Levin Mid-Year Retail Sentiment Survey Shows Surge in Tech

Tenants Continue to Embrace New Ways to Reach and Service Customers

Results of our annual June poll of the retailers in our 95-property, 13 million-square-foot portfolio are here. Formally known as the Mid-Year Retail Sentiment Survey, this research reveals positive action on the part of our tenants in terms of tech-centered marketing. Almost half of the participants (47.3 percent) have stepped-up their use of these tools, with more than a quarter (26.8 percent) planning to put tech to work this year.

In today’s changing environment, which is so strongly influenced by e-commerce and socio-economic shifts, the message ‘adjust or go home’ is being heard. The good news is that we continue to see our tenants embracing new ways to reach and service their customers, and ultimately draw them into their stores.

Our survey results reflect a current retail trend, with the percentage of respondents who have increased their tech marketing matching other industry polls. The National Retail Federation, for example, in its State of Retailing Online 2017 survey found 48 percent of respondents increasing their technology budgets.

Retail Trend: Retailers Are Using Multiple Tech Tools to Win Today’s Shoppers

Many respondents reported they are using multiple tech tools in-store to cater to the new generation of shoppers. This is a retail trend that our industry needs to heed as a recent HRC Retail Advisory study shows emerging in-store technologies are top priorities for Millennial and Generation Z consumers.

According to the respondents in our survey, the most popular technologies being used in-store provide incentives and conveniences for shoppers. The majority of our tech-using participants – 72.8 percent – offer digital coupons, discounts and/or loyalty points; 37.3 percent offer the option to pre-order items online/pick up in store; and 35.1 percent provide the ability for in-store, online ordering (with free shipping) for out-of-stock items. Thirty-two percent have free WiFi, and 30.3 percent use e-receipts.

Technology is also critical for bricks-and-mortar retailers as they strive to reach customers outside their stores. Email and social media/social marketing have been the favorite tools in our past surveys, and they remain the most popular today, used by 78.9 percent and 71.3 percent of tech-marketing participants, respectively. More than one third (34.3 percent) are incorporating banner ads or other Internet advertising, and 31.5 percent use text messaging.

Social Media Continues as a Favorite Marketing Tool, Facebook Rules

Social platforms have become critical in driving purchasing decisions, and it is no surprise that a sizable percentage of our respondents are incorporating social media and marketing into their efforts. Consider this: in the same HRC Retail Advisory survey mentioned above, half of respondents said they use social media to solicit opinions while shopping, and more than 40 percent said they have made a purchasing decision based on feedback from their largely peer network.

The most popular among our survey respondents who use social media are:

  • 81.3 percent use Facebook.
  • 37.0 percent use Instagram.
  • 6 percent use Twitter.

Facebook, Instagram and Twitter have topped our poll for the past four years. This year we asked, for the first time, if our retailers are also enhancing their social media presence with paid options, like Facebook sponsored content or ads. More than one-third (36.8 percent) indicated they are.

When it comes to social marketing platforms, Yelp is the most popular among respondents, used by 66.4 percent of those who employ social marketing.

E-Commerce is Now a Major Influence on Our Retail Tenants

Of our Mid-Year Survey respondents, half (49.8 percent) offer an online option for purchasing goods, scheduling appointments for services or placing orders for pick-up. And more than one third (36.5 percent) indicate they have adapted their business model in response to the growth of e-commerce.

Of these, nearly half (48.5 percent) have added in-store services and/or incentives; 44.3 percent have added in-store pickup and returns option for purchases made online; and 35.1 percent have increased coordination between online and bricks-and-mortar operations.

While e-commerce has made an undeniable and significant impact on the shopping center industry, there are so many positive signs that these changing times are bringing new opportunities for our sector. Bricks-and-mortar retailers are using e-commerce as another channel to reach consumers, but also are enhancing efforts to provide unique shopping experiences that cannot be duplicated online. In fact, 29.9 percent of our survey respondents who have made changes added “experience” draws, such as demonstrations, classes, performances or other in-store events.

A significant percentage (46.6) of those who have adapted to e-commerce reported benefits in terms of sales and in-store traffic. Another 30.2 percent reported they do not know if their actions have impacted sales and traffic. It may be soon to see measurable change, but it is clear retailers need to evolve to not only survive but thrive.

Looking Ahead, Bricks and Mortar Stores Remain the Heart of Retail

Our year-to-date leasing activity for 2017 has been more robust than the past several years. Additionally, more than half of our survey participants (56.6 percent) report sales at the same or a higher level than at this point last year, and three quarters (75.1 percent) expect their performance during the second half of the year to continue at its current pace or improve.

Despite news reports of sluggish retail sales and continued store closings, activity within our own portfolio is quite positive. The colleagues and retailers we spoke with at ICSC’s recent RECon event – one of our industry’s largest trade shows – echoed this sentiment. Retailers are trying new things. Property owners are investing in their shopping centers. New concepts are coming into the market. We also are seeing a growing movement among online retailers toward establishing physical locations. Amazon’s acquisition of Whole Foods represents the most high-profile example to date. All of this reflects that bricks and mortar is still key. This is a retail real estate trend we want to see continue.

Our next Retail Sentiment surveys will be conducted in October/November, gauging expectations and plans for the holiday season, and again in January, gauging retailers’ outlooks for 2018. Look for more news then.