Mid-Year Survey Shows Sales Up, Expansion Underway and a Tech-Driven Evolution in Progress

Outlook for Retail and Retail Real Estate Is Bullish

The results of our annual mid-year Retail Sentiment Survey are in and theres positive activity on virtually every front. The survey queries managers within our 95-property, 13 million-square-foot shopping center portfolio regarding key performance indicators.

Solid Growth in Sales Reported Is Mirrored by U.S. Commerce Department Stats

More than half (52.9 percent) of our respondents reported sales at equal or higher levels than at the same point last year. This percentage is notably higher than both the mid-year 2014 and 2013 polls, in which 42.9 and 43.7 percent of participants, respectively, reported the same or higher year-over-year sales. This increase aligns with U.S. Commerce Department numbers that put May 2015 retail sales 2.7 percent higher than the previous year. Taking a longer view, the National Retail Federation, predicts industry growth reaching 4.1 percent in 2015.

Heres more good news. Retailers are in expansion mode. Nearly one third (31.1 percent) of our survey respondents reported that their companies have or will open new stores this year. This is the highest mid-year percentage in the four years for which comparative Levin survey data is available. And it looks like a retail real estate trend in the making. National Real Estate Investor this month reported that U.S. chain retailers nationwide have stepped up plans for new locations over the next 12 months, citing an RBC Capital Markets study.

Our Survey Show Retail Marketers Growing More Tech-Centric

Matthew K. Harding, our president, calls the survey results great news for both retail and retail real estate. He notes that the feedback provides some interesting insights related to retailers use of technology in marketing, and their ongoing adaptation to consumer shifts driven by e-commerce.

Not surprisingly, a majority (78.4 percent) of our respondents work for companies that are actively using technology in marketing. More than half of these (53.9 percent) said they have upped their technology-centered strategy year over year.

We asked about specific technology being employed in-store to provide incentives or conveniences for shoppers. The most popular tech tools reported included mobile apps for discounts, loyalty points and/or rapid payment (used by 61.2 percent); post-sale online surveys (used by 47.8 percent); and free Wi-Fi (offered by 41.8 percent). The use of mobile by shoppers has been a rising retail trend for some time. A recent McKinsey & Company study confirmed just how pervasive the practice is. McKinseys report indicates that of the 60 percent of Americans with smartphones, 80 percent use them when shopping in a store, to check product reviews and specifications, and to compare pricing.

Queries about tech in marketing were a big part of our survey and the responses indicated that omnichannel marketing is here to stay. More than three quarters (76.4 percent) of respondents say they incorporate social media into their marketing mix. Nearly as many (72.3 percent) use email. Other popular tactics include Internet advertising (41.9 percent), text messaging (27.7 percent), and SEO optimization like Google AdWords (11.5 percent).

Social Media Is the Dominant Force in Retail Marketing Today

Social media has moved rapidly from a retail trend to an almost universal practice. With that in mind, we drilled down into specific platforms being used by our tenants. Heres what we found:

  • 91.9 percent use Facebook.
  • 39.7 percent use Twitter.
  • 33.1 percent use Instagram.
  • 27.9 percent use Google+.
  • 17.7 percent use Pinterest.
  • 10.3 percent use Groupon/Living Social.
  • 9.6 percent use Foursquare.

Facebook, Twitter and Instagram have remained the top three platforms across a full year of surveys. And it appears our tenants are not alone on the social media bandwagon. A CNBC article noted the trumpeting of social media triumphs appears to be a growing trend among retail companies. The author notes that in recent earnings calls, Dollar Trees CEO reported connecting with 2 million customers via Facebook, YouTube, Twitter and Pinterest during the first quarter, while Whole Foods co-CEO announced his company has surpassed 4 million followers on Twitter.

Retailers Are Finding Opportunities in New World Shaped by E-Commerce

The growing popularity of e-commerce has made an undeniable and significant impact on bricks-and-mortar stores, Harding noted. Yet the conversation has shifted from survival to opportunity, and our survey results indicate that retailers with physical stores are rethinking their approaches and capitalizing on opportunities to meet changing consumer needs and desires.

