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Annual Post-Holiday Survey: Seasonal Cap Positive Year

Retailers Ramping Up Staffing and Tech-Related Marketing for 2015

The results of our annual Post-Holiday Retail Sentiment Survey are in and the news is good. Participating store managers in our 95-property, 13.0 million-square-foot shopping center portfolio reported a healthy rise in both yearly and holiday sales and traffic. Optimistic as a result of 2014’s performance, they’re also ramping up staffing and planning to put more technology into their marketing mixes in anticipation of continued momentum. That’s a retail real estate trend we like.

Our Research Mirrors NRF and ICSC Polls, But with Sales and Traffic Higher

Mirroring findings of the National Retail Federation (NRF) and the International Council of Shopping Centers (ICSC), 63.6 percent of our survey respondents reported 2014 holiday sales at the same or higher levels than 2013’s. Last year, only 51.2 percent reported sales at the same or higher level year over year. The NRF reported a smaller rise of 4.0 percent in total holiday retail sales, which include November and December sales, while ICSC reported a 3.6 percent increase.

An impressive, though slightly smaller, percentage (60.0 percent) of our 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.

What accounts for the more robust numbers from our managers? 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. 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.

Retailers Expectations Met or Exceeded by 2014 Holiday Shopping Season

Since our survey measures the sentiment of retailers along with sales and traffic, expectations are an important element. And 2014 scored well. According to our participants, 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.

Two Holiday Sales Peaks Are Emerging as a Retail Real Estate Trend

Seasonal sales peaked earlier for a larger percentage of our responding managers this year. For 15.9 percent, sales spiked 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 surged, with 26.1 percent reporting a peak 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. 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.

Holiday Staffing Levels Expected to Stick

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 our survey respondents hired temporary workers during the holiday season – 43.3 percent vs. 33.7 percent in 2013.

Even more encouraging, 62.0 percent of those say they intend to retain some of those positions in 2015. That’s a big jump over last year, when only 40.5 percent said that they would transition seasonal workers to permanent staff. 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. We see this as really good news, especially in light of January announcements of store closings and layoffs by Macy’s, JC Penny and other large retailers. It’s good news for commercial retail leasing too!

Use of Tech in Marketing Is a Retail Trend Thats Here to Stay

In recent Retail Sentiment Surveys, we’ve closely tracked our tenants’ growing use of technology in marketing, and the trend appears to continue unabated. For the holidays, 74.2 percent of survey respondents incorporated technology such as mobile apps, social media, email and text message marketing into their promotional mix. Among those respondents, 63.2 percent said they believe the 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. 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 our findings. 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, with this platform projected to comprise an average of 19 percent of their marketing efforts this year.

2014: All Around It was a Very Good Year

The U.S. Census Bureau announced a 4.0 percent rise in retail sales in 2014. Over half of our 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. And it’s important to note that this percentage is higher than the average for the prior three years (65.1 percent).

Retailers have reason to be positive. Overall indicators for the retail industry point to further positive momentum. 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. Watch for the results here on our blog.