Indie Retailers and Social Media: Perfect Together?

Retail Trend Watchers Say Social Is Under-Utilized Despite Its Potential
July is Independent Retailer Month, a time to salute those merchants across the country who account for half of the annual total retail sales in the US. If our economy is to stay robust, independent retailers of all sizes need to thrive. For the smaller players in this sector of our industry, social media seems like the magic bullet. It’s pervasive, influential, and inexpensive. In addition, platforms like Facebook, offer pinpoint targeting, that matches messages to prospects.

So why aren’t more indies – especially the “Mom and Pops” – stepping up to social? Roughly one-quarter of independents have no social presence at all, and half of those who do have accounts use them inconsistently or post rarely. As regional leaders in commercial retail real estate, this is a trend we’re watching.

(Read more: https://smallbiztrends.com/2017/03/companies-that-do-not-use-social-media.html)

Why Social Media Matters to Small Businesses
As more consumers flock to social – 81 percent of the US population are on it – they expect to find local retailers there. And they expect those retailers to have websites, as well as social presence. Half the respondents to Time Warner Cable’s Small Business Technology Impact Study said they avoided businesses without websites, believing they are not credible. Thirty percent said they may not buy from a company without a social media presence, with females and millennials rejecting businesses without social at an even higher rate. Fifty percent of millennials stated they preferred businesses with active Facebook pages.

Ninety percent of the small retailers who do use social media are on Facebook. In fact, many substitute their Facebook pages for websites, a solution that, in spite of the platform’s popularity and influence, fails to impress potential customers for whom a web presence signals credibility. Bottom line? Small retailers need to think bigger and go with both a site and social for maximum success.

What’s Keeping Indie Retailers Off Social Media
With so much to gain (or lose) and so much competition, why are some indies ignoring or under-utilizing social? Respondents to the recent Clutch 2017 Small Business Social Media Survey say the primary barriers are the time social requires and doubts about ROI. And a recently released study from Infusionsoft says that half of the small businesses they surveyed had no idea what their ROI was and 14 percent believed their investment in social was not delivering a quantifiable payoff. Still, half said they plan to push forward with their online efforts.

From Special Offers to Personal Stories: Social Is Empowering the Indies
While some are missing out on the benefits of social media, many indie retailers are enjoying brand exposure and growth in traffic – both in-store and on the web. Their tactics include:

Storytelling: Millennials especially respond to the personal stories of entrepreneurs, told on social platforms like Facebook or on a website.

Special Offers: Those old reliable – coupons and special offers – are finding a new life on social.

Seasonal Events: In store-events, promoted on Facebook and sometimes livestreamed, are proving to have strong millennial appeal.

How To’s: Recipes, demonstrations, useful information of all kinds are social gold –

especially in video format on Facebook or YouTube.

Charity Tie-Ins: Socially conscious millennials tend to be responsive to social media-based tie-ins to local charities and community fundraisers.

Dialogue: Website visitors and social media followers alike expect responses to their comments and/or questions. Savvy retailers also monitor the major review platforms like Yelp for mentions of their business. Whether positive or negative, they leave a response.

Mobilization: Mobile technology is shaping the nature of shopping. Responsive design that makes websites mobile friendly is essential. And merchants who offer mobile payment options are cashing in with – you guessed it – the millennials.

Social media is no passing fad. Generation Z, the demographic wave behind the millennials, are true digital natives who live the online life. That includes not just online browsing but discovering and connecting with physical stores in their neighborhoods –

often the indies. And the place where this next generation is most likely to connect is in the palm of their hands – on their phone or tablet. Smart indies will make sure they’re there to meet them.

 

The Mighty Dollars: A Bricks and Mortar Success Story

Retail Real Estate Trend: Will Good Times Be Bad for Bargain

You might call them the mice that roared. They’re the dollar stores – now almost 30,000 nationwide and growing. These price point retailers not only weathered the economic recession but they triumphed, growing their annual sales by 50 percent from 2010-15, compared to the 17 percent notched by retail overall in the same period. And while every week seems to bring news of closing doors and downsizing among bricks and mortars, the dollar niche remains in expansion mode. Dollar General, the top player in this category, is set to open 1,000 new stores this year (that’s 3 per day)! (Read more: http://www.retaildive.com/news/why-dollar-general-will-keep-its-promise-to-build-1k-stores-this-year/434044/)

Demographics Plus Location Equals Dollars for the Dollar Niche
Low- and middle-income shoppers have been these stores’ sweet spot since the first Dollar General opened in 1955 with a variety of wares, all below a $1 price point. As more retailers joined the bargain bandwagon, a location strategy emerged: cluster the stores within a small range for maximum ease of access. It was the reverse of Walmart’s centralization strategy. Consumers who must economize on gas or who rely on public transportation can always find a dollar store close to home or work. The convenience factor also proved a powerful draw for time-starved shoppers at higher income levels.

