Food for Thought: Change Brings Opportunity for Grocery-Anchored Properties Growth by Established Brands, New Entrants Driving Activity in Northeast Market

Investor affinity for grocery-anchored shopping centers has endured through market cycles and the continually evolving landscape of retail, itself. Simply put, properties with supermarkets do better than those without, drawing strong and steady traffic that boosts leasing appeal and, subsequently, return on investment.

The Northeast market is experiencing several noteworthy shifts within this sector – including growth and investment by established brands, new entrants, and increased grocery offerings in non-traditional outlets.

For example, long-time regional staple ShopRite continues to build its market share and improve existing stores. At the LMC-leased and managed Wall Towne Center in Manasquan, N.J., a recently expanded, 71,000-square-foot ShopRite features larger produce and natural foods departments, and a cooking classroom. A similar ShopRite project is wrapping up at the LMC-managed Mansfield Plaza in Hackettstown, N.J.

ShopRite, Stop & Shop and Whole Foods for many years represented just a few expanding brands in our market. That, too, has changed. ACME re-entered the arena aggressively, acquiring approximately 70 stores tied to the A&P bankruptcy. Today, German grocer Lidl is among the region’s newest entrants, with stores planned in the 35,000-square-foot range.

Aldi is accelerating its expansion here as well. The company just opened a 23,400-square-foot store at Flemington Marketplace in Flemington, N.J. Sav-A-Lot also is growing, targeting a similar square footage. On the smaller side, Trader Joe’s and other specialty and ethnic brands continue to seek locations. In fact, LMC’s North Village Shopping Center in North Brunswick, N.J., is home to one of the newest Trader Joe’s. The 13,000-square-foot store opened in October.

Grocery has moved from brand consolidation to growth. This is driving competition at a time when consumers have abundant options for purchasing groceries, from online giant Amazon, to Walmart and Target stores with full-scale grocery, to easy grab-and-go offerings at pharmacies, dollar and convenience stores. Amazon’s acquisition of Whole Foods – arguably the most high-profile example of online retailers getting into the bricks-and-mortar game – signals continued shifts within the sector, and an endorsement of the key role physical stores play in overall retail strategy. Convenience is key.

So while grocery is not a new topic for our industry, it is again rising as one of the most interesting. Grocers are working to distinguish themselves with enhancements like online ordering, in-store demonstrations, more proprietary and prepared foods, and café-style seating. Overall, they are working to provide better experiences for their customers.

Landlords, in turn, must exercise more flexibility. Shop-from-home ordering requires dedicated parking and in-store space. New size requirements may necessitate space reconfigurations. And, as always, curb appeal is paramount. To this end, our clients are investing more capital in property updates, and we are seeing increased demand for experienced third-party commercial real estate services providers, like LMC, that offer in-house construction along with traditional property management and leasing capabilities.

The takeaway? Buying food is changing, yet that change is bringing opportunity. Ultimately, bricks-and-mortar grocery remains on solid footing, and owners of grocery-anchored shopping centers – especially those focused on providing meticulous maintenance and functionality – are positioned to benefit.

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.
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Shopping Centers: Not What They Used to Be (But That’s Not a Bad Thing)

Tale of Survival and Adaptation Unfolding for Retail Tenants and Properties

Your neighborhood shopping center isn’t what it used to be. While some say the Great Recession and the e-commerce phenomenon impacted the bricks-and-mortar landscape in a negative way, in reality, we are seeing an interesting – and encouraging – tale of endurance and progress, illustrated by the ongoing transformation of the tenant mixes of retail real estate companies.

The changes are not singular – or linear. These retail real estate trends involve new types of retail tenants and the evolution of those in our industry adapting to new settings shaped by socio-economic shifts and public policy. The bottom line: fresh opportunities are emerging in an industry where change remains one of the only sure things.