In fact, more than one third (37.3 percent) of our survey respondents reported adapting their business model in response to the growth of e-commerce. Of these participants:

  • 61.3 percent have added in-store services and/or incentives.
  • 46.7 percent have incorporated in-store pickup and returns options for purchases made online.
  • 42.7 percent have altered store inventory (fewer in-stock SKUs, larger quantities of popular items, etc.).
  • 41.3 percent have increased collaboration between online and bricks-and-mortar operations.
  • 17.3 percent have altered their store prototype (i.e. smaller store size or increased focus on showrooming, etc.).

Are these adaptations working? Of the respondents who have made operational adjustments, 52.1 percent have seen a benefit in terms of sales and/or in-store traffic. At the same time, 30.9 percent said they dont know yet.

The fact that more than half of these retailers have seen positive results is encouraging and may tie directly to the reports of increased year-to-date sales and expansion plans, Harding said. It also seems there are some unknowns as retailers continue to blaze this new path. This makes sense, and it will be interesting to see how the numbers shift in future surveys.

Our next Retail Sentiment Surveys will be conducted in early November, gauging pre-holiday optimism, and in January, measuring new year expectations, and of course, spotting retail real estate trends. Look for those results here.

Four Retail Real Estate Trends Aim to Score with Shoppers

Can You Corner Grab While Theme Parkifying and Side Selling? 

There are some new buzzwords in the retail real estate world that you’ll want to add to your business vocabulary. As might be expected, they’ve got an edgy quality that gives a new gloss to trends you might have seen stirring for a while in one form or another. In a recent interview, Dave Weinberger, vice president and director of engagement for the brand agency CBX (www.chainstoreage.com/article/four-2015-retail-trends-you-havent-already-heard-about) introduced four of these: Corner Grabbing, Re-Booting, Side Selling and Theme Parkifying. All are driven by brick and mortar retailers’ ongoing need to lure shoppers away from their computers, while squeezing out more sales per square foot of space. What interests us about them is that, unlike many of the current trends in the spotlight, they are about retail space, rather than technology.

As Banking Automates, Corner Spots are up for Grabs

As consumers flock to online transactions and ATMs, banks need far less space than in the past. As they reduce their square footage, often moving out of large prime locations, other businesses are moving in. Drug stores, which now offer an inventory beyond prescriptions and health-related products, including grocery and household items, are hungry for both increased space and prime location. Whether that space is in a shopping center, strip mall or urban block, look for a CVS, Walgreens or another top brand to be ready to grab a vacant corner in this retail real estate trend. Their aim is to make a trip to the drug/convenience store as easy and shopper-friendly as possible and to compete with both online and the grocery store.

Rebranding, Rebooting and Relocating

With adaptation as the key to brand survival, re-booting is the name of the game. A reboot can mean an entirely new brand vision for a new market (think Eileen Fisher and Timberland) or a change in physical location for better access to the primary customer base. Weinberger cites Juicy Couture’s decision to shut down all its current locations with new ones slated for the brand’s re-launch this year. Independent bookstores, long imperiled by Amazon, are finding new life through relocation. Rizzoli, one of mid-town Manhattan’s last book stores, closed its doors in 2014 to an outcry from readers and preservationists. It is rebooting though, joining other independent booksellers in a more affordable, reader-friendly location downtown. Others in its category have rebooted to Brooklyn looking for lower rents and avid readers, who want to browse among real books instead of on a website.

Side Selling: New Retail Channels Rising

Retail is everywhere today: in traditional stores, in pop-ups, on laptops and mobile devices, in parks and public spaces. Weinberger predicts that this retail real estate trend will grow stronger in the coming year as brands and retailers see the value of partnering with entities that offer good demographics and high traffic, like college campuses. Meanwhile, fitness centers and spas will continue to move into health products, equipment and clothing. Have you noticed that your doctor or dentist is now offering health-related items? More of that may be on the horizon as businesses of every kind look to go beyond their basic services and get more out of their investment in their professional or retail space.