Not Your Grandpa’s Dollar Store
The crash of 2008 that brought misery to merchants nationwide was a boon to the category. The newly price-conscious turned to the dollars and the stores responded to that rush by pushing their inventories beyond novelties, out-of-date seasonal decorations, discontinued brands and basic staples. To meet the needs of a new class of bargain hunters, they improved their product mix, while retaining their original “treasure hunt” appeal. Consumables – food, household paper goods and cleaning products, health and beauty aids and tobacco products – now comprise three-quarters of the average dollar store’s inventory. Some dollars have added frozen meals, and prepared sandwiches. And 99 Cents Only’s website promises “Fresh produce daily.”

Bargain-priced consumables have drawn another new demographic to the dollars: Millennials. Known for their thriftiness and their preference for experiences over possessions, these sought-after consumers are among the dollar stores’ most loyal customers. In fact, NPD Group reports that at the three biggest dollar chains, 25 percent of purchases were made by Millennials from $100,000-plus households.

Dollar Stores Continue to Boost Commercial Real Estate
Shopping centers shared in the success of the dollar store niche during the recession and that positive connection continues. We are pleased to have 16 dollar stores in our portfolio, all representatives of the major chains. Dollar stores typically seek ten-year leases on 8,000-12,000 SF spaces in properties with strong anchors and high traffic counts. Their solid financial positions and brand names plus their ability to pull in shoppers make them ideal tenants.

Retail Real Estate Trend: The Growth Pace of Dollar Stores May Ease
As the economy strengthens, retail trend watchers predict that in the dollar store category new challenges may cool the growth of dollar stores. Will consumers become less interested in bargain hunting? Will the reduction in SNAP benefits curb less affluent shoppers? Will some stores fall victim to the saturation of these retailers in certain areas and end up cannibalizing each other? What about competition from drug stores who now compete with the dollars in the food and beverage categories? Will Amazon finally chip away at the dollars’ convenience appeal with its same-day delivery of low-priced consumables? (Read more: http://www.cnbc.com/2016/03/21/when-1-can-be-much-more-the-dollar-store-divide.html)

On the positive side, the dollar stores stand to remain immune to the threat of online among their original sweet spot – the less affluent household who does not typically shop online. Their low overhead and the minimal investment required to open a new store are also strengths. And then there’s the loyal Millennial consumer segment. Dollar General, the category leader, just launched a new smaller-store concept catering to the taste and needs of urban Millennials.

We’re keeping an eye on this category. These were the big bricks and mortar bright spot of the last decade and we’re not likely to bet against the dollars.

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.

Fast Casual Eateries are Giving Retail Real Estate a Healthy Boost

Retail Trend: Scramble for Small Restaurant Space Creates a Landlord’s Market
Millennial diners want their quinoa bowls in a hurry and that’s good news for retail real estate companies. Fast casual restaurants – the popular source of healthy, affordable fare – are hungry for 1,500 to 3,000 square foot spaces in shopping venues nationwide. They’re competing with each other and with nail salons, spas and downsizing retailers who are eying the same sized spaces, creating a hot market for retail leasing. Nation’s Restaurant News reports that this competition has “driven lease rates to astounding levels” and created a “landlord’s market.” (Read more: http://www.eater.com/2016/4/28/11523694/restaurant-real-estate) And Jesse Tron, spokesperson for International Council of Shopping Centers calls the current climate “hyper-competitive.”

Tenants in this niche within our leased and managed portfolio include Saladworks, Good Mood Restaurant and Bubbakoo’s Burritos. As tenant representative we work with Dig Inn, the hip, highly popular Boston-based chain, currently on the move into new East Coast markets. So, naturally, we’re staying focused on what’s happening with fast casual restaurants.

