Survey Shows Retail Tenants More Confident Than Ever

NORTH PLAINFIELD, NJ—The first half of 2018 was a healthy period for shopping center tenants, according to participants in Levin Management Corporation’s annual Mid-Year Retail Sentiment Survey.

The survey, which gauges year-to-date store performance and checks in on the latest technology trends, generated the strongest numbers in its seven-year history.

Some 71% of survey respondents report sales at or above the same level as last year. This compares to a trailing six-year average of 54.2%. Additionally, 64%%  report shopper traffic at the same or a higher level year-over-year (compared to a 52.8% trailing average).

“It comes as no surprise that this robust start to the year has retailers confident about the coming months,” says Matthew K. Harding, Levin president. “Nearly three-quarters [73.5%] of our survey participants expect July to December performance to match or exceed the first half of the year.”

Levin’s mid-year survey traditionally explores technology issues impacting the retail industry. The current results reflect forward movement in the ways tenants are responding to e-commerce influences and leveraging tech advancements to serve and engage customers.

“The latest findings are highly encouraging,” Harding says. “Our retail tenants are using technology to their advantage at an increasing rate and in a variety of manners.”

More than half (51.8%) of survey respondents reported that e-commerce has prompted their companies to adapt their business model in some way – or ways. Most notably, 72.7% of those respondents cited increased training and focus on customer service.

This emphasis on enhancing the bricks-and-mortar shopping experience through employees also is reflected in the National Retail Federation/Forrester “State of Retailing Online” study, which reported that 61% of retailers plan to spend more on supporting their store associates’ ability to service clients.

“Personal touch and human interaction will always distinguish physical store retail from online shopping,” Harding says. “The retailers that recognize this will be best positioned to compete moving forward.”

Levin tenants appear to be embracing change in several important ways, Harding says.

Specifically:

• 68% of respondents who have made adaptations have added in-store services and/or incentives.
• 1% of adaptors have added in-store pickup and returns options for purchases made online.
• 5% of adaptors have altered their store prototype (i.e. smaller store size or increased focus on showrooming).
• 2% of adaptors have incorporated “experience” draws such as demonstrations, classes, performances or other in-store events.
• 6% of adaptors have increased coordination between online and bricks-and-mortar operations.
• 3% of adaptors have adjusted store inventory (i.e. fewer in-stock SKUs, larger quantities of popular items).

According to 60.1% of survey respondents, these initiatives appear to be working. This statistic marks a significant jump in affirmative responses; the trailing three-year average shows 47.2% reporting measurable positive results from e-commerce-influenced adaptations.

The survey also points to increasing connections between traditional and online retailing. Sixty-eight%  of survey participants noted they currently offer an online option for purchasing goods, scheduling appointments for services or placing orders for pick-up, up from 49.8% of respondents last year.

Retailers continue to leverage technology to offer incentives and conveniences for shoppers, both in-store and externally, according to the survey.

Four on-site technology tools ranked high, used by more than one-third of the respondents that embrace tech-based marketing. They include digital coupons, discounts and/or loyalty points (73.9%); free Wi-Fi (43.5%); the option to pre-order items online/pick up in store (43.0%); and in-store, online ordering with free shipping for out-of-stock items: (34.8%). Popular external tech-based marketing tools include Email (80.3%); social media/social marketing (73.9%), banner ads or other internet advertising (42.7%), and text messaging (40.8%).

“Social remains an interesting—and evolving—platform for retail,” says Melissa Sievwright, Levin vice president of marketing. “Facebook and Instagram are the clear leaders for our tenants; 91.1% and 55.1% of mid-year survey respondents that use social media leverage these platforms, respectively. About one-third use Google+ and Twitter. Ultimately, social media has become an active channel for commerce and will continue to play a significant role moving forward.”

Additionally, 43.5% of tech marketing-focused survey participants are enhancing their social media presence with paid options, such as Facebook sponsored content or ads. Many are also leveraging social marketing platforms; Yelp is the most popular, used by 65.1% of respondents, followed by Groupon/Living Social, and Waze and other GPS programs.

Overall, technology-based marketing continues to grow as a priority for retailers, with 44.4% of survey respondents who employ tech-based marketing saying they have increased their volume in 2018. Multiple survey participants noted they have new tech-based initiatives in the works.

For the first time, the survey asked participants whether they are actively employing technology to analyze customer and/or sales data for the purpose of merchandising, creating services and menu options, planning in-store events, or creating individualized special offers.

“An impressive 64.7% of our respondents indicated they are using the information being captured via technology outlets to influence their business,” Sievwright says. “Our tenants are getting to know their clients’ habits and preferences and are applying this insight to enhance and personalize their shopping experiences. In that sense, data is driving retail strategy, presenting one more way that technology is helping companies better serve customers and ensure future success.”

Levin’s next Retail Sentiment surveys will be conducted in October/November, gauging expectations and plans for the holiday season, and in January, exploring outlooks for the coming year.