Levin Survey Shows Sales Growth, Expansion and Tech-Driven Evolution

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Mid-Year Poll Signals Momentum Among Tenants in Firm’s 95-Property Portfolio

Matthew Harding

“The growing popularity of e-commerce has made an undeniable and significant impact on bricks-and-mortar stores." -Matthew Harding, president, Levin Management

Sales growth and expansion in the midst of the continued technology-driven evolution of bricks-and-mortar retailing signal momentum within Levin Management’s tenant base. The North Plainfield retail real estate services firm today released the results of its annual mid-year Retail Sentiment Survey of managers within its 95-property, 13 million-square-foot shopping center portfolio.

More than half (52.9 percent) of respondents to the 2015 survey reported sales at equal or higher levels than at this time last year. This percentage is notably higher than the mid-year 2014 and 2013 polls, where 42.9 and 43.7 percent of participants, respectively, reported the same or higher year-over-year sales. This falls in line with reports by both the U.S. Commerce Department, which deemed May 2015 retail sales 2.7 percent higher than the previous year, and the National Retail Federation, which predicts industry growth reaching 4.1 percent in 2015.

Further, retailers are expanding. Nearly one third (31.1 percent) of Levin mid-year survey respondents reported that their companies have or will open new stores this year. This is the highest mid-year percentage in the four years for which comparative Levin survey data is available. Additionally, National Real Estate Investor this month reported that U.S. chain retailers’ nationwide have stepped up plans to open new locations over the next 12 months, citing an RBC Capital Markets study.

“This is great news for both retail and retail real estate,” noted Levin Management’s Matthew K. Harding, president. “Beyond this positive trending, our latest survey results provide some interesting insights related to retailers’ use of technology in marketing, and their ongoing adaptation to consumer shifts driven by e-commerce.”

The Technology Revolution
Not surprisingly, a majority (78.4 percent) of respondents work for companies that are actively using technology in marketing efforts to attract customers to their stores. Of those survey participants, more than half (53.9 percent) have upped their technology-centered strategy year over year.

The survey asked about specific technology being employed in-store to provide incentives or conveniences for shoppers. Among the respondents using technology for marketing, the most popular tools include mobile device apps for discounts, loyalty points and/or rapid payment (used by 61.2 percent); post-sale online surveys (used by 47.8 percent); and free Wi-Fi (offered by 41.8 percent). A McKinsey & Company study touts the importance of stores digitizing, reporting that of the 60 percent of Americans who have smartphones, 80 percent use them when shopping in a store, to check out product reviews and specifications, and to compare pricing.

Similarly, the Levin survey asked about technology marketing tools being used to reach customers outside the store. Of applicable respondents, more than three quarters (76.4 percent) incorporate social media. Nearly as many (72.3 percent) use email. Others employ banner ads and other Internet advertising (41.9 percent), text messaging (27.7 percent), and SEO optimization like Google AdWords (11.5 percent).

“What we find interesting is the multi-faceted approach our tenants are taking when it comes to leveraging technology for marketing,” Harding noted. “Retailers clearly are using many – and multiple – channels to engage shoppers.”

Social Media’s Dominance
With social media as such a dominant focus for retail marketing, the Levin survey drilled down into specific platforms being used by its tenants. Of applicable survey participants:

  •     91.9 percent use Facebook.
  •     39.7 percent use Twitter.
  •     33.1 percent use Instagram.
  •     27.9 percent use Google+.
  •     17.7 percent use Pinterest.
  •     10.3 percent use Groupon/Living Social.
  •     9.6 percent use Foursquare.

Facebook, Twitter and Instagram have remained the three most popular platforms across a full year of Levin surveys. And it appears Levin tenants are not the only ones placing value on the benefits of social media. A CNBC article noted “the trumpeting of social media triumphs appears to be a growing trend among retail companies.” The author notes that in recent earnings calls, Dollar Tree’s CEO reported his company connected with 2 million customers via Facebook, YouTube, Twitter and Pinterest during the first quarter, while Whole Foods’ co-CEO announced his company has surpassed 4 million followers on Twitter.

Adaptation and results
“The growing popularity of e-commerce has made an undeniable and significant impact on bricks-and-mortar stores,” Harding noted. “Yet the conversation has shifted from ‘survival’ to ‘opportunity,’ and our survey results indicate that retailers with physical stores are rethinking their approaches and capitalizing on opportunities to meet changing consumer needs and desires.”

In fact, more than one third (37.3 percent) of Levin mid-year survey respondents reported they have adapted their business model in response to the growth of e-commerce. Of these participants:

  •     61.3 percent have added in-store services and/or incentives.
  •     46.7 percent have incorporated in-store pickup and returns options for purchases made online.
  •     42.7 percent have altered store inventory (fewer in-stock SKUs, larger quantities of popular items, etc.).
  •     41.3 percent have increased collaboration between online and bricks-and-mortar operations.
  •     17.3 percent have altered their store prototype (i.e. smaller store size or increased focus on showrooming, etc.).

“The International Council of Shopping Centers provides some interesting statistics supporting the benefits of omni-channel retailing for bricks-and-mortar stores,” Harding said. “For example, 35 percent of consumers have made in-store returns of items purchased online, and 18 percent of consumers making those types of returns will make in-store purchases during their visit.”

Are these types of adaptations working? Of the Levin survey respondents who have made some operational adjustments in response to e-commerce, 52.1 percent have seen a benefit in terms of sales and/or in-store traffic. At the same time, 30.9 percent said they don’t know yet.

“The fact that more than half of these retailers have seen positive results is encouraging and may tie directly to the reports of increased year-to-date sales and expansion plans,” Harding said. “It also seems there are some unknowns as retailers continue to blaze this new path. This makes sense, and it will be interesting to see how the numbers shift in future surveys.”

Levin’s next Retail Sentiment Surveys will be conducted in early November, gauging pre-holiday optimism, and in January, measuring new year expectations. In business for six decades, Levin is one of the nation’s leading retail real estate services firms, with a strong focus in the northeastern United States and an owner’s approach to the business. Levin provides leasing, property management, accounting, construction management and marketing services for properties ranging from neighborhood, community, lifestyle and power centers, to enclosed malls, street retail, downtown stores and mixed-use projects in New Jersey, New York, Pennsylvania, Massachusetts, Virginia and North Carolina. The company specializes in repositioning, retenanting and renovating retail properties – areas that have become particularly vital for today’s institutional and individual property owners.

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