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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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.

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.”

Retail Real Estate Trend: Non-Traditional Tenants Go A-List

Web-Proof Services Are Attracting Landlord Interest as Some Retailers Falter

Last month I served on a panel at ICSC’s PA/NJ/DE Conference and Dealmaking event in Atlantic City. My group’s discussion focused on non-traditional tenants and their growing popularity in commercial retail leasing. On the four-person panel, I was the sole spokesman for the landlord side, with the rest of the members representing non-traditional tenants who lease space (or want to lease) in shopping centers. As might be expected, they were all attracted by the visibility, convenience and traffic a popular shopping center offers. They want to be where the customers are. No surprise there.

At Levin, we have many non-traditional tenants under lease – fitness centers, health services, day care providers, gaming centers, and, of course, restaurants. Not long ago, like most managers in the business of commercial retail leasing, we were reluctant to go with tenants other than more traditional retailers. That’s changed big time. I’d like to tell you why non-traditionals are now on our A-list.

Behind the Trend #1: Non-Traditional Tenants Are Amazon-Proof
While many retailers are struggling against branded online stores and behemoths like Amazon, service businesses face no web-based competition at all. WebMD can’t stitch up a cut. YouTube videos are no substitute for a Nautilus circuit or Spin class. You can’t leave your toddler with babytv.com while you work. You get the point. Services and experiences can’t be provided by the Internet (at least not yet). We in commercial retail leasing like that. We’re looking for tenants that are fiscally solid and likely to stay that way.

Behind the Trend #2: Service Businesses Drive Traffic
In our era of the time-starved lifestyle, people look to consolidate as many of their errands and activities as possible. A shopping center that offers the opportunity to combine a fitness session with grocery shopping and a prescription refill will draw traffic, benefitting multiple tenants and attracting new ones. Our grocery tenants, for example, report a substantial flow of customers from their fitness center neighbors. That’s a win-win-win for the tenants, landlord and shoppers.

Behind the Trend #3: Long Leases and Solid Financials
Non-traditional tenants typically seek longer leases, often because of the higher construction costs due to the more extensive build-outs they initially require. They also tend to be stronger financially and have better credit than many of today’s retailers. Both these qualities make them a highly desirable addition to the tenant mix.

Non-Traditionals Do Pose Some Challenges in Retail Leasing
Since nothing’s perfect, we have to consider the challenges that these businesses – appealing as they are – present. The most common is parking. A fitness center user, for example, may tie up two hours of parking space per visit. We’re always very careful to assure that there’s adequate parking before any new lease is signed. Another roadblock may be image. Some specialized medical centers, for example, can seem out of place among the existing mix of restaurants, boutiques and entertainment providers. We’re sensitive about overall image and have declined some prospective tenants that weren’t a good “fit.”

At Levin-Managed Properties Non-Traditionals Are Here to Stay
Our portfolio has many fitness centers, which are now considered mainstream uses in today’s shopping centers. Levin-managed properties are home to most of the major national brands, including Blink, Crunch, LA Fitness, Leisure, Snap and Planet Fitness.

More health services are coming on board with us. We just signed a lease for 2,500 square feet at our Mayfair Shopping Center (Commack, NY) with GoHealth, a walk-in clinic. This medical services model is growing rapidly, with a third of the new establishments situated in shopping centers. We expect to see more of them as Levin tenants in the near future. Physical therapy services are interested in shopping center space, too. A Kessler rehab is located in our Aldrich Plaza (Howell, NJ).

Daycare (Apple Hill Academy and C2 Education Center), postal services and even a vet, along with restaurants and the popular gaming chain Dave & Buster’s evidence Levin’s interest in cultivating this new segment in commercial retail leasing. Non-traditional tenants meet the needs of today’s consumers – and even boost business for our traditional retailers. A combination that works quite well

Back-to-School Retail Season Looks Like Something to Celebrate

Fastest Rate of Growth in Four Years Was Driven by Electronics and Discounters

Early numbers are in for the 2016 BTS shopping season and retailers have something to cheer about. Though August retail numbers slipped a bit (down 0.3 percent), BTS sales were strong. Retail trend watchers and managers of retail real estate alike can’t help but be cheered by the activity during this second biggest shopping period of the year.

Will BTS Sales Meet the NRF’s 2016 Projection of $75.8 Billion?
Though not all the numbers are in yet, a recent report from Reuters says that 2016 BTS spending grew at its fastest rate in four years. According to statistics from First Data, sales rose 2 percent in July vs. 1 percent in 2015 and 2014 and just .2 percent in 2013. The NRF’s $75.8 billion projection for the BTS 2016 may be realized.

