A Facelift Can Put Bricks And Mortars Ahead of The Game

Retailers May Be Neglecting Their Strongest Competitive Advantage

Digital technology has transformed our industry – some might say disrupted it – along with just about everything else in contemporary life. Retailers, over the last few years, have risen to the challenge of their online competitors with major investments in omnichannel. But have all those dollars poured into online come at the expense of the retailer’s biggest asset: the bricks-and-mortar store? This provocative question was recently raised by Antony Karabus, CEO of Hilco Retail Consulting, in a recent article in Women’s Wear Daily. He gave us cause for some thought.

Investing in Bricks: Is a Retail Real Estate Trend Emerging?

Karabus maintains that bricks-and-mortar retailers “consistently underestimate the enormous advantage they have relative to their ecommerce counterparts, in particular their physical brand assets.” A bricks-and-mortar store, he goes on to say, satisfies the consumer’s innate desire to interact with merchandise in an inviting environment. Yet, according to a survey of the CEOs and CFOs of top retailers conducted by Hilco, only 20 percent are investing capital in their stores. Forty percent of the stores in Hilco’s study, in fact, had not been remodeled in a decade.

The vast majority of retail sales still occur in stores rather than online. The most recent statistics from the U.S. Commerce Department show online sales accounting for 6.8 percent of total third-quarter retail sales. Online is growing at a steady pace, but Forrester Research projects that by 2018, it will still represent only 11 percent of total annual sales. Still, leading retailers remain fixated on tech – perhaps at the expense of their physical brand, which is the chief driver of revenue.

An Experience Technology Can’t Match…Yet

Steve Barr, U.S. Retail and Consumer Leader at PricewaterhouseCoopers, echoes Karabus’ views on the overlooked value of bricks. “There are reasons people are still going to the store – it’s accessible, people can see and feel the product, try on merchandise, see what a room set looks like. It’s a very visual experience that can’t be replicated through even the best online tools,” he told Retail Dive earlier this year. He added this caveat: “Retailers are going to need to adapt the physical store to stay relevant and compete with online retailers.”

Levin’s President Matthew Harding agrees that while a strong online presence is vital, retailers can’t afford to ignore their physical stores. “As a leading retail real estate company, we’re naturally concerned about the physical appearances of the tenants in the centers we manage. The look of a store is a valid concern for any retailer. Many of ours are doing an outstanding job. A good example is ShopRite. They’ve created high-quality environments for grocery buyers. Pier 1 Imports is another good example. I’ve seen some great interior and exterior remodeling of their stores. They’re driving more traffic because of their fresh, new look. Shoppers are drawn to novelty.”

Retailers Who Find the Right Balance Will Own the Future

Bricks and clicks need to be brought into balance, according to Karabus, who insists that success will come from serving customers “consistently at all touch points (online and in-store) however and whenever they want to interact with a retailer.” Bring stores up to meet the expectation of today’s savvy consumers, he urges. Merchants who do so will reap dividends. “The prize,” he predicts, “will be huge when retailers find the right balance of capital spending.”

U.S. Consumer Sentiment Bodes Well For Holiday Sales

NRF Projects Rise of 3.7 Percent over 2014; All Eyes on Black Friday

According to a recent NPD Group survey of 3,600 adults, U.S. shoppers are looking forward to the winter holidays this year. Eager to catch a break from “what’s going in the world” and wanting “to give to the less fortunate” are the main reasons given for the positive sentiments. Whatever’s behind their holiday outlook, 15 percent of those surveyed plan to spend more than last year and 16 percent plan to spend less (down from 20 percent in 2014). That’s the smallest gap between the two groups in the last three years. The glass looks half full as we head into the make-or-break season, and as a leader in retail real estate, we’re watching for the opening salvo – Black Friday – and what it might indicate for the final stretch of 2015.

Modest Rise in Holiday Sales Projected by Major Retail Trend Watchers

After a sluggish 2015, will retailers get a rush of spending in the year’s closing weeks? The National Retail Federation has projected an increase of 3.7 percent, totaling $630.7 billion in sales for November and December and slightly below last year’s 4 percent advance. Deloitte LLP is more optimistic, predicting an upward tick of “as much as” 4 percent. Alix Partners’ view is more sober at 2.8 to 3.4 percent. Whichever number eventually materializes, it seems that the retail trend toward bargain-hunting will continue, with buyers as the ultimate winners.

“Americans remain torn between their desire and their ability to spend. The fact remains that consumers still have the weight of the economy on their minds,” said NRF President Matthew Shay. Despite low energy prices and a strengthening job market, the economy is not in full recovery and not all boats have been lifted by the rising tide. Stagnant hourly wages at the lower end of the economic spectrum have restrained a substantial segment of consumers.

PwC describes today’s shoppers as divided into two groups: “survivalists” and “selectionists.” The border between the two is a household income of $50,000. Those below that mark will seek bargains this holiday season, planning to spend $631 less than last year. Those above, who are planning to boost seasonal spending by $1,331, will gravitate toward personal electronics and experiences (travel and entertainment). But, because of the power of the Internet, shoppers in both groups will be able to search for and find the best deals for almost everything on their wish lists, using dozens of websites with up-to-the-minute news on Black Friday specials.