Non-Traditional is the New Normal
Not long ago, the presence of a gym at a shopping center was unusual. However, when the recession hit and many stores went dark, retail real estate companies found fitness tenants eager to step into the vacancies. At first, co-tenants were concerned about their new neighbors monopolizing parking or watering down the property’s range of products for sale. But soon, they recognized that the gym brought increased traffic their way.

Today, fitness tenants are shopping center staples, positioned as first-tier targets for retail leasing professionals. And they come in a range of price points and sizes, from Crunch Fitness and 24-hour Fitness to mid-size Retro Fitness to boutiques like Orangetheory Fitness.

The rise of the gym at retail properties was a precursor to a larger retail real estate trend. Today, many shopping centers are transitioning from places where consumers buy goods and services to places where they enjoy recreational opportunities and engage in their community.

To this end, restaurants – especially fast-casual concepts like Panera Bread and Chipotle – are comprising a larger percentage of tenant mix than in the past. This is by design, as landlords work to reintroduce shopping as a recreational pastime. Entertainment tenants are leasing spaces of all sizes, from big-box anchors like Dave & Busters to small paint-and-sip boutiques. Their success speaks to the viability of “retailtainment.”

That Which Does Not Bend May Break
At the same time, traditional bricks-and-mortar retailers – such as grocery and apparel, to name just two – remain alive and well. However they, too, look a bit different.

Following the recent A&P bankruptcy and liquidation, a growing diversification in grocery tenants has taken place in the Northeast. After several years with only a handful of expanding operators, we are seeing significant growth among chains including ShopRite, Acme, Trader Joe’s, and other specialty and ethnic grocers. Additionally, many non-grocery retailers like dollar stores and pharmacies are expanding their food inventories (although lease clauses may limit their amount of grocery-dedicated space).

In the apparel sector, a number of mid-price retailers, such as Mandee and Fashion Bug, have gone out of business over the years. However, bigger national department store players, like Nordstrom and Saks, are generating healthy sales from off-price concepts like Rack and Backstage. Discount brands such as Kohl’s, T.J.Maxx, SteinMart and Ross also remain favorites among today’s cost-conscious consumers.

Yet there’s no denying that e-commerce has made a significant impact on traditional bricks-and-mortar stores. The conversation has shifted, however, from “survival” to “opportunity,” and physical-store retailers are rethinking their approaches. They are capitalizing on opportunities to meet changing consumer needs and desires by giving customers a good reason to visit their stores.

The trends go beyond the grocery and apparel categories. Retailers across a wide range of specialties are finding new ways to engage shoppers. In Levin Management Corporation’s most recent tenant survey, nearly 40 percent of participants indicated they have adapted their business model in response to e-commerce growth. Among those respondents, many are adding in-store services and incentives, incorporating in-store pickup and return options for purchases made online, and increasing coordination with their online operations. Others are altering store inventory, introducing experience draws and/or changing their store prototypes.

Now Batting: The Healthcare Revolution
In addition to the shopping habits of Millennials and Baby Boomers, one significant driver in shifting tenant mixes ties directly to public policy. Changing healthcare laws are incentivizing people to choose walk-in clinics over trips to the ER. At the same time, hospital systems are decreasing operating costs and improving customer service by establishing outpatient services in non-medical satellite locations. The resulting boost in space demand has come at a time when retail supply has been plentiful, giving rise to a new breed of non-traditional tenants.

Urgent-care, imaging centers, doctor’s offices and dentistry chains in retail settings have something in common with their non-traditional predecessor, the fitness tenant. A shopping center-based trip to the doctor, like a workout at a gym, evolves into a visit to the grocery store or a lunch at a nearby restaurant. In this regard, healthcare tenants are queued up to become the next “normal” retail space users.

The bottom line is that shopping center tenant mixes and tenants themselves, have always evolved to accommodate social trends. The retail industry will continue to re-invent itself to survive – and thrive. And so will retail real estate.

Levin Retail Sentiment Survey Reflects Positive Outlook on 2016

Lower Gas Prices, Job Growth, and the Housing Market Will Bolster Sales this Year

Store managers in our 95-property, 13 million-square-foot portfolio told us they feel good about the year ahead during our annual January Retail Sentiment Survey. This is particularly good news considering that the poll was conducted at the outset of the current stock market volatility.

