Twelve Trends Will Shape The Year in Retail

Ahead: Smaller Stores, Personalization, Experience, and Tech Everywhere
Last month – January – is always “Predictions Month,” with pundits in every industry scanning the horizon for what’s ahead. We’ve reviewed most of the 2017 retail and retail real estate outlooks and wanted to share what we think is the best of the bunch. The comprehensive list that follows is from the Vend blog and includes observations from experts worldwide. Keep an eye on these twelve as the year rolls forward.

Shoppers Will Seek Retailers Who Deliver a Good In-Store Experience
1. Stores offering unique shopping experiences will thrive. “Experience” includes special additions like food services, but also the delivery of a seamless shopping experience, reflecting the online world. Crate + Barrel’s “Mobile Tote” is a good example. Shoppers use store-provided tablets to browse and note their favorites, while sales associates ready their orders.

2. Smaller stores will win out over their super-sized counterparts. Time-starved shoppers have less tolerance for navigating big spaces and look for easy-to-access inventory. Target, Best Buy and Ikea have jumped in with junior box stores. Expect more to follow.

3. Specialty stores will perform better than department stores. Building on #2 above, smaller venues with well-curated inventory and a knowledgable staff will beat the traditional department store concept. Note: those Millennials everyone is chasing are specialty store fans.

4. “Retailment” (the fusion of retail and entertainment) is the new game in town. To entice shoppers to leave their screens for an out-of-home experience, retailers will deliver everything from virtual reality to pop-ups. Note the rise of theaters that serve dinner and cocktails along with the movie.

 

Services Will Be Expected

5. Shoppers will expect same-day shipping. Consumers want the traditional gratification of having their purchase on the day they make it.

6. Personalization will be more important than ever. Shoppers want to be recognized and rewarded. Loyalty programs will step up their game with more customized offers based on buying history and other data.

 

The Reign of Tech Will Continue
7. Mobile will be the way to pay. TechCrunch predicts that there will be 447.9 million mobile payment users this year. Purchases in this mode will total $60 billion in 2017 and $503 billion in 2020. Savvy retailers will adopt whatever system fits them best, choosing from custom apps or third-party options like Apple Pay.

8. Omnichannel growth will continue. Effective omnichannel strategies will separate the winners from the losers in 2017. Vend’s retail trend watchers expect to see retailers push omnichannel in bold, new directions to deliver that seamless experience.

9. Data will continue to drive retail success. Data will be a force in every aspect of the retail process from supply chain to purchase. Collection and analysis of information will be a top focus, with social shopping making a major contribution.

10. Retail and tech will unite to deliver new ways to bring shoppers into bricks and mortar stores. Science fiction will come to shopping: the Internet of Things, virtual reality, artificial intelligence and robots.

11. Apps, services and third parties will help bricks and mortars compete with online. But there’s one caveat: retailers will need to be selective about the tech products and platforms that serve their particular needs. There will be many to choose from. The best options are the ones that free the user to focus on the customer.

 

Transparency and Sustainability: Must Haves for Success in 2017
12. It’s no longer enough just to sell quality products at good prices. The Internet has created a hunger for information. Shoppers want to know what goes into a product. They’re driven by both ethics and a commitment to sustainability. This trend will continue into 2017 and beyond. (Think Millennials).

If you’ve enjoyed these highlights, read the complete Vend report at:

https://www.vendhq.com/university/retail-trends-and-predictions-2017 and watch these predictions become reality.

 

 

 

 

After a Strong 2016, Our Retail Tenant’s Outlook is Optimistic

Annual LMC Outlook Survey Reveals Growth Trend, Continued Evolution
Retailers in our 95-property, 13 million-square-foot shopping center portfolio are feeling good about the future. In fact, three quarters (74.5 percent) of respondents in our annual Retail Sentiment Outlook Survey of store managers are optimistic about their anticipated 2017 performance – the highest percentage in the January poll’s six-year history. As a regional leader in retail real estate, this is the kind of news we love to hear.