Efficient and Appealing, Fast Casual Tops the Industry in Growth and Sales Volume
Led by the rise of Chipotle and Panera in the early 90’s, fast casual fused the speed and convenience of fast food with menus featuring healthy fare. It’s a winning combination, growing the category 550 percent since 1990 and driving the annual growth of fast casual sales to 11.4 percent in 2015, double the rate of any other restaurant segment. Fast casual, which now comprises 7.7 percent of the industry, is expected to lead restaurant sales through 2022, as Millennial diners take healthy dining further with demands for food that is locally raised, according to sustainable and humane practices.(Read more: https://www.washingtonpost.com/news/wonk/wp/2015/02/02/the-chipotle-effect-why-america-is-obsessed-with-fast-casual-food/?utm_term=.cd1fb581cc35)

Consumer appeal lies at the core of fast casual’s success, but it’s not the sole factor in this segment’s growth. Operationally, the concept is amazingly efficient. Sit-down diners are served in under 8 minutes and 50 percent of orders are take-out. This means a high volume of business can be transacted in a space about one-third the size of the average casual restaurant.

National Brand vs. Local Favorite: Which One Gets the Lease?
Faced with tenants vying for space, managers of retail real estate find themselves
weighing a number of factors when awarding a lease. Fitting out a restaurant space
even one of modest size – is more expensive than a retail store or an office. Ventilation, special kitchen requirements, and local regulations spike construction costs. A successful fast casual establishment, however, can offset that initial investment, not just in rent but in driving shopping center visits which, in turn, attract more demand for leases.

The choice is often between an independent or regional chain and a big national brand. Both bring positive buzz but savvy landlords, especially in the case of shopping centers or malls, tend to choose big names. Brand recognition, a record of success and deep pockets tend to win out. Emerging retail areas in urban neighborhoods, where there may be resistance to chains, may be the exception to this trend.

What’s Ahead: Fast Casual – A Role in Reviving the Mall
As brick-and-mortar stores shutter or scale back, food and entertainment may breathe new life into malls and shopping centers. Ron Ruggles of Nation’s Restaurant News sees a rosy future for retail venues that provide an inviting mix of entertainment, food and shopping to create a community experience that online can’t match. Fast casual, with its Millennial appeal, will have a big role to play in this new environment that replaces transactions with experiences.
(Read more:
http://www.themarketmogul.com/implications-rise-fast-casual-restaurants-real-estate.)

Pop-Ups are Bringing Excitement to Brick and Mortar Retailing

No Longer Just a Retail Trend, but a Way to Build Traffic and Brands
They began popping up in the bleak days of the last recession when shopping was dormant and retail vacancy rates reached 13 percent. Their focus was typically seasonal and their leases were temporary but they helped many a retail property manager survive the downturn. But the pop-ups didn’t fade away when the economy bounced back. In fact, these stop-gap stores have evolved into a $10 billion industry that some retail trend watchers say can help bricks and mortar merchants counter their online competition.

Pop-Up Retail: Custom Made for the Experience Economy
No longer just sellers of Halloween costumes or holiday decorations, pop-ups now provide innovative, sometimes daring, ways for retailers and brands to lure shoppers (especially experience-seeking Millennials) away from their screens. These temporary retail outposts sprout in urban centers, in malls, galleries and public spaces and in unexpected venues like barges, buses, even shipping containers. Known for pushing the envelope of retailing, they rely on the elements of novelty and surprise not associated with traditional stores. Read more: http://popupinsider.com/pop-up-phenomenon/

By now, virtually every brand category has at least dabbled in pop-up retailing. From big names like Nike, Reebok, Levi’s and Samsung to avant designers like Comme des Garcons to newcomers like Etsy artisans, looking to test the market, all have gone the pop-up route. Target has used the pop-up concept repeatedly for cause marketing and to promote its top product lines. eBay stepped out of the virtual world with Showhouse pop-ups decked out in furnishing and accessories available for online bids. Then there’s the Meow Mix Cat Cafe for cats and their humans, which set up temporary residence on Times Square. The creativity shows no sign of stopping.

Traditional department stores have joined the pop-up phenomenon too. Nordstrom turned the concept around with Pop-In @ Nordstrom, where select branches play host to new designers and product purveyors, some chosen because they are usually unavailable in the local market.

