How many times have we heard in the last decade that retail was dead? While the closing of numerous brick-and-mortar retail stores, especially those of large chains, is undeniable, retail continues to make a comeback.
And the optimism for its resurgence in 2022 is there.
At least, that’s the take from Matthew Harding, CEO of Levin Management Corp., which recently published findings from its 11th annual Retail Sentiment Outlook survey, which polls retail managers from within.
“People like to shop, and they like to shop in person,” Harding said. “Retail is on a positive trajectory, and tenants within our leased and managed portfolio are embracing that — despite some significant ongoing challenges.”
Levin Management operates a 120-property, 16 million-square-foot portfolio. Harding isn’t ready to give up on it — no matter what the naysayers offer.
“Brick-and-mortar retail business has been declared dead a number of times,” he said. “All kinds of things were going to do it in, and nothing has. It’s evolved, it’s always evolved and needs to evolve.”
Biggest challenge: Labor
Labor shortages, supply chain disruptions and rising inflation are still lingering effects of COVID-19, according to the 11th annual Retail Sentiment Outlook by Levin Management Corp.
Levin CEO Matthew Harding said hiring remains a concern, with close to 70% of respondents experiencing difficulty. The only bright spot: That number was closer to 80% a year ago.
Retailers are working hard to win new hires. When asked how they are incentivizing new hires beyond hourly wage, LMC Outlook survey participants cited hiring bonus programs, additional commissions and tips, paid time off and health benefits.
Harding noted that, while some retailers go out of business, new ones open. Store owners are always doing different things to show their strength and come out on top, and that is what is enduring in the aftermath of the 2020 pandemic, he said.
“Retailers have adapted in a number of ways and made changes — online ordering, pickup in store, curbside pickup, all kinds of other things,” he said. “But, fundamentally, brick-and-mortar retail — and, in particular, open-air brick-and-mortar retail — has bounced back in a very big way and really underscores how it’s here to stay.”
According to the survey, half the respondents said that their company has adapted its business model to improve its competitive advantage.
More than half of them (55%) have increased training and focus on customer service, and 55% increased their use of technology-centered marketing tools in-store.
Other adaptations included an array of protocols to make customers feel safe during a shopping experience, from hand sanitizer stations to new methods of shopping, and operating a hybrid store that fulfills online orders or anything that helped patrons minimize their time in the store — letting the customer choose the best experience for themselves is key.
In terms of performance, Harding said the there wasn’t much of a surprise in the survey. Three-quarters of its respondents said annual sales volume exceeded 2020 levels.
Yet, there are still concerns, he said.
Biggest surprise: More leases
The number of long-term leases signed during 2021 exceeded that of 2019, according to the 11th annual Retail Sentiment Outlook by Levin Management Corp.
Levin CEO Matthew Harding said a number of factors were in play.
“I think that the speed with which brick-and-mortar retail recovered really changed from having a foot on the brake to putting a foot on the gas,” he said. “Not only with reopening stores and getting customers back inside, but opening new stores, and taking advantage of a real estate market that was good, it shows confidence.”
E-commerce remains a worry. And, today, there are more e-commerce retailers now opening stores. Harding used Amazon as an example. It is going deeper into brick-and-mortar retail and opening its independent supermarkets in certain locations.
Overtime, Harding said data from other surveys Levin has compiled shows technology has become less of a threat and more of a help.
“As a retailer, you can advertise more efficiently, targeting your customers and promoting things directly to them, than you could before,” he said. “You can have an online presence that helps you promote sales, advertise specials and new items.
“The use of technology by brick-and-mortar retailers has really balanced things out in terms of what the belief was 10 years ago, when everyone thought the internet was going to put brick-and-mortar out of business.”
Adjusting, Harding said, is part of the business.
“There are so many moving parts as we settle into 2022, but retail is an industry that is accustomed to continual change,” he said. “Tenants are trying new approaches and embracing opportunities despite challenges — and that is encouraging.”