Once a Retail Trend, Now a Retail Institution, Will Black Friday Bounce Back from 2014s Fall-off?

The winter holidays are a crucial season for many retailers, with the major chains dependent on November and December activity for as much as 30 percent of their annual sales. Black Friday, the unofficial opener to the season, holds special significance. A consistent winner for the past dozen years, Black Friday’s sales fell off 11 percent in 2014, with four-day total sales of $50.9 billion, down from $57.4 billion in 2013. This includes both in-store and online.

Amazon Will Open the Season on November 1, But Wal-Mart Will Finish on Top

No retailers are waiting for the day after Thanksgiving to launch holiday promotions. First out of the gate on November 1 will be Amazon with its “Countdown to Black Friday” promotion. From there, the frenzy will continue, peaking on Black Friday but continuing through the holiday weekend before slipping into online’s own Cyber Monday.

If Black Friday itself turns in a disappointing performance, trend watchers say, it will likely be the result of a time frame that has stretched from one day to two to now a full month. BestBlackFriday.com, a website that tracks seasonal retail activity, predicts that Friday sales will slip 3.3 percent to $8 billion. Thanksgiving Day will get a bump of 18.8 percent. Together, the two days will see online sales up 33.3 percent from 2014.

As Black Friday 2015 becomes retail history, promotion will continue to surge from Cyber Monday to Green Monday (the second Monday in December), all the way to the final holiday shopping week, when in-store sales are expected to spike. At the season’s end, retail watchers predict, Wal-Mart will emerge the big winner. Its multi-channel strategy includes their one-hour in-stock guarantee policy, online exclusives on a powerful website, and irresistible in-store pricing on the hottest holiday items.

Interested in more trends and predictions for Black Friday, visit: http://www.twice.com/news/statistics/top-10-black-friday-2015-predictions/58759.

Latest Retail Trend May Surprise Millennial Watchers

Hip Gen-Y’s Shopping Habits Reveal Price Sensitivity

Retailers and retail real estate companies are paying close attention to Millennial shoppers as they progress. After all, 80 million consumers (one-quarter of the U.S. population) with annual spending power of $600 billion are not to be ignored. Although over half of Millennial households currently live on under $50,000 per year, their prime earning period is on the horizon and some will inherit assets from their Boomer parents.

And though it may come as a surprise, hip Generation Y loves Wal-Mart. A recent study by InfoScout indicates that Millenials spend 32 percent of their annual purchases in the grocery, cleaning and health/beauty categories at Wal-Mart. This is more than their elders – overall, Americans plunk down 24 percent of all dollars spent on those product categories at the Bentonville Behemoth’s big box stores.

Hipper Target is a close second on Gen-Y’s list, with 11.6 percent of their spending on groceries and related items funneled to that chain. The total average US household’s annual spend in the same category at Target is 8.6 percent. When it comes to fashion and home accessories, Target tops the list, especially at the younger end of the demographic range. Twice as many in the 18-24 age cohort say they often shop for fashion at Target as in the 25-plus group, reports BIGresearch.

Two Factors Drive the Latest Millennial Retail Trend

Wal-Mart executives credit the company’s aggressive commitment to online and mobile as a driver of their appeal to Millennials, the first generation of Americans born and raised in a computer-centric world. They also cite the impact of a distressed economy during the formative years of this group. “The Millennial customer grew up with a lot of hardship. They see Wal-Mart as a place where they can save money,” observed Matt Kirsten, Wal-Mart’s SVP-Consumer Insights and Analytics. Mix that experience with a less-than-robust job market plus heavy student debt (currently standing at a total of $1.2 trillion) and it’s easy to see why Millennials are price sensitive.

Millennials’ List of Go-To Retailers Also Includes Macy’s and JCPenney

When Moosylvania, a St.Louis-based digital ad agency, surveyed 1,500 Millennials regarding their brand preferences, Wal-Mart and Target again scored near the head of the list of 50 favorites, at spots five and six. Other retailers among the top choices were JCPenney and Macy’s, both in the top 20, and both catering to price-conscious consumers. Further down were Forever 21 (36), Victoria’s Secret (38) and Aeropostale (46). Only two luxury brands, Chanel (43) and Ralph Lauren (30), made it as Millennial favorites. (http://moosylvania.com/millennials/Moosylvania_Millennial_Study_2015.pdf)

Millennials and the “Experience Economy”: Another Retail Trend

Gen-Y may be flocking to the above retailers for another reason. They are pinching pennies on commodity purchases and clothing to splurge on “experience.” A recent survey conducted by Harris for Eventbrite reported that 78 percent of their Millennial participants said they would rather have experiences than material things (tech is the notable exception). Instead of acquiring high-end possessions, this group said they would choose to splurge on concert and sports tickets, travel, hobbies, dining, fitness, cultural pursuits and various special events. Called “the experience economy” by Eventbrite, this trend is growing across virtually all generations, supported by sharing on social media via mobile.  