Theme Parkifying: Looks Like Everybody Wants to Be Eataly

Today’s Theme Parkifying is not the type of mall-based phenomenon launched by Mall of America in 1992 with skating rinks, ferris wheels and other diversions in an oversized mall environment. It is a single store that brings together under one roof, not just merchandise but entertainment, information and engagement on a big scale – all integral to one category of interest. The New York City branch of Eataly is the best expression of the trending retail-based theme park, with its 50,000 square feet of space encompassing seven sit-down restaurants, cooking schools, bookstores, curated products and staff of food mavens. It attracts 8,000 to 10,000 “guests” each weekday. No wonder it is known as a “funhouse for foodies.”

Eataly may have set the theme park bar to a dizzying height, but that has not stopped many upscale grocery stores from finding inspiration in its multifaceted appeal to food lovers. Grocers have been experimenting with in-store restaurants for a decade, beginning with the food court concept. Lately though, the higher-end brands have become what is being dubbed “grocerants,” moving up to table service in selected stores, along with wine and coffee bars, craft beers and cooking classes. Shaw’s, Wegmans, Whole Foods, Hy-Vee, Publix and Schnucks are among these “grocerants.”

This looks like a retail real estate trend with legs. One recent report in USA Today calls in-store restaurants “One of the fastest growing segments of the grocery industry.” Will we see retailers in other categories moving into vacant big box stores to create theme parks around specific sectors: children, wellness, pets, outdoor recreation? Stay tuned.

A New Generation of Tenants Revives Retail Leasing

Todays Movers and Shakers Succeed with New Approaches

With demand for retail leasing from national, local and franchise companies heating up in the Northeast, it’s a good time to take a look at the movers and shakers defining the next generation of tenancy. Though these companies span a range of categories, they all share a bold new vision that combines technology with creative approaches for reaching consumers. We’ll be covering their tech side in a later blog. For now, let’s focus on who’s coming on strong in mid-2015 and what they’re doing.

Meet the Up-and-Comers in Retail Leasing 2015: Fast-Casual Eateries, Affordable Gyms, Small Grocers and Off-Price Retailers

We’re seeing a surge in leasing activity from a number of retailers looking to establish or expand a footprint in our market area. Here’s what’s been coming our way this year:

  • Only a limited number of big supermarket chains  are adding locations at present (with some exceptions, such as ShopRite, Stop & Shop and Whole Foods in New Jersey). However, we’re seeing leasing activity from an assortment of smaller stores like Save-A-Lot, Trader Joe’s and Fresh Market.
  • No-frills fitness concepts like Blink, Retro Fitness and others continue to expand rapidly in our marketplace.
  • Off-price retailers enjoy a wide demographic appeal, making them extremely popular and driving expansion into new locations. Chains such as Dollar Tree, Five Below, T.J. Maxx and HomeGoods continue to gain traction.
  • Fast-casual eateries like Chipotle Mexican Grill and Noodles & Company are on the move, too. And Starbucks is enjoying a growth spurt, thanks to their free-standing stores with drive-thrus.

A Few Trouble Spots Continue to Cloud the Retail Leasing Picture

While the retail picture looks bright, a few sectors continue to feel pressure from consolidations and bankruptcies. Chapter 11 announcements by Radio Shack, Wet Seal and Cache were among the most newsworthy so far this year.

Some attribute Radio Shack’s decline to the impact of e-commerce on the entire electronics sector. Yet, some retailers in other “easily poachable” areas, like office supplies, have met the online challenge by right-sizing their bricks-and-mortar presence with smaller footprints and fewer in-store SKUs. A good example is Staples, which is thriving, having successfully trimmed its stores to the 15,000-square-foot range. Adaptation like this is essential, as we saw in one of our recent Retail Sentiment Surveys.

The Outlook for Retail Leasing Companies Is Good

As demand strengthens, vacancies are declining, boosting rents at quality properties. Spaces left by retailers that didn’t survive the downturn are backfilling quickly with tenants in the active categories mentioned above. A diverse range of service businesses are also signing leases. That means much of the prime space has been absorbed – and what remains commands higher prices. In spite of rising rents, well-located shopping centers with strong tenant mixes and curb appeal continue to draw retailers.