Survey Respondents Report Record Sales Performance in 2016; Bricks and Mortar Stores Continued to Attract Shoppers
According to our President Matthew K. Harding, the percentage of respondents reporting 2016 sales at the same or higher level (68.8 percent) was the highest in Outlook survey history. Our finding reflects a positive year for retail nationwide. According to the U.S. Department of Commerce, 2016 retail sales rose 3.3 percent over 2015; for context, 2015 retail sales were up 2.1 percent from 2014.

The holiday season yielded a record performance, too, with survey respondents reporting sales and shopper traffic at the same or higher level than last year. These were the strongest in survey history at 75.6 and 74.4, respectively. “Industry experts agree that the recent holiday season was good for retail, yet some have indicated e-commerce was the real winner over bricks and mortar,” Harding said. “From a ground-level perspective we are seeing a different story – one illustrating the ongoing relevance of physical stores in our portfolio, which is comprised mostly of open-air shopping centers.”

Supporting our findings, the International Council of Shopping Centers (ICSC) in its Post-Holiday Shopping Survey found consumers spent an average of $711 on gifts and seasonal items during the holidays – a 16 percent increase over 2015’s post-holiday survey results. Further, ICSC reported 91 percent of holiday shoppers spent at bricks-and-mortar locations.

Expansion Plans Are Heating Up:  A 2017 Retail Trend to Watch
When we asked survey participants about their companies’ expansion plans for 2017, more than one-third (35.1 percent) indicated their brand plans to open additional stores.

“Again, our findings may seem to counter current headlines reporting ongoing store closings by major retailers,” Harding said. “But in the 65 years we’ve been leasing and managing retail properties we have witnessed the ongoing transformation of retail. Ultimately, concepts come and go, creating opportunities for new and expanding players. Today is no different, and our tenants are proving this point.”

Qualified Job Candidates: Retail Is Facing a Growing Scarcity
The decline in unemployment and its impact on retail hiring also was addressed in the Outlook Survey. Only about one-quarter (23.6 percent) of respondents have seen changes in the hiring climate related to the tightening jobs market. Of that group, more than half (51.7 percent) indicated they are seeing fewer applications from qualified job candidates, and nearly half (46.6 percent) said they are experiencing demand for higher starting salaries.

Tenant Business Models Are Adapting to Impact of E-commerce
The e-commerce phenomenon – and its impact on bricks-and-mortar – has remained top-of-mind for us. As leaders in retail real estate we are continuing to gauge how our tenants are taking competitive action. In the 2017 Outlook Survey, we asked our tenants how they have adapted their business models in response to e-commerce’s growth.

Marking a notable jump from the last two times the question was asked, 55.2 percent of survey participants indicated they have adapted in some way. This compares to 38.2 percent of respondents in the 2016 Mid-Year Survey and 37.3 percent at mid-year 2015. Among that group, our retail tenants have:

  • Added in-store services and/or incentives (50.9 percent).
  • Added in-store pickup and returns options for purchases made online (37.9 percent).
  • Increased coordination between online and bricks-and-mortar operations (30.2 percent).
  • Added “experience” draws such as demonstrations, classes, performances or other in-store events (28.4 percent).
  • Altered store inventory, such as having fewer in-stock SKUs or larger quantities of popular items (25.0 percent).
  • Altered store prototype, such as reducing store size or increasing focus on showrooming (17.2 percent).

In turn, 57.5 percent of the respondents who have adapted in response to e-commerce say they have seen a benefit in terms of sales and/or in-store traffic. That percentage compares to 43.0 percent at mid-year 2016 and 52.1 percent at mid-year 2015.

“In our last two mid-year surveys, about one-third of tenants (32.9 percent and 30.9 percent) were unsure of whether their efforts were making a positive impact,” said Melissa Sievwright, vice president of marketing. “The number shrank to less than a quarter (24.4 percent) in the 2017 Outlook Survey, indicating that tenants are beginning to see more measurable results.

“This is very good news in an environment requiring retailers to continually reinvent themselves,” she added. “We anticipate continued changes as our tenants strive to establish the best mix of services and incentives, and elevate and personalize the shopping experience to draw customers into their stores.”