Commercial real estate firms CBRE and Levin Management Corp. both announced they expect brick-and-mortar to see a boost from holiday shopping in the coming weeks.
CBRE said it expected four major trends to influence this holiday season.
The trends include:
Rise in short term leases – According to the firm, pop-up shops are becoming more and more favored by both retailers and retail-center owners. CBRE said it expects the trend to be accentuated by several of the largest mall owners in the country who have designated space in their properties for pop ups, which will also allow for a shifting roster and experimentation.
“Landlords that have faced increased vacancy from retailer closures, especially in the mall and high-street segments, see holiday pop-ups as an opportunity to generate revenue from an otherwise vacant space,” said CBRE in its report. “At the same time, landlords with high-performing properties with fewer vacancies see pop-ups as an opportunity to appeal to consumer demand for ‘new and different’ driving up traffic and revenue.”
Increase in Mobile “M-commerce” – while CBRE acknowledges that e-commerce will continue to claim a growing portion of retail sales, the brokerage firm said that more than a third of e-commerce sales will occur on phones and tablets. Using data from eMarketer, CBRE said retailers will, likely, adopt m-commerce for customer service, mobile marketing and facilitating sales.
“As consumer expectations for convenience and speed continue to rise, brick-and-mortar brands are adding mobile technology as an integral component to omnichannel success,” said CBRE in its report. “eMarketer forecasts 38 percent growth in retail sales made through a phone or tablet in 2017 (full-year), accounting for 34.5 percent of all e-commerce purchases and the majority of which will go to brick-and-mortar brands.”
Growth in discount retailers – According to the firm, demand for off-price and low-priced products has increased significantly since the 2008 recession. This season, as retailers continue to compete for a bigger market share, they will continue to be more and more sensitive of pricing to drive sales.
“Sales growth among key discount retailers has outpaced growth in other pricing categories, demonstrating consumer demand for better deals,” CBRE said. “JPMorgan recently announced that off-price retailers have increased their sales by $14 billion since 2011 and that key off-price retailers TJX, Ross Stores and Burlington are expected to see additional sales growth of nearly $19 billion by 2021. On Wall Street, investors are betting on this success, with share prices up this year for many discount and off-price players and TJX in particular raising forecasts for year-end sales.”
Increased demand for industrial – CBRE expects the increase in pop-up retailers to affect warehousing as well. The firm said that as e-commerce continues to push toward faster service, and strategies in e-commerce become adopted by brick-and-mortar retailers, a model known as ‘pop-up warehousing’ has entered the market. The model, according to the firm, exploits excess warehouse space and leases it on a temporary basis.
“Thus far, the net result of leveraging an on-demand model is that a warehouse user with large seasonal inventory peaks can quickly find excess space and commit to only the time needed. A study by Flexe, one of the early on-demand warehouse providers, found that users who utilize on-demand flexible warehouse space to augment a single-peak seasonal inventory surge can improve warehouse utilization by almost 100 percent and cut overall seasonal warehouse and inventory costs in half,” CBRE said. “In a multi-peak scenario, where inventory surges more than once per year, warehouse utilization improves by 40 percent and costs are cut by 20 percent to 30 percent.”
Levin Management on the other hand, said that based on its annual ‘Pre-Holiday Sentiment Survey’ retailers anticipate a similar or better than last year.
“From a ground-level perspective, 2017 has been a positive year for retailers within the LMC portfolio, and the survey findings support our observations,” Matthew Harding, LMC president, said. “Busy shopping center parking lots and more than two dozen new store openings testify that the economy is strengthening, and consumer confidence is rising. In fact, The Conference Board reported that in October consumer confidence registered at its highest level in nearly 17 years.
“It comes as no surprise, then, that more than three-quarters – 76.9 percent – of our survey participants expect sales to be the same or better than last year’s holiday shopping season. This optimism is reinforced by projections from our industry’s largest trade organizations.”
Levin said that 48.7 percent of retailers surveyed expect holiday sales to peak before and during Thanksgiving and Black Friday weekend.
The firm said that following the expected peak in sales during Thanksgiving weekend, and this being the first time in five years where there are four weekends before Christmas, retailers can expect additional sales.
Harding said Saturday, Dec. 23 will, most likely, be the second busiest shopping day this year after Black Friday.
And like CBRE, Levin found that local and regional retailers will exploit digital tools to drive sales and engagement.
“The LMC Pre-Holiday Survey results emphasize retailers’ efforts to engage customers and enhance their in-store experiences during the 2017 holiday season,” Levin said in a news release. “Continuing an established trend, technology-centered marketing is playing a key role as bricks-and-mortar stores work to compete in an increasingly digital world.
“More than half (52.3 percent) of respondents who use tech-centered marketing tools report their efforts have boosted holiday sales in prior years. To that end, 96.2 percent of those respondents will employ the same amount or more technology-centered marketing for the 2017 holiday season.”