At the same time, demand is building for retail real estate in secondary positions (either because of location or other fundamentals). Landlords are becoming more creative in their approach to leasing these shopping centers, considering a variety of potential uses for their space.

Entering the heart of 2015, we are optimistic about what we’re seeing. While we will likely hear of additional bankruptcies and consolidations within categories – facts of life for our industry – those retailers that are adapting will continue to do so with success. We look forward to seeing the creative ways they’ll leverage opportunities within today’s dynamic retail leasing landscape.

What Always Stays in Vegas is Reinvention

A Convention Capital, Revived and Renewed, Hosts ICSC RECon for the 30th Consecutive Year 

Retail real estate professionals from around the world—a projected 30,000-plus—are set to stream through McCarran Airport next week, heading for the annual ICSC RECon at the Las Vegas Convention Center. They’ll be among the 36 million people expected to visit this desert oasis in 2015. Bound for business or pleasure—or probably a little of both—few visitors realize the city awaiting them is in a constant process of reinventing itself. And why not? After all, Las Vegas has reinvented the Great Sphinx (making it even bigger than the original), the Pyramid of Luxor, the sidewalks of New York  and the Eiffel Tower right here in the desert, along with erupting volcanoes, pirate battles, medieval jousts and a bay full of sharks.

From Sin City to a Desert Disney WorldThats Vegas

Known originally as a mob-ruled casino-centered getaway, Las Vegas evolved over time into a glamorous playground for celebrities and high rollers alike. Then came the conventions with three major meeting venues, making the city one of the world’s top spots for major business events like RECon (whose first Las Vegas convention was held in 1985). In the 90’s, family tourism became the draw with the city promoting its affordable hotels, great weather and wholesome new attractions like the world’s fastest zip line, spectacular rides and a world-class aquarium. Now, Vegas has donned a new hat: unsurpassed entertainment delivered 24/7 for just about everyone. And there’s plenty of accommodations for all. The Las Vegas Strip alone (which is technically in the town of Paradise) offers 62,000 rooms in 15 of the world’s 25 largest hotels.

Beyond The Strip, a Slice of Silicon Valley Offers Economic Diversity

Yes, the Strip does glitter. Its 15,000 miles of neon tubing make it the brightest spot on planet Earth, as seen from space. But not far from its bright lights, Las Vegas is reinventing itself again in the Fremont East District with The Downtown Project. Thanks to $350 million in seed money from Tony Hsieh of Zappos and the support of the city government, TDP Ventures, an umbrella organization, is adding a slice of Silicon Valley to Sin City. Their goal of diversifying Las Vegas’ tourism-dependent economy with a tech element is off to a strong start. In addition to the Zappos headquarters, the Fremont East District is alive with new development that houses tech startups, healthcare centers, co-working spaces for entrepreneurs, and education initiatives, plus retail real estate in the form of spas, restaurants and shops. Its core is Container Park, a unique open-air mixed-use venue and potential retail real estate trend setter, built partially from 43 repurposed shipping containers. A “parklet,” focused on desert flora and fauna, is being developed in Container Park in collaboration with The Nature Conservancy—not an organization you’d expect to see in Vegas.

Optimism Soars as Vegas Real Estate Rebounds from 2008 Implosion

Las Vegas’ hyper-aggressive development in the early 00’s meant that the crash of 2008 was especially devastating. In fact, the city was among the hardest hit in the nation, with over 70 percent of homes left “underwater.” With tourism tanking in the economic downturn, unemployment eventually topped 14 percent.

Today the ever-resilient city is back and better than ever. Tourist visits broke a record last year. Single home sales are climbing, and unemployment is down to 6.8 percent. New residents continue to pour into the area, attracted by both the desert climate and a cost of living well below the national average. Named to Bloomberg Business’s list of America’s best places to live, Las Vegas, the Great Reinventor, seems once again to have beaten the odds and come out a winner.