In fact, an impressive 68.1 percent of the survey respondents said they are optimistic about 2016. “We really are at a transitional time for retail, with factors like positive job growth, low gas pricing and the housing market uptick working in the industry’s favor,” noted Levin President Matthew K. Harding.

Mixed with the good news was some uncertainty about the specifics of 2016’s performance, with 20.5 percent of participants undecided about what exactly to expect. “The unseasonably warm fall and early winter, and what has become a longer –and therefore more diluted – holiday shopping season impacted sales for some retailers,” Harding said. “As such, it makes sense that our tenants are expressing some remaining uncertainty.”

Our survey mirrors leading industry sources, who are also predicting a respectable 2016 performance. Kiplinger anticipates retail will grow approximately 4 percent. Trading Economics expects 3.6 percent growth.

2015 Sales Showed Modest Upward Momentum Nationally

The U.S. Department of Commerce announced in January that 2015 retail sales were up only 2.1 from 2014 (for context, 2014 sales were up 3.9 percent over 2013). And the National Retail Federation reported moderate 2015 holiday season sales growth of 3.0 percent, down from its forecasted growth of 3.7 percent. Our survey, as well, showed modest momentum in both year-over-year and holiday sales.

Nearly 53.0 percent of survey respondents reported 2015 sales at the same level or higher than 2014. This figure is up from 51.7 percent and 49.4 percent reporting same/higher sales in our January 2015 and 2014 polls, respectively.

The majority of our respondents also reported a generally positive 2015 holiday shopping season, with 58.0 percent reporting sales at the same level or higher than 2014. And 57.0 percent reported that shopper traffic at the same or higher level than in the 2014 holiday season. While these figures are slightly lower than last year’s poll (63.6 percent reported same/higher sales; 60.0 percent reported same/higher traffic), they still outpace the prior year (50.6 percent reported same/higher sales; 48.2 reported same/higher traffic).

A Retail Real Estate Trend: Online and Bricks-and-Mortar Converging

Our survey and other industry reports, like RetailNext’s Retail Performance Pulse, reflected the strength of bricks-and-mortar retail during the holidays. In fact, the International Council of Shopping Centers’ Holiday Consumer Purchasing Trends Study revealed that 91 percent of consumers shopped in physical stores during the 2015 season. ICSC also reported that 32 percent of shoppers made purchases online and picked them up in physical stores; 76 percent bought additional items in the same or an adjacent store.

“We are witnessing a growing synergy between in-store and online purchasing, and its benefits for bricks-and-mortar,” Harding pointed out. “Increasing demand for this type of technology-driven, omni-channel retailing will play a big role in 2016. Bricks-and-mortar and online are converging. And it appears our tenants are gearing up accordingly.”

Looking Forward: More Than a Retail Trend, Tech is Driving Results

More than half (50.9 percent) of our survey respondents plan to add or enhance their tech-based marketing efforts in 2016 with mobile apps, social media, email and text messaging.

Approximately half indicated their company has changed its business model in response to the growth of e-commerce. The most popular adaptations include enhanced in-store services and incentives, added in-store pickup and returns option for online purchases, and generally increased collaboration between online and bricks-and-mortar. Among the retailers that have revised their business models, 40.6 percent reported a positive impact on sales.

Crystal Ball Time: What will 2016 Hold for Retail? New Stores and Right-Sizing

What’s ahead? “It remains to be seen whether the recent stock market shake-up will have a long-term impact,” Harding concluded. “We all hope to see a fairly rapid correction. Should that take place, the retail industry is likely to maintain growth momentum well into 2016.”

In some cases, this means new stores – good news for retail real estate companies like ours. More than one quarter (28.4 percent) of the store managers in our survey indicated their company planned additional locations this year. “We anticipate that smaller footprints will be the norm as retailers continue to right-size and make shifts to incorporate e-commerce into their operations,” Harding noted.