What Makes Pop-Up Retail So Hot? Fun and Exclusivity
With their ingenious presentations and unexpected venues, pop-ups offer something absent from the typical shopping experience: fun. When Pop-Up Republic, a specialty marketing and management company, conducted a recent survey, they found that 30 percent of pop-up customers were looking for fun in their shopping experience. Besides fun, pop-ups deliver a sense of exclusivity. Merchandise is often new to the market, making buyers the first to own it. And since the stores operate on a temporary basis, opportunities to acquire merchandise or experience the environment are time-limited –also contributing to a sense of exclusivity. Read more:

https://www.shopify.com/enterprise/91139206-why-pop-up-shops-are-the-future-of-physical-retail

Besides generating sales, pop-ups are attention magnets, capturing both news coverage and social media comments. Marketers are increasingly making them an integral component of their overall advertising initiatives.
More than a Retail Trend: Count on Pop-Ups to Keep Popping Up
Yes, those temporary tenants from a decade ago have morphed into a thriving sector of the retail industry. They are supported by specialty architects and designers like Lion’Esque Group, global consultants like Retail is Detail, and real estate firms like Storefront that match pop-up retailers with available space. And having put fun into shopping, they may be just the boost the old bricks and mortar world needs right now.

Twelve Trends Will Shape The Year in Retail

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

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

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

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

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

 

Services Will Be Expected

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

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

 

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

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

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

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

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

 

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

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

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

 

 

 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Big Boxes Are Discovering That Small Can Be Beautiful

Retail Real Estate Trend: “Right-Sizing” to Reach New Markets

It’s a retail real estate trend that began nearly a decade ago when Walmart and Home Depot began exploring the concept of smaller stores in or near urban centers. There’s been some bumps in the road, but it now appears that big box retailers can succeed as “small box” retailers. Eager to attract urban-oriented Millennials, as well as affluent empty nesters who have left the exburbs behind, major retailers are shedding square footage and creating accessible pint-sized versions of their massive models.

Unlike their big brothers, these minis range from 20,000 to 50,000 SF – a footprint that offsets the higher rents in densely populated areas. Instead of stocking “everything under one roof,” they offer a curated inventory matching local lifestyles. Companies are betting that proximity, convenience and branding will divert shoppers from their mobile screens and bring them into their neighborhood junior boxes to browse and buy. As regional leaders in commercial retail real estate, this is a trend we’re watching closely.

Hip Enclaves, City Centers, Inner Burbs, College Towns: Junior Boxes Are on the Move
Target, the leading upscale-downscale retailer, is offsetting the reduced traffic in its mammoth suburban stores, by going small in major metro areas like New York City and Chicago, in corporate hubs and in college towns. These new Targets, some at just 20,000 SF, feature hyper localized offerings. The State College, Pa. store, for example, features pantry items for dorm living plus Penn State fan merchandise. The Cupertino, CA Target, meanwhile, aims at Silicon Valley workers with grab-and-go lunches and techie gear. In many pint-sized, urban Targets, shoppers can pick up or return their online orders. Prices are on par with nearby suburban Targets, to avoid cannibalization. And Target is thinking big when it comes to rolling out these stores. There are over 30 already with more planned for 2017. Read more: http://www.wsj.com/articles/target-goes-after-younger-market-with-small-focused-stores-1475597213

Whole Foods has joined this retail real estate trend with a hip brand extension – 365 by Whole Foods Market, located in hot neighborhoods like LA’s Silver Lake and Portland’s Lake Oswego. Like Target’s junior format, these stores are smaller than their suburban counterparts. But unlike Target, prices are generally lower than in their traditional stores. The company sees its brand extension not only as a way to tap a desirable demographic, but as a “lab” for testing new products. Read more: http://www.latimes.com/business/la-fi-365-store-opening-20160525-snap-htmlstory.html

Walmart Tackles the Art of Thinking Small…Again
Walmart was a pioneer of “junior boxes” with its 12,000 SF Walmart Express stores. Launched as a pilot in 2011 and situated in major cities like Chicago, as well as small towns near the retailer’s home turf, the stores featured a limited selection of groceries, household supplies, beauty products and pharmacy. The competition was the dollar and drug stores, the 7/11s and Wawas that drew customers on price and convenience. But Walmart’s supercenter supply chain model simply couldn’t scale down and the 102 unprofitable mini-markets were shuttered last year in a chain-wide downsizing. Read more: http://www.marketwatch.com/story/wal-mart-to-close-walmart-express-stores-as-part-of-reorganization-2016-01-15

The world’s largest retailer hasn’t abandoned the “junior box” concept though. Its focus is now on its Neighborhood Markets. At 28,000 to 60,000 SF, these minis are just one-fifth the size of the typical supercenter. The 600-plus fleet of stores (85-95 more will be added this year) includes some urban locations (for example, Chicago and Minneapolis), but tend to be located in highly accessible inner suburbs. Groceries, household supplies, health and beauty products and pharmacy comprise the inventory, at Walmart’s “always low prices.” Traditional bargains plus greater accessibility, the company believes, will deliver a new wave of shoppers.