Tech-Driven Marketing Continues as Top Retail Trend

Platforms Roll Out New Features to Connect Shoppers and Merchants

The second quarter of 2015 has just begun and already we are beginning to see those New Year’s marketing predictions evolving into actual retail and retail real estate trends. We could start with all that’s happening with mobile but that platform has moved out of trend status into business as usual. If you’ve got any doubts, just consider the growth in mobile-only Facebook users last year: a whopping 34 percent. Trend watchers observe that mobile is no longer a secondary channel but a primary conduit to the marketplace. And on mobile, social media plays a major role. Let’s take a look at five of the new moves happening in that fast-changing medium. How many of these have you spotted?

Paid Amplification: The Growing Cost of Social Media Marketing

Facebook and Twitter, the big players in social media marketing, are feverishly monetizing their platforms with promoted/sponsored posts and tweets. Given the new algorithms in place on Facebook, marketers can no longer rely on organic engagement to get their messages out. “Free” posts are simply lost in the torrent of updates on most feeds – particularly those of active social media users. Facebook and Twitter are costing more, but media dollars invested in sponsored posts are paying off in sharper demographic targeting and deeper user engagement.

Instagram: Where Images Rule

There seems to be no stopping this image-based network which now boasts 200 million monthly users. No longer a place to just share pictures, Instagram has captured the attention of marketers promoting brands with strong visual appeal. A recent Social Media Marketing Industry Report (http://www.socialmediaexaminer.com/SocialMediaMarketingIndustryReport2014.pdf) says that 42 percent of marketers surveyed plan to increase their Instagram use this year (up 6 percent). With video and targeting options now available, Instagram looks more appealing than ever. Some of the big names embracing this retail trend include Victoria’s Secret, Urban Outfitters, American Eagle, Tiffany & Co, Anthropologie, Nordstrom, Gap and Target.

Blogs and Vlogs: Engaging the Audience, Building the Brand

Retailers’ blogs are proliferating and growing ever more sophisticated in terms of design and content. Among the leaders of the pack are “The Blender” (William Sonoma), “The Apron” (Home Depot), “Aerie” (American Eagle) and “The Thread” (Nordstrom). These e-zines showcase merchandise but also offer DIY advice and opportunities for users to add their own content through themed events and contests. Video is making inroads here, but to see an outlier in retail “vlogging” check out Wine Library TV on YouTube. Gary Vaynerchuk, founder of the online wine retailer, does a weekly review in typical YouTube style – authentic, offbeat and far from slick – but very popular. Trend watchers say more retailers large and small will be “vlogging” in the future as video continues to dominate contemporary communications.

Social Shopping: Buy Buttons Promise Increased Sales

Tested successfully by Twitter last year and soon put into trial by Facebook, buy buttons on posts and tweets will enable users to order items seamlessly (see it, buy it). It’s the impulse buy taken to new heights. The sharing aspect of social media promises to amplify the message and lend the all-important endorsement of a friend or follower. Other platforms are following the leaders in this retail trend with Tumblr recently announcing a test. Pinterest, seemingly a natural for buy buttons, also plans an exploration. This is one retail trend that’s poised for takeoff.

Interest-Based Social Sites: Sharing Things That Matter

Emerging social platforms like Foodie and Fitocracy are building their online communities around shared interests. Like the special interest magazine of the print world, these up and comers stress focus. While they will initially provide a place for people to share their enthusiasms, experiences and inside tips, it probably won’t be long before promotional opportunities open up in sponsored posts.

With three quarters left in 2015, expect to see these retail trends take the role of social media marketing to a new level.

Great Expectations: The “Omnis” Want it All and Right Now

Omnichannels Next Big Challenge: A Retail Trend is Evolving

Omnichannel is now the name of the game. Successful players have created (or in the process of creating) the consistent shopping experience that links online with brick and mortar for a seamless presentation of message and offers. But there’s never any resting on laurels. Here comes the next wave of challenges in marketing to the “Omnis,” those multichannel shoppers who are the retailer’s most valuable customer. This is a retail trend that just won’t stop.

Who Are These Omnis and What Do They Want?

