Positioning Retail Real Estate for a New Generation

January 29, 2015

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January 29, 2015

Levin Post-Holiday Survey shows strong seasonal sales

Companies are ramping up staffing, increasing the use of technology in marketing and gearing up for a positive 2015

Levin Post-Holiday Survey Shows Strong Seasonal Sales Capping Positive Year
Retailers Ramping Up Staffing and Tech-Related Marketing for 2015

NORTH PLAINFIELD, N.J., Jan. 29, 2015 – Strong holiday seasonal sales capped a positive year for participants in Levin Management’s Post-Holiday Retail Sentiment Survey. The retail real estate services firm annually in January polls store managers within its 95-property, 13.0 million-square-foot shopping center portfolio; the findings, released this week, also indicate that retailers are ramping up staffing and the use of technology in their marketing mixes in anticipation of continued momentum in 2015.

Mirroring reports by the National Retail Federation (NRF) and the International Council of Shopping Centers (ICSC), 63.6 percent of Levin survey respondents reported that their 2014 holiday sales were the same or higher than in 2013. Last year, only 51.2 percent reported sales at the same or higher level year over year. The NRF reported a 4.0 percent increase in total holiday retail sales, which include November and December sales, to $616.1 billion, while ICSC reported a 3.6 percent increase.

An impressive, though slightly smaller, percentage (60.0 percent) of Levin survey respondents also reported the same or higher traffic to their stores this year compared to the 2013 holiday season. That said, retail analytics firm RetailNext Inc. reported a 7.1 percent year-over-year decline in traffic at brick-and-mortar stores during December.

“Our survey is conducted at the grassroots level and involves a regional mix of local, regional and national retailers, while many larger, national studies focus on ‘big picture’ corporate earnings or only major retail organizations,” noted Levin Management’s Matthew K. Harding, president. “That differentiates our study, which sometimes counters what others report – like in the case of holiday traffic. This different approach gives a picture of what merchants are seeing at the ground level, in realtime."

To that end, Levin Management’s retailers indicated, for the most part, that the 2014 holiday season met expectations (44.4 percent) or exceeded them (24.4 percent). For context, last year only 13.4 percent of respondents said that their holiday season was better than they thought it would be.

Seasonal sales also peaked earlier for a larger percentage of Levin respondents this year. For 15.9 percent, sales peaked before Thanksgiving, and for 19.3 percent they peaked during the Thanksgiving/Black Friday weekend (compared to 12.8 percent and 15.4 percent, respectively, in 2013). That percentage dropped off in early December and then climbed up to 26.1 percent reporting peak sales during the weekend before Christmas.

“Retailers have been promoting the Black Friday sales push earlier and for longer, which has extended that buying period to include more and more of November,” Harding said. “The slowdown early in December and spike just before Christmas likely reflect emerging patterns in online shopping, with consumers returning to physical stores as the holiday nears and shipping deadlines become tight.” RetailNext’s study supports this observation, citing December’s “bookend” performance for brick-and-mortar stores.

While some sources reported a drop in seasonal retail hiring in 2014 (including consulting firm Challenger, Gray & Christmas, Inc., which reported a 4.0 percent drop), a significantly larger percentage of Levin survey respondents hired seasonal workers during the holiday season – 43.3 percent vs. 33.7 percent in 2013.

Even more encouraging, 62.0 percent of survey respondents that hired seasonal staff intend to retain some of those positions in 2015. Last year, only 40.5 percent said that they would transition seasonal workers into permanent positions. And while the percentage is down year-over-year, nearly one third (31.5 percent) of survey respondents anticipate their companies will open new stores in 2015. “This is really good news, especially in light of January announcements of store closings and layoffs by Macy’s, JC Penny and other large retailers,” Harding said.

In recent Retail Sentiment Surveys, Levin Management has closely tracked its tenants' growing use of technology in marketing, and the trend appears to continue unabated. For the holidays, 74.2 percent of respondents incorporated technology such as mobile apps, social media, email and text message marketing into the mix. Among those respondents, 63.2 percent said they believe these efforts bolstered holiday sales performance. Additionally, 44.9 percent of all respondents indicated they will add or enhance marketing efforts involving technology in the coming year.

“Technology innovations are entrenched in how the retail industry does business, and our survey pool reflects this,” Harding said. “Our respondents are seeing direct benefits, especially in social media, mobile apps and email. It is encouraging to hear how these new tools are making a difference.”

Several third-party reports support these concepts. The Consumer Electronics Association indicated more than half of shoppers who use mobile devices prefer to look up information while shopping, rather than talk to store employees. And BDO recently found that 84 percent of retailers are using social media, and this platform will comprise an average of 19 percent of their marketing efforts this year.

The U.S. Census Bureau announced a 4.0 percent rise in retail sales in 2014. Over half of Levin survey respondents (51.7 percent) reported 2014 sales levels above or the same as 2013, a slight uptick from the 2013 post-holiday survey, when just under half (49.4 percent) reported the same or higher sales year over year.

Levin’s retailers feel good about what 2015 will bring. A full 67.0 percent of respondents are optimistic about the coming year’s potential. This percentage is higher than the average for the prior three years (65.1 percent).

According to Harding, retailers have reason to be positive. “Overall indicators for the retail industry point to further positive momentum,” he said. “Gas prices are down. Unemployment is down. And consumer confidence and spending are rising. We expect continued steady growth in the near term, and our tenants appear to mirror this sentiment.”

Levin’s next retail sentiment survey will be conducted in late May and early June, gauging mid-year performance. In business for six decades, Levin is one of the nation’s leading retail real estate services firms, with a strong focus in the northeastern United States and an owner’s approach to the business. Levin provides leasing, property management, accounting, construction management and marketing services for properties ranging from neighborhood, community, lifestyle and power centers, to enclosed malls, street retail, downtown stores and mixed-use projects in New Jersey, New York, Pennsylvania, Massachusetts, Virginia and North Carolina. The company specializes in repositioning, retenanting and renovating retail properties – areas that have become particularly vital for today’s institutional and individual property owners.

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