Technology Propelling Retail’s Positive Trajectory at Mid-Year 2019
Strong Holiday Season Caps Year of Solid Performance; Economy Expected to Drive Industry and Create Opportunity in 2019
NORTH PLAINFIELD, N.J., June 18, 2019 – The incorporation of cutting-edge technology to serve customers and gain competitive insight continues to propel retailers within Levin Management Corporation’s (LMC’s) 105-property, 15 million-square-foot portfolio on a positive trajectory at the heart of 2019. The commercial real estate services firm today released the findings of its eighth annual Mid-Year Retail Sentiment Survey, polling managers on tech issues and their stores’ year-to-date performance.
“Our latest survey reveals historically strong sales and traffic numbers,” noted LMC’s Matthew K. Harding, chief executive officer. “More than three quarters (76.0%) of participants reported sales at a same or higher level year over year, and nearly three quarters (72.9%) are seeing traffic levels that match or exceed last year at this time. These are the strongest gains in our survey’s history, beating trailing averages by double digits.”
Further, when asked about their expectations for the remainder of the year, 82.2% of survey participants indicated they expect sales to continue at the same pace or improve. The LMC results are supported by other positive outlooks. For example, the National Retail Federation has forecasted a retail sales increase between 3.8% and 4.4% for 2019.
THE MERGER OF E-COMMERCE AND BRICK-AND-MORTAR
According to Harding – and the LMC survey findings – technology and the continued merger of e-commerce and brick-and-mortar is at the core of the retail sector’s solid performance. “What we previously have differentiated as e-commerce or traditional retail today is, simply, retail,” he said. “In our omnichannel world, ‘click and collect’ has become a huge driver of traffic to brick-and-mortar locations.”
To that end, 70.4% of LMC survey respondents noted that their company offers an online option for purchasing goods, scheduling appointments for services or placing orders for pick-up. This number is up from less than 50.0% just two years ago. Of those respondents who indicated their brand has adjusted its business plan due to the growth of e-commerce, the addition of an in-store pickup and returns option for purchases made online is one of the four most popular adaptations.
“A recent International Council of Shopping Centers (ICSC) survey shows more than half of adults use click-and-collect,” Harding said. “Top retailers like Home Depot and Target have reported that individual stores are fulfilling significant percentages of their digital sales. Smart retailers know ancillary sales are a big win in these situations, and they are striving to make the customer experience as convenient as possible. Everything from self-serve lockers to space redesigns that emphasize showrooming are in the mix.”
Retailers also are leveraging technology for business intelligence. In fact, 66.9% of LMC survey respondents said they are analyzing customer and sales data for the purpose of merchandising, creating new services and options, planning in-store events, and creating individualized special offers. “Our tenants are gaining valuable insights from information they are gathering organically in the process of selling goods and services, and via maintaining customer-loyalty and other programs. This undoubtedly facilitates a more targeted marketing process and more personalized experiences for shoppers.”
A FOCUS ON CUSTOMER EXPERIENCE
Physical retail also is working to “up its game” in areas that distinguish in-store shopping from its online counterpart, according to Melissa Sievwright, LMC’s vice president of marketing. In fact, among Mid-Year survey respondents who have made changes based on the e-commerce evolution, 71.9% have increased their focus on training and customer service, and 48.1% have added in-store services and/or incentives.
“The human touch and the level of convenience that can be created today in a physical store has great appeal for consumers,” Sievwright said. “Smart retailers are recognizing this and taking advantage of any chance to make a trip to their shop pleasant and worthwhile.”
Survey participants who are using technology-centered tools in-store for customer service and convenience favor digital coupons, discounts and/or loyalty points; free WiFi; in-store, online ordering (with free shipping) for out-of-stock items; and electronic receipts. Other in-store features being used by a notable percentage (>10%) of those employing in-store technology include mobile scanners for inventory checks, sales floor price-check scanners and mobile point of sale systems. Approximately one quarter of LMC Mid-Year respondents plan to adopt new in-store technologies this year.
Technology is also weighing in prominently in retailers’ external marketing efforts. Email is the most popular tool, followed closely by social media/social marketing – both used by more than three quarters of respondents employing tech-centered marketing to reach customers and potential customers. The popularity of text messaging appears to be rising, currently used by 45.2% of tech-marketing-savvy respondents – a jump over a four-year trailing average of 32.4%.
Facebook, Instagram and Twitter are the most popular social media platforms, continuing an established hierarchy. Notably, more than one-third of LMC survey respondents who are leveraging social are enhancing their presence with paid options, such as Facebook sponsored content. For social marketing, Yelp is a clear favorite, followed by Groupon/Living Social.
“Retailers have such a great opportunity to leverage technology in marketing,” Sievwright noted. “It is no secret that consumers today conduct research online before heading to a store to make a purchase. And when it comes to social, a hyper-local strategy can be a big differentiator in establishing strong community-based branding and shopper loyalty.”
LMC’s next Retail Sentiment surveys will be conducted in October/November, gauging expectations and plans for the holiday season, and in January, exploring outlooks for the coming year. For nearly 70 years, the North Plainfield, N.J.-based company has served as a trusted single-source commercial real estate services provider for institutional and private owners. LMC today maintains a diversified, retail-focused portfolio in the Northeast and Mid-Atlantic states. The firm’s capabilities continue to evolve with new technologies, efficiencies and sustainability-focused initiatives to serve a new generation of properties, investors and tenants.Download Survey (PDF)