Positioning Retail Real Estate for a New Generation

July 13, 2021

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Levin Retail Survey: Brick-and-Mortar Store Managers Say Things are Looking Up

Annual Mid- Year Poll Reflects Strong YTD Performance, Challenging Labor Market and Signs of Permanent Change

NORTH PLAINFIELD, N.J., July 13, 2021 – Brick-and-mortar store managers say things are looking up and report positive expectations for the second half of 2021, according to Levin Management Corporation (LMC). The North Plainfield commercial real estate services firm this month wrapped up polling for its annual Mid-Year Retail Sentiment Survey, exploring year-to-date performance and outlook, hiring, technology usage and more among tenants in its 120-property, 16 million-square-foot leasing and management portfolio.

Nearly 65% of survey participants are optimistic their sales will improve further this year – the highest percentage in the LMC mid-year survey’s decade-long history – and more than half of those respondents believe their sales will grow to meet or exceed pre-pandemic levels in 2021. Another 19% anticipate sales will remain steady during the coming months. Significantly, the combined “improve/remain steady” response percentage is more than 10 points above the survey’s trailing average*.

“What a difference a year makes,” noted LMC’s Matthew K. Harding, chief executive officer. “Clearly, business is moving closer to normal, and tenants feel this trajectory will continue. Our survey’s street-level sentiment findings are supported by industry groups like the National Retail Federation, which last month adjusted its 2021 forecast to reflect significantly better-than-expected sales growth. Further, another key study shows brick-and-mortar will continue to capture a healthy share of consumer spending.”

Within this context, tenants are shoring up their staffing, with just over 70% of LMC respondents currently hiring. Nearly 80% of that group indicates it has become harder to find qualified job candidates in the current environment – a statistic supporting ongoing, industrywide discussion of retail labor shortages and jobs openings. “This inability to hire could curb progress to a degree,” Harding said. “The industry will be watching this closely – particularly moving into the fall and toward the critical holiday shopping season.”

A NOTE ON TECHNOLOGY

LMC’s mid-year survey traditionally explores technology trends, and while the 2021 poll expanded its focus to emphasize performance and recovery, it did take a look at the tech tools retailers are leveraging to reach, serve and engage consumers. Notable takeaways include:

  • More than 70% of LMC survey respondents offer an online option for purchasing goods, scheduling appointments for services or placing orders for pick-up. This data point has grown steadily since LMC began tracking it in 2017, when less than half of respondents offered this convenience.
  • Among LMC tenants that leverage technology for in-store customer service, the four most popular tools include digital coupons, discounts and/or loyalty points (used by 63.2%); in-store, online ordering with free shipping for out-of-stock items (used by 48.1%); free Wi-Fi (used by 47.2%) and e-receipts (used by 42.5%).
  • The three most popular tech-centered marketing tools for tenants that leverage technology for marketing include email (used by 79.4%), social media/social marketing (used by 70.0%) and text messaging (used by 52.8%).
  • 57.8% of LMC survey participants indicated their company is actively employing technology to analyze customer and/or sales data for the purpose of merchandising, creating services and menu options, planning in-store events, or creating individualized special offers.

“We have tracked consistent growth over time in how our tenants are incorporating technology to service and reach customers,” noted Melissa Sievwright, LMC vice president of marketing. “The tools ranked most popular have held steady, but with wider adoption over the past several years. Some – such as e-receipts and text messaging – have gained notable traction, which likely correlates to retailers amassing more contact information. From a business standpoint, it’s all about data, and our tenants are clearly using it to their advantage.”

LOOKING AHEAD: IT WILL NEVER BE THE SAME

Savvy brick-and-mortar tenants have known for years convenience is a top priority for consumers, Harding noted, adding the pandemic brought this into laser focus. Flexibility became paramount last year, and retailers adapted in kind. Approximately 85% of LMC mid-year survey respondents implemented changes ranging from added fulfillment options and designated areas for click-and-collect pickups, to shopping appointment times, open-air setups and more.

Today, nearly 58% of those respondents say they plan to maintain some of these changes as permanent operational best practices. “The pandemic has changed us,” Harding said. “As consumers and as businesspeople, we found new ways of doing things – and some of them work well. Agile retailers will continue to embrace change with their customers’ wants and needs in mind.”

LMC’s next Retail Sentiment surveys will be conducted in October/November, gauging expectations and plans for the holiday season, and in January, exploring outlooks for the coming year. For nearly seven decades, the company has served as a trusted single-source commercial real estate services provider for institutional and private owners. LMC today maintains a diversified, retail-focused portfolio in the Northeast and Mid-Atlantic states. The firm’s capabilities continue to evolve with new technologies, efficiencies and sustainability-focused initiatives to serve a new generation of properties, investors and tenants.             

*LMC’s Mid-Year Retail Sentiment Survey was not conducted in 2020; trailing average is calculated from the 2012-2019.

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