Despite the reported demise of retail properties, not only is the retail industry experiencing some renaissance, but operating fundamentals are considerably stronger than a year ago and, in many cases, several years ago. Operating fundamentals and performance metrics are stronger today than before the pandemic. !
As you might expect, stay-at-home / work-at-home orders have created an incredible demand for online shopping for everything from essentials like food and clothing to toys, games, fitness equipment, home furnishings. desktop (for our new job – home offices), enlarged screens, laptops, iPads, upgraded mobile devices, adult drinks (a lot of these), etc. The pandemic has certainly accelerated the trajectory of online or online performance. The acceleration of online shopping had already started to take shape long before the arrival of the pandemic in the United States. . In December 2021, with so many retail establishments reopened and bustling with activity, online revenue growth is actually slowing.
In fact, according to The NPD Group, leading industry analysts, brick-and-mortar sales accounted for 64% of all retail sales as of September 2021. Consumers have returned to brick-and-mortar stores, with pent-up demand for the store, in-person experiences swept away by the effects and concerns of the pandemic. In addition, NPD reports that in the first year of the pandemic, from April 2020 to March 2021, year-over-year online sales growth exceeded 40% every month. Since then, however, e-commerce revenue growth has remained below 10%.
Retailers had been busy resizing their store formats even before the effects of the pandemic really took hold. Retailers have been more successful than others, moving from a strictly physical in-store presence to implementing an aggressive omnichannel retail / experiential concept. As Steve Miller, senior vice president of strategy, ecommerce and analytics at Dick’s Sporting Goods suggested during Adweek Trade Week, “the future of retail is experiential.” It’s that mindset, and outside of the proverbial (big) box thinking that Dick’s embraced, making huge investments in their in-store experiences. Their âHouse of Sportâ concept includes 100,000 s / f stores with a variety of playgrounds, offering unique consumer attractions and great experiences. The future of retail will also rely heavily on partnerships and strategic alliances to develop the two brands. For example, the partnership between Dick’s and NIKE will offer buyers the ability to connect their loyalty memberships across each brand. Once there, consumers can purchase an expanded selection of NIKE products, receive invitations to special in-store events, and access new experiences and relevant content.
Dick’s Sporting Goods is not the only major retailer to expand its retail concepts to attract and expand its customer base. These sophisticated retailers take a very methodical and measured approach to store locations. They no longer open stores on every street corner or in every closed mall in the United States. Rather, their current approach is to create experimental and strategic in-store experiences that will attract and retain consumers. They don’t just think about increasing brick and mortar store revenue in the short term. Instead, they’re laser-focused on building the foundation for creating future devotees of all ages through experiential offerings. Retailers are more committed to expanding their presence and revenue in existing markets by capturing or converting new consumers to their brand and lifestyle.
The strategies and initiatives undertaken by these companies and their ability to adapt to changing consumer trends also appear to be working. In fact, retail and restaurant sales (excluding auto / truck, vehicle parts and gasoline sales) actually increased 16.5% in the first 10 months of 2021, year-over-year, according to an advanced estimate from the US Census Bureau. Several retailers have introduced or are in the process of rolling out new, expanded concepts in the coming months. A few of these concepts include: Public Lands (Dick’s Sporting Goods), House of Sport (another Dick’s Sporting Goods concept), Amazon Fresh (Amazon’s offline grocery portfolio), IKEA Planning Studio (the design specialists IKEA assist consumers with design, ordering, etc.) and Popshelf (Dollar General concept within a store) featuring refreshed home decor, party favors and seasonal items. TJX has enhanced its consumer offerings with the introduction of new concepts to the market such as Sierra, HomeSense and Nordstrom Local, which offer online order pickup and return, as well as modifications and advice to consumers.
It is no coincidence that these brands and concepts feature some very important and highly visible themes, strong creditworthy tenants with impressive balance sheets and superior access to expanded resources.
The demand for well-located and performing retail assets has also accelerated significantly in recent months. Until the end of September 2021, the strength and performance of the retail industry was remarkable and quite impressive. Newly released data points suggest retail demand through October remained impressive and suggest “sustained positive economic momentum” for the sector. A senior executive at a large commercial services firm reports that “retail sales are on the rise, the strongest on record.” Even if inflation is factored in, core retail sales revenues have grown by an impressive amount, as mentioned earlier. In fact, retail sales are up almost 21% from pre-pandemic levels! Foot traffic to physical retail stores was said to have “fully returned” to pre-pandemic levels. Several remarkable concepts are benefiting from an inspired brand revitalization, resulting from the renewed commitment of retailers to offer consumers a truly intuitive omnichannel experience and demonstrating that the future of commerce will most certainly be centered on creating unique consumer experiences. .
David De Lise is the Business Unit Manager at Berkshire Hathaway Verani Realty, Londonderry, NH.