Positive Momentum Offsetting Pandemic, Labor and Supply Chain Concerns
Strong industry projections for consumer holiday spending, along with solid year-to-date performance, appear to be offsetting retailers’ concerns about how COVID-19, supply chain and labor challenges may impact performance during this critical season. North Plainfield-based commercial real estate services firm Levin Management Corporation (LMC) this week released the findings of its annual Pre-Holiday Retail Sentiment Survey, which polls store managers in its 120-property, 16 million-square-foot leasing and management portfolio.
Nearly 80% of survey participants reported their year-to-date sales have met or exceeded expectation, with more than three quarters reporting the same for store traffic. Approximately 72% are optimistic about what the holiday season will bring, though nearly 20% say they are not sure how their stores will perform.
“There is no doubt that people are shopping – as consumers we’ve all seen the evidence first-hand at busy shopping centers,” noted LMC’s Matthew K. Harding, chief executive officer. “Tenants are leasing space at a healthy pace as well. As such, this level of optimism for the holidays makes sense and is encouraging.”
Still, Harding said that considering the level of uncertainty 2021 has brought on a variety of fronts, it is understandable that a notable number of LMC survey participants are not sure what to expect. Respondents ranked factors that they believe will influence seasonal sales performance. COVID-19 safety concerns led the field, followed by inventory availability and labor supply.
At the bottom of the list? E-commerce growth concerns. “Retailers are facing a number of well-documented hurdles, certainly, yet the position of e-commerce impact among them is worth noting,” Harding said. “Just a few years ago, this topic led the conversation. Now we are seeing a true equilibrium, as bricks-and-mortar and online operations feed one another with an integrated approach highlighted by ship-from-store and click-and-collect collaboration.
“And, simply put, people like to shop in person,” Harding added. “Consider the findings of ICSC’s holiday intentions survey, which revealed that 85% of shoppers plan to spend money in physical stores this season, and of those who plan to use click-and-collect, 72% say they will likely purchase more while picking up their orders.”
Staffing for a Busy Season
Within this context, nearly 56% of LMC survey participants reported they are seeking to add seasonal staff. This percentage far exceeds the Pre-Holiday Survey’s 10-year trailing average of 34.5%. Given the widely discussed retail labor shortage (the US Bureau of Labor Statistics most recently tracked 1.32 million retail job openings at the end of August), it comes as no surprise that LMC tenants are having a hard time filling seasonal positions.
In fact, approximately 72% of survey respondents said it is harder to find qualified job candidates than in the past. Nearly half (48.6%) of those hiring have increased their seasonal hourly wage over previous years – a notable jump up from 23.1% and 38.7% reporting the same in 2018 and 2019*, respectively. Further, many LMC tenants are offering incentives beyond hourly wage to attract workers – from referral, performance and end-of-season bonuses; to opportunities for transitioning to full-time permanent staff; to free meals during shifts; to flexible compensation options.
Peak Sales and Holiday Marketing
When asked about when they expect holiday sales to peak, more than 25% of LMC survey respondents selected “Pre-Thanksgiving/Black Friday,” reflecting a sustained trend toward earlier shopping patterns. “We’ve come to expect holiday promotions to begin sooner in the fall,” noted Melissa Sievwright, LMC’s vice president of marketing. “This year, retailers – and consumers – are also contending with widespread supply chain issues, which may prompt shoppers to start even earlier over stock-out concerns.”
Competition for holiday sales and traffic has brick-and-mortar retailers working hard to gain and retain customers. One quarter of LMC Pre-Holiday Survey participants say they are trying something new this year to enhance their store’s seasonal shopping experience, and nearly 95% say they have maintained or increased holiday-specific marketing this year.
“From new in-store customer services and loyalty programs, to same-day delivery, curbside or in-store pickup, and more, consumers are looking for their favorite retailers to offer perks and convenience – and retailers are responding in kind,” Sievwright said. “Further, good marketers know they need to invest to reach customers; they cannot wait for customers to find them. To that end, our survey participants indicated they are leveraging a range of marketing tools, from special events, to expanded social and email marketing, to full rebranding rollouts in time for this critical season.”
LMC serves as a trusted single-source commercial real estate services provider for institutional and private owners, maintaining a diversified portfolio in the Northeast and Mid-Atlantic states. All LMC clients, and each property in its portfolio, benefit from the firm’s experience, relationships and fully integrated approach – from leasing, to development and renovations, to property operations, marketing and more. LMC’s Retail Sentiment surveys reflect the firm’s commitment to understanding issues and trends impacting retailers from a street-level perspective. In addition to the pre-holiday poll, the surveys are traditionally conducted in January, exploring outlooks for the coming year, and in May, exploring technology trends and mid-year sales performance.
*This question was not asked in the 2020 survey.