Today, nearly everyone is a cross-channel shopper, buying both online and in-store, but not necessarily weaving the two together into a single experience. That’s what the Omni, a different breed, does. Quite simply, the omnichannel shopper is the shopper you want most. Each one spends on average 50 percent more than their single channel counterparts, with a lifetime value that is 30 percent greater. Digitally powered, they have changed the nature of shopping from a simple transaction to a journey that is dynamic and continuous, a journey that has them bouncing between online and in-store in search of the best merchandise at the best price. The Shopify blog calls the omnichannel shoppers by the acronym “SOLOMOs,” which stands for SOcial, LOcal, and MObile and means that this valuable group is influenced by SOcial media, focused on LOcal brick-and-mortar stores and inseparable from their MObile phones. Eight in ten of them, according to “Beyond the Checkout Cart” a report from MIT, do research with their phones while in-store shopping.

These tech-empowered consumers exhibit elevated expectations about shopping. They are accustomed to the seamless experience finally in place between online and in-store, but now they are looking at availability and delivery as must-haves. When they visit a brick-and-mortar’s site, they want to see the full inventory available to them locally. They want to know where to find their item. If they buy online, they want free in-store pick-up or expedited free delivery. And, if a retailer can provide personalized service, so much the better. So, the next wave of omnichannel retail trends is rolling in right now.

Be ready to catch it.

Meeting the Omnis’ Unique Needs: High Tech and High Touch

Retailers can meet the Omnis’ needs on two fronts. The first step is serious investment in the technology needed to create localized fulfillment operations, inventory management, and customer profiling. The second is to develop a team of tablet-enabled sales associates who can provide information and support the Omnis’ shopping goals. Accessible data can help them expedite orders, locate merchandise, reward loyalty with special offers on the spot, and upsell or make suggestions based on knowledge of the shopper’s profile and history. Retailers and retail real estate management companies should guarantee the availability of free and reliable wi-fi storewide to accommodate the “personal shopping assistants” that every Omni carries in the form of a mobile device. If they can’t connect to wi-fi, the Omnis won’t stay for long or be back soon.

Social Shopping Apps, Another Omni-Inspired Retail Trend

Major retail players like Ikea, Macy’s, Home Depot, Walgreens and Target, among others, have introduced branded shopping apps that provide store maps, inventory overview, QR codes, coupons and special offers (many of the latter delivered in real time during the shopping experience). Expect to see more of these.

It’s a safe bet that it won’t be long before the ranks of today’s Omnis are joined by other tech-enabled shoppers – especially as the younger digital natives begin buying in earnest. That may mean of course that the core Omnis will grow more insistent on yet a new set of shopping must-haves. Stay tuned.

In Hyper-Competitive Retail Environment Branding is Critical

Branding is a Retail Trend Thats Here to StayAt Least for Now

The current year, though only a quarter of the way through, looks a lot like the preceding one. Even though the economy continues to chug forward, most shoppers remain hyper-vigilant about value. For most retailers that means that promotion will be the marketing strategy of choice. The root of these doldrums may be a lack of consumer excitement. The unisex, generic Normcore may be becoming the “style” norm and no new must-have fashion trends have broken through to challenge it for the consumer’s interest and dollars. New discounters on the scene will likely provide more competitive pressure. Primark, the Irish chain known for ultra discounts on youth-oriented fashion is opening stores in Pennsylvania and Massachusetts, and Aldi, the German private label grocer, is adding fashion items to the offerings in its 400 U.S. stores. High-end retailers are joining the push toward the value-oriented shopper. Nordstrom will open 25 new Rack locations this year and Neiman Marcus will expand their successful Last Call mark-down stores. So, what’s a retailer to do besides mounting sales and special offers?

When Competition is Relentless, Branding Must Be Equally Relentless

Walter Loeb, retailing expert and former Director at National Retail Federation, calls “unrelenting competition,” the biggest retail story of 2015. In a post on his forbes.com blog, (http://www.forbes.com/sites/walterloeb/2014/12/16/unrelenting-competition-the-retail-story-of-2015/2/) he urges retailers to harness the power of the brand – every aspect of it – to succeed in today’s environment. Effective branding marries the retailers’ established identity with that of their signature lines of merchandise. Loeb cites Macy’s as a prime example of this kind of seamless branding. Their brand conveys an overall image of being fashion-savvy and value-driven through omnichannel messaging and also through their merchandise: designer exclusives and private labels. Preppy Tommy Hilfiger and selections from the Ralph Lauren collection combine with house brands like Alfani and Charter Club to establish Macy’s in the shopper’s mind as at the top go-to place for style and value. Retailers who create this kind of consumer relationship stand the best chance of winning even against deep discounters.