We also asked retailers if they observed shifts in the hiring climate as the unemployment rate continues falling. Their feedback indicates about 44.0 percent are noticing changes, most prominently in the areas of applications by fewer qualified job candidates and increased demand for higher starting salaries.

“U.S. unemployment inched down to 5.0 percent last month, and if this trend continues it will likely have a growing impact on retail hiring,” Harding pointed out. “This is an area we will be focusing on more closely in upcoming surveys.”

Levin’s next Retail Sentiment Survey will be conducted in June, reporting mid-year progress and exploring technology issues.

Our Annual Pre-Holiday Survey Reflects Retailer Optimism

Strong Sales, Positive Expectations, and High-Tech Marketing Plans Point to a Happy Ending for 2015

Retailers in our 95-property, 13 million-square-foot leasing and management portfolio are heading into the holiday shopping season confident and optimistic. They responded to our annual Pre-Holiday Retail Sentiment Survey with strongly positive views of the critical weeks ahead. This looks like a retail trend that’s all about good news.

As a leader in retail real estate, we couldn’t be happier with the picture our survey paints. According to 66.5 percent of respondents, 2015 sales are equal to or better than they were at this time last year. This is the highest percentage in the six-year history of the survey. The year-to-date traffic report is good too, with 64.2 percent indicating their stores saw the same or a higher volume year over year. And a whopping 80.5 percent of survey participants said they are expecting their 2015 holiday season performance to equal or top 2014.

“These are very positive numbers,” noted Matthew K. Harding, Levin’s president. “Our tenants are clearly doing well in 2015, thanks to a number of factors including the economic rebound, low gas prices and a growing equilibrium as bricks-and-mortar stores adapt for success in a technology-driven world.”

Our Pre-Holiday Survey Findings Mirror Other Key Industry Reports

Our survey results reflect the findings and predictions of leading retail industry organizations. The International Council of Shopping Centers (ICSC) and the National Retail Federation (NRF) are projecting holiday sales growth of 3.3 and 3.7 percent, respectively. This compares to a 10-year average of 2.5 percent. According to NRF, consumers plan to spend an average of $805.65 on holiday merchandise, the highest projected amount in its Holiday Consumer Spending Survey’s 14-year history. ICSC reports that 95 percent of holiday shoppers intend to make a purchase in a physical store this year, reflecting the resiliency of bricks-and-mortar despite e-commerce growth.

An Early Start Will Usher in a Strong Holiday Shopping Season

More than a third (36.0 percent) of our respondents expect their holiday sales will peak prior to and during the Thanksgiving/Black Friday weekend. Nearly half (45.3 percent) predict their peaks will occur in mid-December through the weekend before Christmas.

“These percentages are similar to last year, indicating that ‘Black Friday’ has really become a month-long event, with many promotions starting in early November,” Harding noted. “Hanukah comes early in December this year, which will keep things busy during the first week of the month. And with Christmas falling on a Friday the mid-month time period bumps right up against the final weekend to shop.”

A Retail Real Estate Trend Continues: Ramped Up Seasonal Staffing

As in past surveys, many retailers told us they plan to add staff to accommodate the expected holiday rush. For 2015, 31.3 percent of respondents will add seasonal team

members. This compares to an average of 29.4 percent in the four previous years. Of those who plan additions, 80.0 percent said their number of seasonal hires will be the same or higher than 2014. NRF predicts that between 700,000 and 750,000 seasonal jobs will be created nationwide during this holiday season, matching last year’s 714,000 holiday positions.

High-Tech Holidays are Here to Stay

We asked our tenants about whether – and how – they are using technology in their marketing mix. More than three-quarters (76.1 percent) told us that tech is, indeed, central in their efforts to reach customers. A full 89.0 percent said they will employ the same or more tech-driven marketing during the 2015 holiday season compared to last year.

“We are an increasingly digital society, and savvy retailers are responding accordingly,” Harding said. “They are using a variety of tools as they leverage the Internet and mobile technology, in particular, to boost holiday sales.”

