Influential Retail Real Estate Trends Include Technology and E-Commerce
The results of our mid-year Retail Sentiment Survey are in and the news is good, with our tenants reporting strong year-to-date performance. They’re optimistic about the months ahead and are continuing to leverage technology to stay competitive in the e-commerce-influenced retail landscape.
Retail Real Estate Tenants Cite Numerous Causes for Optimism
Our latest poll of store managers in our 95-property, 13 million-square-foot shopping center portfolio yielded the strongest percentage (65.8 percent) of participants in the survey’s five-year history reporting mid-year sales at the same or a higher volume year over year. This represents a jump from 51.9 percent reporting same-or-higher sales at mid-year 2015 and 42.9 percent at mid-year 2014. Similarly, 61.3 percent of participants reported the same or a higher volume of shopper traffic to date in 2016 compared to 2015.
“Retail is experiencing solid momentum following the stock market volatility and bankruptcy announcements that kicked off the year,” said our president Matthew K. Harding. “The latest retail sales data from the U.S. Commerce Department, which shows a 2.4 percent year-over-year increase for March to May, reinforces what our tenants are saying. At this year’s International Council of Shopping Centers’ well-attended RECon in Las Vegas, expansion was an overarching theme among national retailers – another confirmation of a positive trajectory.”
So, it’s no surprise that a full 67.0 percent of our survey participants expect sales to continue at the same pace or improve through the remainder of 2016.
The Digital Revolution is Here to Stay
Like most savvy retailers, tenants at our leased and managed properties are employing digital technology – such as online ads, mobile apps, social media, email and texting – to attract customers to their stores. And our survey found that technology’s importance is growing. Of respondents active in tech-centered marketing, 42.4 percent have upped its usage year over year; while 52.7 percent said their usage levels had remained at the same level.
Retail Real Estate Trends: Digital is Reaching Customers Everywhere
When it comes to engaging customers in-store, mobile device apps (such as those for coupons, discounts, loyalty points and/or rapid payment) are the most popular tools – employed by 69.9 percent of respondents active in tech-centered marketing. Levin tenants appear to be on the right track; a recent ICSC customer engagement survey found that two thirds of consumers in the U.S. use their mobile devices while shopping in bricks-and-mortar stores. Other popular tools among survey participants include free in-store Wi-Fi (49.3 percent), post-sale online surveys (41.9 percent) and electronic receipts (28.7 percent).
Levin tenants are going with tech to reach customers outside their stores. “For the second year, social media and email ranked as most popular among survey respondents active in tech-centered marketing, used by 79.4 and 78.1 percent, respectively,” said Melissa Sievwright, vice president of marketing. “The power of these tools is clear, and social should be on everyone’s radar. In fact, a Deloitte study found that ‘shoppers are 29 percent more likely to make a purchase the same day when they use social media to help shop.’ ”
Facebook Leads the Social Media Marketing Pack
Among Levin survey participants with social media in their marketing mix, Facebook dominates, with 91.3 percent of respondents using it. Other popular platforms include Twitter (36.9 percent), Instagram (34.2 percent) and Google+ (32.2 percent).
Business Models are Evolving as Tech Expands
As bricks-and-mortar stores seek success online, many retailers are finding new ways to serve and engage customers. Our retail real estate tenants are no exception. In our mid-year 2016 poll, 38.2 percent of participants indicated they have adapted their business model in response to e-commerce growth.
Those respondents are adding in-store services and incentives (62.7 percent), offering in-store pickup and returns options for online purchases (57.6 percent); and/or increasing collaboration with their online counterparts (44.1 percent). Some are altering store inventory (35.6 percent); introducing “experience” draws (30.5 percent); and/or changing their store prototypes (13.6 percent).
“We expect the experiential retail trend, especially, to gain momentum,” Sievwright said. “The re-invention of this industry is well underway, driven both by tech advances and new shopper preferences. Millennials and Baby Boomers alike are opting to invest in experiences over things. Smart companies are melding lifestyle with shopping and giving consumers a reason to step into the store.”