Retailers are gearing up for more opportunities for growth and change this year due to a strong holiday and annual performance in 2019, according to Levin Management Corp.‘s 10th annual Retail Sentiment Outlook survey.
The survey polled store managers from Levin’s 105-property, 15 million-square-foot leasing and management portfolio. It found the highest-ever percentage reported by respondents saying holiday sales and traffic were at the “same or higher” level than the year prior (77.4% and 76.5%, respectively.) For the entire year, 68% said sales were at or above their prior annual total.
“Brick-and-mortar retail is on a roll, and our own tenants reflect the positivity we are seeing among companies focused on evolving within this ever-changing landscape,” LMC CEO Matthew Harding said. “A strong end to 2019 provides further justification for a positive outlook.”
Harding noted a National Retail Federation report, which showed 2019 holiday sales were up by 4.1%, nearly double 2018’s growth.
“In our Outlook survey, nearly three-quarters of respondents (71.8%) indicated they are optimistic about the coming year,” Harding said. “Of the many drivers impacting retail, they anticipate the economy and consumer confidence to weigh most significantly in their success entering this new decade.”
Embracing new ideas
More than one-quarter (25.6%) of respondents said their companies plan to open more locations this year and 28.9% said they plan to increase their staff. When compared to 2019, only 18.3% said they wanted to expand their teams.
In terms of embracing change, more than half (54.3%) of LMC survey respondents said they have adapted their business model over the past two years.
“Physical-store retailers are working hard to win the patronage and loyalty of today’s consumers, and this means doing more than simply providing access to quality goods and services” Harding said. “They are leveraging their advantage over online retail – including the abilities to offer a personal touch and distinctive experience. Our Outlook survey indicates that ‘convenience’ has become a central objective.”
Of those who’ve adapted their business model, 70% increased training and focused on customer service, nearly half (47.9%) increased their use of in-store technology — like digital coupons, price-check scanners, free-WiFi — and a significant percentage (have added in-store, online shopping with free shipping for out-of-stock items and in-store pickup and returns for online purchases (34.3% each). Technology is also playing a role in retail marketing, with more than half (52.9%) of adapted business model respondents saying they have increased their use of tech-centered marketing tools, including email, text messaging, SEO optimization, Google AdWords, banner ads and more.
“There is no doubt tech advancements have been a boon to retailers as they look to build brand awareness,” Melissa Sievwright, LMC’s vice president of marketing, said. “At the same time, they are gathering a wealth of customer data through various channels. This information, in turn, is being leveraged to help them build business and marketing strategies catering specifically to their customers’ patterns and preferences.”
Change is good, or so said Sievwright. Nearly two-thirds (60.1%) of those who have made adaptations reported they have seen benefits of sales and in-store traffic.
“This statistic has risen steadily, and by nearly 20%, since we added this survey question in 2016,” she said.
“It is no surprise, then, that our retailers continue to try new things,” Sievwright continued. “About one-third (33.6%) of our Outlook participants say they plan to adapt their model in some way during the coming year. When asked what they see as the biggest opportunities for their business, providing the highest-quality service and building customer relationships were – by far – the top themes.”