And there is a good chance this will help drive sales. In a survey by G/O Digital Marketing, more than 90 percent of consumer respondents said they search for deals and discounts online prior to shopping in-store. NRF’s survey revealed that 37.9 percent of smartphone owners will use their devices to research products, 28.4 percent will look up information like store hours and directions, and 20.3 percent will check on a product’s in-store availability this holiday season. Nearly half (47.5 percent) of tablet users will research products, while nearly one-quarter (23.5 percent) will check for in-store product availability.

Social Media and Email are the Top Tech Routes to Holiday Shoppers

For our tenants, social media remains the most popular tech platform, used by 89.2 percent of our respondents who employ technology in their marketing. Facebook is their top choice (used by 88.4 percent), followed by Google+ (used by 40.8 percent). After social media, email is the most-employed tech platform (used by 69.2 percent), followed by Internet advertising (37.5 percent), text messaging (22.5 percent) and SEO optimization tools like Google AdWords (13.3 percent).

It looks like our retail tenants are on the right track with email. G/O Digital believes this medium, often considered dated, remains the most effective tool for reaching consumers, with more than 51.0 percent of its survey respondents saying they would click on an email promotion over a social media post, a text message or mobile promotion. However, 25 percent of those respondents indicated they would click on a Facebook promotion, and G/O Digital anticipates social media “may rival email and other effective promotional outlets in the near future.” New “shop” buttons on Facebook, Pinterest, Instagram and Twitter may fuel this.

Keep up with retail real estate trends. Look for our next Retail Sentiment Survey, conducted in January on 2016 sentiment and plans. In May, we’ll report on mid-year progress and tech.

A&P Bankruptcy Opens a New Era in Retail Real Estate

New Opportunities Ahead for Shopping Centers in Northeast U.S.

We recently saw the end of a long chapter in American retailing when the parent of the iconic A&P brand filed for Chapter 11. This is the second time in five years that the quaintly named Great Atlantic & Pacific Tea Company (now a division of Montvale-Para Holdings) has entered bankruptcy proceedings and it looks as though this is the end of the line. Once the Wal-Mart of its day, A&P created the supermarket concept in 1936, bringing a diverse inventory at low prices to a mass market and becoming the world’s largest retailer. There are many reasons for its demise, including a string of strategic blunders, and we can count on the media to deliver a full autopsy soon. But from my perspective, the primary failure of the 156-year old retailer was remaining static while the world was changing. A&P tried to retain its classic retailing model in the midst of a dynamic and robust competitive landscape of supercenters, dollar stores, convenience stores, and discounters. At the high-end, Whole Foods, Fresh Direct, and new concepts like Amazon Fresh and Blue Apron were staking their claims. In the middle, retailers such as ShopRite and Stop & Shop reinvented and modernized their stores. In an industry with razor-thin margins, the competitive squeeze was too much.

Whats Next for Grocery-Anchored Shopping Centers Post-A&P?

In a recent article, USA Today said “A&P’s biggest asset may be its real estate,” which includes A&P, Pathmark, Waldbaums, SuperFresh, Food Emporium, A&P Liquors, and Best Cellars stores. This puts the spotlight on the shopping centers of the Northeast region of the country, where most of these stores are located and where our portfolio is concentrated. It appears that Stop & Shop, Acme and Key Foods have struck deals on 120 of the locations. A&P has said it will close 25 stores, which leaves 176 on the block. Lots of retail real estate trends are in the making.

As leading retail leasing advisors, our Levin team sees the A&P bankruptcy as signaling a new paradigm. We’ve found that retaining competitive advantage following a change in a retail anchor tenant requires both strategic rethinking and capital infusion. Retenanting and repositioning is a constant factor in effective asset management. It’s part of the game plan for success in our dynamic retail real estate industry. Sometimes a bankruptcy is the driver, sometimes other factors are at play. Whatever the impetus, these are situations that present opportunities for reinvention and growth. And in a market that’s got plenty of post-recession momentum going, there’s cause for optimism in the face of anchor changes. It’s much too early to get specific about the effects of A&P’s passing, but the takeaway here is that one of the few things we can count on is change.