Tech-Enabled, Price-Conscious Gen-Y Will Continue to Drive Retail Trends

Will Millennials then move beyond Wal-Mart, Target and JCPenney to Neiman Marcus and Nordstrom? Become fans of the aspirational brands? At this point, that’s hard to predict, but it’s a safe bet that these digital natives with frugal habits and the tech power to find deals and compare prices will continue to set a new pace for bargain-hunting.

For more about Millennial Shopping Trends, go to:










Back-To-School Shopping Season Now Lasts All Summer

Surveys Project Higher Spending and More Online Activity, Bricks & Mortar Stores Are Still the Favorite Destination. Watch for Retail Trends Ahead.

It seems today’s back-to-school shopping season begins minutes after the kids are set free for the summer. What was once a harried weekend of gathering supplies and buying new jeans and sneakers now stretches from June until the post-Labor Day period. Value-driven shoppers, informed and empowered by the Internet, are taking their time selecting the right item at the best price – even if that means stretching the traditional shopping season. As Dallas Lawrence, SVP at the ad firm Rubicon Project, says, “The consumer is actually taking control of when back-to-school shopping starts. They’re not waiting for the two weeks where retailers say ‘Here’s the best deal.’”

B-T-S Surveys Suggest the Outlook is Bright for 2015

With the back-to-school buying period second only to the holiday shopping season in bottom line impact, retailers and retail real estate companies are focused on upcoming sales activity. Leading consumer surveys conducted early this summer say optimism is in order. According to a recent National Retail Federation poll, 86 percent of participating consumers plan to spend more or the same on their back-to-school purchases than last year. In Rubicon Project’s latest study, 1,000 participating parents of children K-12 said they plan to spend more for the upcoming school year, with an average tab of $873 per student. Parents of the college-bound in the same study said they’ll spend upwards of $1,100 per student. The International Council of Shopping Centers’ back-to-school survey also found that wallets might be opening wider, with 67 percent of parents planning to spend more on school-related purchases than last year. This increase in the number of shoppers planning to increase their B-T-S spending represents the largest jump since 2012. Deloitte, however, cautions against too much optimism. Their annual back-to-school survey offers a different take on the season. Their data indicates spending by parents of K-college students will remain flat in 2015, a sobering prospect given that 2014’s spending showed the slowest growth since 2009.

Bricks and Mortars Projected to Dominate, but Online is a Major Player

According to ICSC’s research, 85 percent of back-to-school purchases will be made in bricks and mortar stores. Discounters will be in the top spot, with office supply stores and department stores tied for second place. Dollar Tree stores in busy Levin-managed locations such as Clifton Plaza (NJ), Hamilton Plaza (NJ) and a new store at Warren Plaza (NJ) are geared up for the season. Dollar General locations at Capitol Plaza (PA) and Union City Plaza (NJ) stand to benefit from that chain’s partnership with Operation Homefront’s Back to School Brigade, a campaign to collect school supplies for military families and drive store traffic as well. Staples in Fairground Plaza (NJ) and Office Depot in Rutgers Plaza (NJ), among other Levin locations, stand to benefit from aggressive chain-wide promotions and couponing programs.

Though physical stores are shoppers’ go-to place for back-to-school, online is a potent purchasing influencer. According to Deloitte, nearly half of every dollar spent on apparel during B-T-S 2014 was digitally influenced. This season could be even bigger for digital. Eighty percent of smartphone owners in Deloitte’s survey said they plan to use their digital devices in their back-to-school shopping – up six percent over 2014. Mobile will lag, however, in completing transactions, with only 29 percent of surveyed shoppers saying they will make a purchase via their smartphones. Digital wallets and mobile payment apps are still early-stage technologies, but well worth watching.

What about online purchases? Seventeen percent of Rubicon’s survey respondents say they will make their back-to-school buys online, with seven percent saying they will use a website but opt for in-store delivery. A good opportunity for bricks and mortar venues to score some in-store sales, says ICSC.

Major Slice of B-T-S Shoppers’ Dollars Will Go for Tech vs. Apparel But Social Media May Have Minimal Impact on Purchasing Decisions

Following a growing retail trend, the majority of back-to-school budgets will be devoted to tech products: laptops, tablets, and mobile phones. Rubicon’s study reports that K-12 households expect to spend $400, almost double the amount on apparel. The B-T-S season is fast becoming the time to upgrade or change mobile phone plans and this trend is expected to continue.

And what about social media? Will the power of Facebook, Instagram and Vine impact what’s bought for back-to-school this year? Deloitte’s survey queried parents of K-12 students on this. The answer may come as a surprise, with only 10 percent saying they would factor social into their decisions – down from 18 percent last season. As might be expected though, the picture changed among the back-to-college set. 51 percent of the students (who are definitely deciders) and 22 percent of their parents said social channels will play a big role.