Matthew Harding and Melissa Sievwright
Retail Tenants Leveraging Technology and E-Commerce-Influenced Change
As 2016 approaches the half-way mark,Levin Management retail tenants are reporting strong year-to-date performance and optimism for the coming months. Findings of the commercial real estate services firm’s annual mid-year Retail Sentiment Survey also reveal a continued leveraging of technology in marketing as companies respond and adapt to an increasingly e-commerce-influenced landscape.
Levin’s latest poll of store managers within its 95-property, 13 million-square-foot shopping center portfolio yielded the strongest percentage (65.8 percent) of participants in the survey’s five-year history reporting mid-year sales at the same or a higher volume year over year. This represents a jump from 51.9 percent reporting same-or-higher sales at mid-year 2015 and 42.9 percent at mid-year 2014. Similarly, 61.3 percent of participants reported the same or a higher volume of shopper traffic to date in 2016 compared to 2015.
“Retail is experiencing solid momentum following the stock market volatility and bankruptcy announcements that kicked off the year,” noted Levin’s Matthew K. Harding, president. “The latest retail sales data from the U.S. Commerce Department, which shows a 2.4 percent year-over-year increase for March to May, reinforces what our tenants are saying. At the International Council of Shopping Centers’ well-attended RECon in Las Vegas last month, expansion was an overarching theme among national retailers – another confirmation of a positive trajectory.”
It comes as no surprise, then, that a full 67.0 percent of Levin survey participants expect sales to continue at the same pace or improve through the remainder of the year.
Retail’s Digital Revolution
Like most savvy retailers, tenants at Levin’s leased and managed properties are employing digital technology – such as online ads, mobile apps, social media, email and texting – in efforts to attract customers to their stores. And the mid-year survey findings indicate that technology’s importance is growing. Of respondents actively using technology-centered marketing, 42.4 percent say they have upped the volume year over year; 52.7 percent reported a similar amount of tech-centered marketing compared to last year.
When it comes to engaging customers in-store, mobile device apps (such as those for coupons, discounts, loyalty points and/or rapid payment) are the most popular tools – employed by 69.9 percent of respondents who are active in tech-centered marketing. Levin tenants appear to be on the right track; a recent ICSCDeloitte study found that ‘shoppers are 29 percent more likely to make a purchase the same day when they use social media to help shop.’”
For Levin survey participants who use social media as part of their marketing mix, Facebook is by far the leader, leveraged by 91.3 percent of respondents. Other popular outlets include Twitter (36.9 percent), Instagram (34.2 percent) and Google+ (32.2 percent).
A Changing Landscape
As bricks-and-mortar stores seek continued success in the face of expanding online sales, many retailers are looking for new ways to serve and engage customers. Levin tenants are no exception. In the mid-year 2016 poll, 38.2 percent of participants indicated they have adapted their business model in response to e-commerce growth.
Those respondents are adding in-store services and incentives (62.7 percent), incorporating in-store pickup and returns options for purchases made online (57.6 percent); and/or increasing collaboration with their online counterparts (44.1 percent). Some are altering store inventory (35.6 percent); introducing “experience” draws (30.5 percent); and/or changing their store prototypes (13.6 percent).
“Based on activity within our portfolio, we expect the experiential retail trend, especially, to gain momentum,” Sievwright said. “The re-invention of this industry is well underway, driven both by tech advances and new shopper preferences. Millennials and Baby Boomers alike are opting to invest in experiences over things. Smart companies are melding lifestyle with shopping and giving consumers a reason to step into the store. Think demonstrations, classes, performances and exhibits – to compliment fashion, jewelry, footwear and furniture.”