Hot Retail Real Estate Market Spawns Construction Boom

Flight to Quality is Seen in Major Retail Corridors in the Northeast
Heading into the heart of 2015, the Northeast retail real estate market looks robust. Tenants wanting to establish or expand their footprint here have turned aggressive in leasing, absorbing much of the prime retail space. What remains is commanding higher prices.

The result? An emerging supply/demand imbalance for Class A space that is beginning to create some barriers to entry for retailers, while spurring expansion of existing shopping center properties. For these new projects, flight-to-quality is a common theme, with developers focused on opportunities in established retail corridors, especially those offering the strength and stability of a grocery anchor.

Levin’s Construction Management Services See Strong Demand 

Examples of this retail real estate trend can be found in Levin’s own leasing and management portfolio. Our construction management team recently began an expansion of St. Georges Crossing, a fully leased, 317,000-square-foot property in Woodbridge, N.J. After arranging a long-term lease with T.J.Maxx, we broke ground on a 23,000-square-foot building for the fashion retailer, which will occupy a newly acquired parcel of adjacent land. Similarly, at Mid-Town Plaza in Middletown, Pa., we orchestrated the purchase of an adjacent parcel to accommodate the construction of a 7,380-square-foot AutoZone.

Additionally, at the 80,000-square-foot Clifton Plaza in Clifton, N.J., we leased and delivered a 15,000-square-foot, newly constructed building for Blink Fitness. And in Flemington, N.J., we orchestrated a lease with HomeGoods at The Shoppes at Flemington and then oversaw approvals, contractor sourcing and construction of a 22,000-square-foot, free-standing addition.

Flight to Quality Drives Expansion Projects in Key New Jersey Retail Areas

Reflecting the flight-to-quality play, Stafford Park, a thriving, 650,000-square-foot shopping center in Manahawkin, N.J., has been approved for an additional 195,000 square feet – including several prime pad sites. The retail portion of Stafford Park includes anchor tenants Costco and Target, plus PetSmart, Dick’s Sporting Goods, Best Buy, Ulta and Olive Garden.

In Southern New Jersey’s Burlington County, the ShopRite-anchored Bordentown Plaza provides a great example of shopping center redevelopment driven by the need for competitive positioning in an established retail corridor. ShopRite is slated for a complete renovation and expansion, and the entire, 179,000-square-foot center itself will be updated and repositioned. As the property’s retail leasing advisors, Levin is marketing more than 100,000 square feet of existing space, plus proposed pad sites.

Outlook for Retail Real Estate in the Northeast: Increased Stability

The success of recently completed ground-up and renovation projects are bright spots in our region. And while we will continue to see quality inventory added to meet growing demand, the maturity of the market, combined with lengthy approval and building processes, will keep expansion in check. In other words, oversupply should not be a concern anytime in the near future. We expect the market’s stability to build steadily over the next couple of years. A continued low interest rate environment bodes well for the positive construction and investment activity we are seeing.

As always, well-located shopping centers with a strong tenant mix and curb appeal continue to draw retailers, consumers and investors. At the same time, we see some strengthening in the demand for properties in secondary positions. Landlords are becoming more creative in their approach to leasing in these spaces and are working hard to establish their properties as attractive alternatives to the scarce Class A’s.

The outlook for Northeast retail real estate remains nothing but positive through the balance of 2015 and beyond. Demand from national, local and franchise companies in active categories – including grocers, affordable fitness chains, off-price retailers and fast-casual restaurants, among others – will continue to drive vacancies down and rental rates up. And the level of development activity – both for new projects and expansions/renovations – speaks to growing confidence in the future of the retail sector in our area.