Good Weather and Optimistic Outlook Brought in the Shoppers
Better weather than in recent BTS seasons brought a wave of shoppers into stores. Many of them were searching for bargains – especially parents of young children. These are the thrifty Millennials, who came of age in lean times. “Income rises faster than frugality changes,” one retail analyst suggested.

Electronics Were the Hottest Items on the 2016 Shopping List
As expected, the big-sellers could be found in the electronics category. Electronics and appliance sales have been climbing in 2016 – their sharpest ascent in four years, according to First Data. BTS shoppers went for tablets and USB drives, especially if those items were bundled with special offers. Best Buy’s aggressive offers and coupons delivered strong sales. Items geared for dorm life were among the big winners.

Gap Recovers and Fast Fashion Outposts Score Big
Gap gained traction during the BTS season, leading to thoughts that its troubles may be behind them. Low-priced, fast fashion stores like Old Navy, T.J.Maxx and Marshalls delivered strong numbers, too. Chief Industry Analyst-Retail at NPD Group, Marshal Cohen credited the numbers at these stores to youngsters who will accept shopping at lower-priced retailers because they can get “more stuff.”

Whatever the reason for surging sales, retailers are closing out a banner season – the best in a long time. Now, all eyes are on the winter holiday ahead.

Outlook on Back-to-School Sales Has Retailers Cheering

Total Volume Projected to Reach Near-Record Levels for the 2016 Season

The school bell is ringing in the second biggest retail spending season of the year. Retail trend watchers are predicting more-than-healthy sales with shoppers in an upbeat mood and retailers and retail real estate companies like Levin are keeping a close eye on the action. The National Retail Federation (NRF) projects that total sales will approach a near-record level of $75.8 billion, up from $68 billion last year. The season began early with shoppers hitting stores and online sites in June, and so far the purchasing pace is strong. We’ll see the full story next month, but for now here’s a look at what’s behind the surge.

More Kids in School: A Retail Trend That Will Continue
As the NRF observed, the children of the first wave of the massive Millennial generation are beginning to swell the school age population, contributing to increased BTS spending (a retail trend that’s expected to continue over the next decade as the Millennials enter the job market and form families).

More Confidence in the Economy
Mid-July’s consumer confidence figures held steady with Americans reporting positive attitudes about the economy. That confidence is reflected in Deloitte’s ninth annual back- to-school survey in which 81 percent of respondents said their finances were better or the same as last year. It’s no surprise then that 39 percent of those polled by the Rakuten Marketing Survey said they plan to spend more on BTS purchases than last year. Depending on the source, the projected average spend ranges from $488 to $673 per K-12 student.

Starting Early, Spending More at Bricks and Mortars and Online
Online BTS shopping continues to climb – projected to expand by 9 percent in 2016. But bricks and mortar stores will continue to dominate, except in the electronics category where online is the top choice. Here’s where US shoppers, who’ve been buying for BTS since June, say they will be spending their dollars:

  • Discounters
  • Department Stores
  • Clothing Stores
  • Online (top of the list for electronic purchases)

Online is expected to continue to play a major role in BTS purchase decisions as shoppers (61 percent) reported in the Deloitte survey that they will research products, compare prices and look for deals online prior to heading out to shop. Fifty percent of those said they will rely on their smartphones when making purchasing decisions.

Free Shipping Will Drive Online Purchases, Store Pick-Up Appeals
According to the NRF, online BTS shoppers are heavily influenced by free shipping. Eighty-nine percent of those surveyed said they reject paying for delivery.

Ordering online with store pick-up was favored by 54 percent of the respondents, while 10 percent (predominantly male) wanted same day delivery.

Apparel Heads the BTS Shopping List, Lunch Boxes and Backpacks are the Most Sought-After Accessories
Clothing, electronics, shoes and supplies are the top categories on 2016’s BTS list. (For high school or college students, electronics lead the pack). Office supply stores and drug stores, long the source of pencils and paper, will likely feel new competition from kits marketed by schools or PTAs.

Topping the trends for elementary schoolers are the once-utilitarian lunch box and backpack, reborn in a wide variety of fabrics and styles. It’s Hello Kitty and My Little Pony themes for girls, while boys are opting for camo and superheroes. High-end backpacks for the elementary set feature LED lights, while packs for computer-toting high schoolers and college students offer multiple pockets for electronic gear and accessories.

Not surprisingly, school-bound girls are going for animal prints and glitter, while boys are opting for Under Armor and Nike apparel. But surprisingly, kids are helping fund their BTS buys. The Deloitte study projects that elementary school students will lay out an average of $20 and middle schoolers an average of $33 for BTS purchases. Is this the influence of thrifty Millennial parents? Stay tuned. And stay tuned as well for the final numbers on BTS 2016.