Taking Branding to a New Level with Environment, Interaction and Social Media

Technology continues to help retail brands connect more deeply with shoppers – and to threaten those who ignore its power and popularity. Compelling in-store environments have given bricks-and-mortars an edge against online. But, be warned, today’s shoppers are increasingly harder to dazzle and trend-watchers predict that the next wave of in-store tech will not just entertain but also engage and inform. One retail trend that’s worth watching is the use of mobile devices in shopping. Consumers now check an average of five online sources prior to making an in-store purchase. Savvy retailers of the near future will need to be able to meet and even enhance this need-to-know with in-store displays and well-informed staff ready to interact effectively.

Let’s not forget the ever-growing branding power of social media. Starbucks, despite their recent hashtag stumble, has used the major social platforms to differentiate their beverages and their in-store experience in a stellar manner. With 800,000 Twitter followers and 5 million Facebook fans, they establish themselves virtually every minute of the day as the go-to spot for a coffee break.

Branding for the Next Generation of Shoppers

Change is one of the few things we can count on and the coming generation of shoppers is poised to alter the concept of branding. At present, this first wave of true digital natives have little brand loyalty (except perhaps to tech products) and are marketing-resistant. Retailers can’t stick with the branding status quo even if they are winning today’s game of unrelenting competition. There’s about to be a new game in town that could launch the biggest retail trend in decades.




Here Come the Cybrids: Omnichannel Shoppers on Steroids

Demographic Retail Real Estate Trend Offers New Chances and Challenges

Meet the Cybrids, the youngest subset of the mammoth Millennial generation. Walter Loeb, former head of the NRF, retail consultant and blogger identified this distinct demographic in his blog (http://www.forbes.com/sites/walterloeb/2014/12/08/beware-all-retailers-todays-youthful-customer-are-cybrids/) at the end of last year. The name seems to be sticking to what looks like the next wave of trend makers who will shape the future of retailing.

Who are the Cybrids?

First and foremost, these 15-20-year-olds are the first true digital natives. Their gaze has been fixed on some type of electronic screen almost from birth. Technology is seamlessly integrated into every aspect of their lives and they are connected 24/7. This tech relationship is what separates them from preceding generations – even from older Millennials. As might be expected, they are early adopters of the newest devices and apps, and tech products are always at the top of their shopping lists. Cybrids, in fact, prioritize tech over any other retail category, including apparel. And perhaps surprisingly, this is the preference of both males and females in the Cybrid demographic.

The Cybrid Shopper: Opportunity and Challenge

The rise of the Cybrid shopper brings opportunities and challenges for retailers and retail real estate. First, the opportunity: this is a group who’s been called consummate omnichannel consumers. They do shop – a lot – at all hours – and spend freely on categories that interest them (keep an eye on sales of the new Apple watch). Next, the challenges: they make the majority of their purchases online, after price checking and consulting with friends. Bricks-and-mortar stores are for social outings and “showrooming” and are typically visited with phone or tablet in hand for researching all available data on any item that appeals. They display minimal brand loyalty and tend to ignore or rebel against fashion trends. They resist influences such as traditional advertising, relying instead on the opinions of friends, social networks, and YouTube personalities. Price promotion is one of the few conventional tactics that moves them.

Winning Over the Cybrid Shopper: Retail’s Response

The power of these young Millennials will grow as they mature and move into jobs and build careers. Their consuming patterns may modify, but one thing about them is unlikely to change: the integration of technology into their lives. Retailers are already recognizing and responding to this new breed of buyer. Immediate responses include: creating and maintaining robust websites, strategic use of social media – including newer platforms like Vine and Snapchat, incorporating mobile wallets into payment systems, and managing “big data.”

