Positioning Retail Real Estate for a New Generation

June 21, 2017

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Levin Mid-Year Retail Sentiment Survey Shows Stepped-Up Use of Technology

Tenants Continue to Embrace New Ways to Reach and Service Customers

NORTH PLAINFIELD, N.J., June 21, 2017 – Nearly half (47.3 percent) of tenants participating in Levin Management Corporation’s (LMC’s) Mid-Year Retail Sentiment Survey have stepped-up their technology-centered marketing in 2017. And more than a quarter (26.8 percent) plan to adopt new tech-based marketing tools this year.

The North Plainfield-based commercial real estate services firm today released the results of its annual, technology-focused June poll of retailers within its 95-property, 13 million-square-foot portfolio. “In today’s changing environment, which is so strongly influenced by e-commerce and socio-economic shifts, the message ‘adjust or go home’ has become clear,” noted Matthew K. Harding, LMC president. “The good news is that we continue to see our tenants embracing new ways to reach and service their customers, and ultimately draw them into their stores.”

The percentage of LMC respondents who have increased their tech marketing fall in line with other industry polls. Among them, the National Retail Federation in its State of Retailing Online 2017 survey found 48 percent of respondents have increased their technology budgets.

Among the most popular technologies being used in-store to provide incentives and conveniences for shoppers, 72.8 percent of LMC respondents who use tech-centered marketing tools offer digital coupons, discounts and/or loyalty points; 37.3 percent offer the option to pre-order items online/pick up in store; and 35.1 percent provide the ability for in-store, online ordering (with free shipping) for out-of-stock items. Thirty two percent have free WiFi, and 30.3 percent use e-receipts.

“Many respondents are using multiple tech tools in-store, which is encouraging,” Harding said. “Retailers must cater to today’s shoppers. A recent HRC Retail Advisory study shows emerging in-store technologies are top priorities for Millennial and Generation Z consumers.”

Technology is also critical for bricks-and-mortar retailers as they work to reach customers outside their stores. Email and social media/social marketing have been the favorite tools in past LMC surveys, and they remain the most popular today, used by 78.9 percent and 71.3 percent of tech-marketing participants, respectively. More than one third (34.3 percent) are incorporating banner ads or other Internet advertising, and 31.5 percent use text messaging.

A FOCUS ON SOCIAL

“Social platforms have become critical in driving purchasing decisions, and it is no surprise that such a sizable percentage of our respondents are incorporating social media and marketing into their efforts,” noted LMC’s Melissa Sievwright, vice president of marketing. “Consider this. In the same HRC Retail Advisory survey mentioned above, half of respondents said they use social media to solicit opinions while shopping, and more than 40 percent said they have made a purchasing decision based on feedback from their largely peer network.”

Which platforms are most popular among LMC survey respondents who incorporate social media?

  • 81.3 percent use Facebook.
  • 37.0 percent use Instagram.
  • 35.6 percent use Twitter.

“Facebook, Instagram and Twitter have led our poll four years in a row,” Sievwright said. “This year we asked for the first time whether our retailers are also enhancing their social media presence with paid options, like Facebook sponsored content or ads. More than one-third (36.8 percent) indicated they are.”

When it comes to social marketing platforms, Yelp is the most popular for LMC respondents, used by 66.4 percent of those who employ social marketing.

THE E-COMMERCE INFLUENCE

Of LMC Mid-Year Survey respondents, half (49.8 percent) offer an online option for purchasing goods, scheduling appointments for services or placing orders for pick-up. And more than one third (36.5 percent) indicate they have adapted their business model in response to the growth of e-commerce.

Of them, nearly half (48.5 percent) have added in-store services and/or incentives; 44.3 percent have added in-store pickup and returns option for purchases made online; and 35.1 percent have increased coordination between online and bricks-and-mortar operations.

“While e-commerce has made an undeniable and significant impact on the shopping center industry, there are so many positive signs that these changing times are bringing new opportunities for our sector,” Sievwright said. “Bricks-and-mortar retailers are using e-commerce as another channel to reach consumers, but also are enhancing efforts to provide unique shopping experiences that cannot be duplicated online.” In fact, 29.9 percent of LMC survey respondents who have made changes added “experience” draws, such as demonstrations, classes, performances or other in-store events.

A significant percentage (46.6) of those who have adapted reported benefits in terms of sales and in-store traffic. Another 30.2 percent reported they do not know if their actions have impacted sales and traffic. “It may be soon to see measurable change, but it is clear retailers need to evolve to not only survive but thrive,” Sievwright noted.

LOOKING AHEAD, BRICKS AND MORTAR IS STILL KEY

For LMC, leasing year-to-date in 2017 has been more robust than the past several years, according to Harding. Additionally, more than half of its Mid-Year Survey participants (56.6 percent) report sales at the same or a higher level than at this point last year, and three quarters (75.1 percent) expect their performance during the second half of the year to continue at its current pace or improve.

“Despite news reports of slower retail sales and continued store closings, activity within our own portfolio is quite positive,” Harding concluded. “The colleagues and retailers we spoke with at ICSC’s recent RECon event – one of our industry’s largest trade shows – echoed this sentiment. Retailers are trying new things. Property owners are investing in their shopping centers. New concepts are coming into the market. We also are seeing a growing movement among online retailers toward establishing physical locations. Amazon’s acquisition of Whole Foods represents the most high-profile example to date. All of this reflects that bricks and mortar is still key.”

LMC’s next Retail Sentiment surveys will be conducted in October/November, gauging expectations and plans for the holiday season, and in January, gauging retailers’ outlooks for 2018. For 65 years, LMC has served as a trusted single-source commercial real estate services provider for institutional and private owners. The firm helps its clients evaluate options, operate properties and create case-specific solutions to protect and improve asset value. LMC offers leasing, property management, financial management and reporting, construction and development, lease administration, marketing services, and acquisition and disposition consulting services. The company’s services continue to evolve with new technologies, efficiencies and sustainability-focused initiatives to serve a new generation of properties, investors and tenants.

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