Junior Boxes: A Retail Real Estate Trend That’s Here to Stay?
A downsized generation of big boxes is going strong at present, with smaller Home Depot, Bed Bath and Beyond, and Lowes operating in non-traditional settings. It’s a big play to win Millennials and offset flagging traffic in some supercenters. Let’s keep watching.

Levin Retail Tenants Report Positive Seasonal Outlook, Robust Hiring Plans

Our Annual Pre-Holiday Survey Confirms Digital Marketing Momentum

Results of Levin Management Corporation’s (LMC’s) annual Pre-Holiday Survey of our retail tenants are in and the news is more than good, with respondents reporting robust hiring plans and continued digital marketing momentum. The poll of tenants within our 95-property, 13 million-square-foot portfolio explores year-to-date performance and expectations for the critical holiday shopping season. As regional leaders in commercial real estate leasing we not only welcome these findings, but look forward to more positive retail trends ahead.

Poll Respondents Expect both Sales and Seasonal Hiring to Rise
An impressive 83.2 percent of our survey respondents project holiday sales to be at the same or a higher level than last year. A full 45.0 percent plan to add seasonal staff – well above the average 29.8 percent reporting seasonal hiring in our prior five Pre-Holiday polls (2011-2015).

LMC President Matthew K. Harding, says strong year-to-date performance is behind retail tenant optimism. In fact, 64.3 percent of survey participants reported year-to-date sales at the same or higher volume than at this time in 2015 – compared to the 2011-2015 polling average of 57.9 percent.

LMC Survey Results Mirror Findings of National Studies
LMC tenants are not alone in their optimistic outlook. The National Retail Federation (NRF) expects sales in November and December (excluding autos, gas and restaurant sales) to reach $655.8 billion – an increase of 3.6 percent over 2015. This compares to a 10-year average of 2.5 percent. Similar studies by the International Council of Shopping Centers (ICSC), Kantar Retail and Deloitte project holiday sales to increase by 3.3, 3.8 and 3.6-4.0 percent, respectively. Further, ICSC reports 91 percent of consumers plan to holiday shop at physical stores.

Survey Respondents Predict Early Holiday Shopping Surge
LMC tenants expect their customers to shop early this year. A full 24.0 percent said they anticipate their sales will peak prior to Thanksgiving. Another 23.5 percent expect their sales peak during the Thanksgiving/Black Friday weekend. The balance of respondents’ expectations for peak sales are spread among early December (12.3 percent), mid-December (18.1 percent) and the weekend before Christmas (16.2 percent). Only 5.9 percent expect their peak sales to fall between the Christmas and New Year’s holidays.

Tech-Stacked Marketing Will Rule 2016 Holiday Shopping Season
Technology-centered marketing remains an ongoing priority, say our survey respondents. The Pre-Holiday survey asked those whose companies are embracing mobile apps, social media, email, texting and other platforms to compare their amount of digital marketing year over year. A full 94.0 percent reported they will incorporate the same or more tech-centered marketing this holiday season.

“This is smart planning,” noted Melissa Sievwright, LMC’s vice president of marketing. “Deloitte forecasts that digital interactions – consumers’ use of digital devices such as smartphones, tablets, and desktop and laptop computers – will influence 67 percent of brick-and-mortar sales during the 2016 holiday season. In turn, our tenants recognize the importance of reaching their customers via digital platforms – both prior to and during store visits.”

Email and Social Media are Top Promotional Channels. In-Store Promotions Include Digital Coupons, Loyalty Programs and Discounts
Survey participants who are actively using technology to reach shoppers outside their stores favor email (74.7 percent) and social media (73.1 percent). Other top channels include text messaging (30.6 percent), banner and other internet advertising (30.6 percent), and digital ads targeted to mobile devices (25.3 percent). For in-store reach, popular tools include digital coupons, discounts, loyalty points and/or rapid payment (73.8 percent); free Wi-Fi (37.8 percent); post-sale online surveys (35.4 percent); and electronic receipts (29.9 percent).

Social Media is Strong Element in Digital Marketing Equation
Facebook reports the holiday season brings more posts, shares and comments than any other time of the year. Deloitte notes that social platforms – such as Facebook and Pinterest – are “shaping what people think a great shopping experience is – a fast, highly-curated assortment with access to visuals, information, and buying sources.”