Like all the Millennial generation, Cybrids seek immediate gratification. This is one area in which bricks-and-mortar establishments have an edge over online (at least for now), affording shoppers the opportunity to bring home their purchases immediately. For less portable items, innovative retailers are experimenting with same-day delivery methods. Store hours are another area in which we may see changes to accommodate Cybrid patterns.

Now that they’ve been “discovered,” the focus on Cybrids will doubtlessly increase. Expect more studies and insights on a young generation that’s shopping by their own rules.



Curation: The Future of Retail (And The Past)

A Trend Goes from Bricks to Clicks Then Back to Bricks Again

A few years ago, The Motley Fool, the online stock advisor, proclaimed that “the future of retail is curation.” True, but it’s also its past. The pioneering department stores launched in the late 19th century were all about curation – selecting market-oriented merchandise and organizing mammoth inventories into designated areas (departments) where shoppers could easily browse items that matched their budgets and tastes. Departments were the retail real estate trend of the day, enhancing the shopping experience by organizing the goods formerly found in multiple stores under one roof and presenting them in a shopper-friendly manner. On the opening day of its Herald Square store, Macy’s was not unlike today’s Amazon, featuring a slogan that was all about size – “A Place Where Almost Anything Can Be Bought.”

Online Merchants: New Masters of the Curation Universe

With the largest selection of goods in the world today, Amazon and its merchant partners continue to refine curation online with algorithms that deliver systematized suggestions based on individual consumption patterns. These formulas guide buyers through a staggering selection of items. The goal is to “drive consumer choices and offer new ways to spend money,” says Netflix, another master of online curation. Netflix, along with Zappos (an Amazon company), Wayfair, and furniture.com are among the leaders of the online pack, mining masses of data and matching it with tailored choices to smooth the online shopping experience.

It’s not all algorithms though. Beyond mathematical formulas, online is also the home of celebrity tastemakers and influencers who lend their star quality to collections they appear to have curated on sites like ShoeDazzle and Overstock.com – all chosen to fit their fans’ shopping profiles. And then there’s social commerce, which brings social media into the shopping mix. Glance, a product of Zappos Labs, is a curated fashion platform that lets shoppers “heart” their favorites and share the word about their buys with their Pinterest, Facebook and Twitter communities. Niche online marketers, like Nasty Gal, which evolved from an eBay store, are natural curators with merchandise so sharply targeted that tech may not even be needed to serve up a selection.

Keeping up with the Curators

So what’s a bricks-and-mortar retailer to do when facing celebrity-curated collections and ever-improving product recommendation technologies? Just as the bricks-and-mortars have achieved success online, they’re also rising to the challenge of 21st-century curation. They’re turning sales staff into in-person curators. Well-trained and well-equipped with tablets that connect to a digitized inventory and supply chain, associates on the selling floor are turning browsers into buyers. Employees at Leica, a camera retailer in Manhattan, use a mobile-inventory-centric retail system to present shoppers with products that match their needs. Leica’s system also allows sales staff to do check outs from their iPads (a la the Apple Stores) – for a bricks-and-mortar version of one-click purchasing. That’s a retail real estate trend worth watching.

Struggling Sears is approaching curation in a more traditional but still creative way.

Three pilot stores are hosting “Connected Solutions” – an online and in-store collection that demonstrates how connected electronic smart goods can make for better living. Sear’s in-store sales centers feature a full range of branded devices in the fitness, home, automotive, and mobile categories. The entertaining, interactive environment and tightly edited collection of products helps tech-shy consumers get comfortable with the latest gadgets.

New Tech Innovations for In-Store may be the Next Retail Real Estate Trend

Sophisticated data-capture is the online retailer’s key to providing tailored product recommendations. Tech innovations are now ready to deliver similar insights for the bricks-and-mortar world. Nomi, the largest player in physical analytics, is extending web analytics into the real world with a platform that gathers insights into shopper behavior via mobile. Mobile identification and facial recognition software, and heat mapping technologies are providing information that will enable merchants to offer an individualized experience that’s not so far from the one shoppers have come to expect online. That’s the kind of experience Rowland H. Macy would have loved.






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.