Levin Management Corp. (LMC) has been polling tenants at its leased and managed shopping centers annually each fall for the past decade at the start of the holiday season. And while this year is clearly different than the rest – and the North Plainfield-based commercial real estate services firm’s Pre-Holiday Retail Sentiment Survey crafted accordingly – retailers again weighed in on sales, traffic and their optimism. The takeaway? While the global pandemic has made an indelible mark, there are some brighter-than-expected results.
When asked to categorize their September/October sales and traffic compared to the same period last year, more than half of the LMC survey respondents reported levels at a similar pace or higher. For the groups indicating higher sales and traffic, about three quarters noted that the increases were modest (in the 0-25% range). At the same time, those reporting decreases also largely said the drops were modest.
“2020 has been nothing like we’ve seen before, but with our nearly seven decades of history and deep expertise serving the retail community we know that this industry continually experiences ups and downs,” noted LMC’s Matthew Harding, chief executive officer. “Yet even within that context, this early fall performance really is a positive sign for a sector that was largely shut down just months before.”
While only 36.2% of the LMC pre-holiday survey participants noted they could correlate an uptick of sales in November to holiday shopping, more than half (54.5%) believe their overall holiday sales will hit the same or a higher level than last year. “Again, while this number is lower than past surveys, we view it as positive in light of current circumstances,” Harding said.
LMC retailers’ experience supports other industry studies. For example, a holiday survey by the National Retail Federation found that COVID-19 cases would have no impact on holiday spending for 55% of shoppers. And looking at the Thanksgiving through Cyber Monday period, the NRF reported an average spend of $311.75 on holiday-related purchases – which is down from $361.90 last year but closely mirrors 2018’s average. While the number of shoppers tracked by the NRF during the same period dropped slightly from 189.6 million in 2019, this year’s 186.4 million shoppers far exceeded the 165.8 million total in 2018.
Harding noted that both the LMC survey results and his team’s own recent experience working with retail tenants points to the creativity and agility of the industry as it adapts to successfully move forward and accommodate customer needs. Following months of shifting operations to adhere to a variety of evolving health and safety protocols, retailers made even more changes specific to managing in-store traffic levels during their traditionally busiest season.
“Nearly half [47.1%] of our respondents have created additional holiday fulfillment options – such as online ordering for store or curbside pick-up, shipping, or delivery service,” Harding said. “And many respondents have implemented multiple modifications with customer convenience and safety in mind.” These include designated areas for click-and-collect orders, including in-store or curbside (25.5%); increased hours (21.6%); longer promotion periods to avoid “the rush” (20.6%); and shopping reservations/appointment times (12.7%).
Open-air shopping centers comprise the bulk of LMC’s 110-property, 15.5 million-square-foot portfolio, which has afforded some advantages to the firm’s tenants, according to Harding. Not only do neighborhood, community and power centers house traffic-driving essential categories like grocery and home improvement, they also provide a higher level of operational flexibility and convenience than other product types.
“We have been able to work with restaurants to increase outdoor seating where possible and set up contactless curbside pickup for inline tenants” Harding said. “Our team also has assisted centers with social media marketing and signage to help them promote safety practices and communicate that they are open for business. These efforts have enabled our retailers to tailor their operations to the wants and needs of consumers.”
Positive property manager/tenant relations have always been important, but this year has really brought this vital dynamic into focus. “Small and mid-sized retailers, especially, have needed to exercise adaptability, and we have worked with them through the process on a tenant-by-tenant basis,” Harding said. “Central to their success has been a focus on moving forward, with an enhanced level of advocacy, flexibility and support from their shopping centers’ operational teams.”
LMC’s Retail Sentiment surveys reflect the firm’s commitment to understanding issues and trends impacting retailers from a street-level perspective. In addition to the pre-holiday poll, the surveys are traditionally conducted in January, exploring outlooks for the coming year, and in May, exploring technology trends and mid-year sales performance.