Among survey respondents, Facebook is by far the most popular social media platform, used by 89.9 percent of those who incorporate social media into their marketing efforts. Other popular outlets included Instagram (40.5 percent), Twitter (33.3 percent), Google+ (27.4 percent) and Pinterest (10.1 percent).

“Social is a vital part of the digital marketing equation,” Sievwright said. “Our tenants are using these channels to announce in-store sales and experiences, and for post-event coverage. Instagram and Pinterest, since they are so visual, are popular choices.” An emerging retail trend to watch: live broadcasts from events on Facebook’s Livestream and Twitter’s Periscope.

For the first time, survey participants were asked whether they are enhancing their social media presence with paid options. Of respondents who use social media for marketing, 37.5 percent indicated they are leveraging opportunities like Facebook’s sponsored content or ads.

Our Retail Sentiment research will continue in 2017. In January, we’ll be gauging retailers’ outlooks for 2017, and in June, we’ll report mid-year progress and explore technology issues.

Fasten Your Seatbelts: Generation Z is Ready to Shop

Retail Trend Sees History’s Most Demanding Consumers on the Horizon There’s no rest for the retailer. Just when you thought you’d mastered Millennial marketing, along comes a new wave of consumers you’ve got to figure out. Dubbed Generation Z and 70 million strong, this rising demographic will represent 25 percent of the US population by 2020. It’s time to get ready for what retail trend watchers say will be the most demanding consumers of all time.

Raised Online and Digitally Addicted: Meet Generation Z
Gen Z members are still very young (13 to 18), so it may be difficult to draw too many solid conclusions about their eventual buying habits. But a number of factors are likely to define their future behavior. Consider the following about them:
-First generation born in the 21st century
-Grew up in challenging economic times
-Never knew a world without the Internet
-Citizens of an on-demand culture
-Tethered to technology since their earliest days

That said, a picture emerges of a consumer who expects instant access to everything and who relies on digital resources for discovering what they want and for getting it when they want it. Forty-percent of Gen Z claim they are “addicted” to their digital devices.

Where to Reach The Z’s: Instagram, Snapchat and YouTube
Characterized by their short-attention spans and love of novelty, it’s no surprise that Z’s prefer quick visual communication. Instagram, Snapchat and YouTube are their platforms of choice. In fact, 72 percent say they visit YouTube daily. Streaming movies and music is a way of life for the group – over half do so daily – obviously a result of their on-demand orientation. And gaming is a major focus with a high degree of interest in virtual reality.

Z’s Are Different from Millennials in Surprising Ways
While both these age cohorts are intense social media users, Millennials (age 19-34) are more influenced by it than Z’s. Over half of the older group (58 percent) credit social as a top purchasing driver. Only 53 percent of the younger demo names it as their major influencer.

Millennials, as we know by now, are active reviewers of brands and experiences, sharing their opinions across the social media spectrum. Z’s much less so. Millennials are 40 percent more likely than Z’s to get their viewpoints out. Will the younger group grow into word-of-mouth as they mature? That’s something worth watching.

Gen Z’s were shaped by the uncertain economic environment of the last decade. Despite this experience, they are much less likely to be bargain hunters than the Millennials. The older group is 29 percent more inclined to check and compare prices before and during shopping trips. The Z’s milder interest in pricing may be due to the fact that the majority are not yet living independently. Will they acquire the Millennials’ cost consciousness as they move out on their own? Another retail trend to watch.

Don’t Miss Out on Marketing to Generation Z
Z’s are still in their formative years, but here’s what Deborah Weinswig, managing director of Fung Global Retail & Technology foresees. “Exposure to near-infinite choice and near-endless information makes this generation more demanding than any of its predecessors. As Gen Z matures, it will become more discerning, but its demanding nature is unlikely to be diluted. We think brands and retailers will be the ones that need to change, because Gen Z is unlikely to compromise on its high expectations.” Read more about Gen Z’s consumer demand here.

Yes, today’s tweens and teens will soon be full-fledged consumers with new and unique habits and demands. Savvy retailers should be ready to accommodate them. Sharpen your visual messaging now. Get active on Instagram, Snapchat and YouTube. Stay up to the minute with mobile marketing. Be ready to deliver at warp speed. Develop incentives for the Z’s to follow you on their platforms of choice. A new breed of shopper is heading your way!

For more information on Generation Z:
https://iei.ncsu.edu/wp-content/uploads/2013/01/GenZConsumers.pdf

http://www.huffingtonpost.com/deep-patel/6-trends-for-generation-z_b_11227446.html