Our Annual Pre-Holiday Poll Shows Rapid Adoption and Adaptation of Technology by Retailers

Technology innovations, once seen as a fad and then a threat, are now an integral part of retailing. As tech continues to transform our industry, it appears that bricks-and-mortar stores are leveraging the benefits of online and mobile platforms, while adapting to the new consumer landscape. Our annual pre-holiday Retail Sentiment Survey of store managers in our 95-property, 13 million-square-foot shopping center portfolio reveal strong adoption of mobile technology as an integral part of the marketing mix and notable operational changes in response to an increasingly e-commerce-centric world.

Like most of the industry, we’ve accepted the fact that technology innovations have firmly entrenched themselves in how retail is run today. No longer just a retail real estate trend, the use of tech is now an established way of doing business. That said, the speed of adoption – and adaptation – reflected in our survey is truly eye-opening.

Majority of Our Respondents Say Mobile is Part of Their Marketing Mix
Simply put, mobile marketing has arrived! The majority of our surveyed store managers – 85.3 percent – indicated they are using this platform in their marketing mixes. This figure is up from 68.0 percent just one year ago and 52.6 percent in 2012. And of those respondents who have been employing mobile technology for at least a year, 53.4 percent indicated that they are using this tool to a greater extent in marketing for the 2014 holiday season than in 2013.

The embrace of mobile marketing goes far beyond our survey. In Accenture’s latest Holiday Shopping Survey, 76 percent of participants “said they would definitely use or would be willing to try mobile services that provide them with real-time promotions and offers as they shopped in-store if those services were offered.”

In-Store and Online: A New Symbiosis, the Next Retail Real Estate Trend
For the first time, our survey asked participants whether their company has adapted its business model in response to the growth of e-commerce. The conversation has moved on from whether e-commerce is impacting bricks-and-mortar stores to how those traditional stores are changing in order to prosper in an increasingly online shopping-centric world. We were encouraged by the responses we got.

In fact, 44.0 percent of survey participants indicated that their organizations have changed to accommodate e-commerce in some way. These adaptations included increased collaboration between in-store and online operations (54.4 percent), added in-store pickup and return options (41.3 percent), altered in-store inventory (34.8 percent) and altered store prototypes (23.9 percent).

To us at Levin, that looks like retailers are making multiple changes as this new environment evolves. We like that the “increased collaboration” response garnered the highest percentage because it indicates that the relationship between online and in-store is becoming more symbiotic. And that’s a good thing.

The melding of online and in-store (the omnichannel model) promises to benefit retailers this holiday season. According to Accenture’s study, 71 percent of shoppers surveyed plan to research purchases online and then make them in stores (“webrooming”), while 68 percent say they will go to see products in stores and then purchase them online (“showrooming”).

Opening “The Front Door to the Store” with Mobile and E-Commerce
The benefits of omnichannel retailing, where companies balance the benefits of online and in-store experiences, and its potential are significant. A recent Harvard Business Review blog does a great job of summarizing this phenomenon. It reads, “websites and mobile apps are not just e-commerce ordering vehicles, they are front doors to the stores. Stores are not just showrooms, they are digitally-enabled inspiration sites, testing labs, purchase points, instantaneous pick-up places, help desks, shipping centers, and return locations.” We at Levin could not agree more.

Our next Retail Sentiment Survey will be conducted in early January, gauging 2014 holiday sales performance. We’ll be sharing the key results here on our blog.


About Matthew K. Harding
Matthew K. Harding, CCIM, has been affiliated with Levin Management since 1986. He originally handled leasing of the Levin portfolio as Executive Vice President at Paul Lawrence Realty Associates for 10 years. Matt joined Levin’s in-house team in 1996 as Senior Vice President/Deputy Chief Operating Officer, overseeing leasing operations while supervising company management and administration. He assumed his current title in 2001 and, since then, has guided the strategic growth of Levin’s management and leasing portfolio. He also serves as a member of the firm’s Board of Directors. Matt earned a bachelor’s degree in Economics from Hamilton College. A Certified Commercial Investment Manager (CCIM), he maintains memberships in the ICSC and the Commercial Investment Real Estate Institute.