Retail, the most dynamic property sector, changes again – and always for the better.
For those trying to predict how the tale of retail will go, remember all of the experts and commentaries at the start of 2020 attempting just that. Those amounted to a big swing and a miss at an unprecedented coronavirus curveball. As the saying goes though, growth happens when you’re out of your comfort zone. Many retailers seized that opportunity and this one, too: never waste a crisis. Adversity is an opportunity to improve and further separate yourself from the competition, with teamwork and good ol’ thinking on those feet.
Retailers, including several of the largest chains, reacted to COVID-19 by adjusting to socially distant protocols and retrofitting stores to offer consumers alternatives like curbside, drive-thru and in-store pickups, in addition to online sales. As discussed in a recent blog, Tanger Outlets reopened their outdoor centers and saw a 90% business bounce-back from pre-COVID traffic averages. Customers have always prized convenience, which they get through the retailers’ online and in-app portals, as well as same-day pickup. And contactless pickup ensures safety through social distancing.
There’s more good news: the retail sector is accustomed to change. “Driven by continual shifts in fashion and consumer preferences, demographics, retailer innovation, and commerce technology, retail has always been the most dynamic property sector. Brands rise and fall, shopping patterns evolve, and retailers adapt. The process of ‘creative destruction’ never ceases,” according to PwC and the Urban Land Institute’s “ Emerging Trends in Real Estate 2021.”
Despite the ease of ecommerce, you can’t point and click your way to immersive “retailtainment” or even an authentic alfresco meal at your favorite restaurant. Customers value experience, now more than ever after a year of being cooped up at home. The pandemic will eventually be history, so balancing the bricks with the clicks, i.e., investing in the shopping experience to go with one’s online platform, is critical for business. Brian McGough, managing director for Hedgeye Risk Management, a Connecticut-based economic research firm, told Bisnow that “90% of retailers don't get it.”
A major question remains: how does the seismic event that made the year 2020 into a dumpster fire meme affect consumer shopping behaviors? eMarketer noted that many people either shopped online for the first time or shopped in new categories during the past 12 months. The work-from-home movement, which was called “the largest social experiment of all time” by one real estate research director, and the housing surge were definite trends away from dense living spaces and bricks-and-mortar commercial environments and toward more online consumer activity.
Retail researchers will be trying to pin down the “how many” and “how frequently” of the new consumer wave eMarketer referenced. Interestingly, the research firm also projected that ecommerce growth “will decelerate substantially this year” while overall worldwide retail will rebound to 5.1% growth, after a decline of 3% in 2020. January already showed signs of this as 23% of consumers surveyed by Coresight Research and reported by Bisnow said they purchased clothing and shoes in a bricks-and-mortar setting, a 6% bump from December, while online purchases of the same goods remained stagnant at 24%.
A retail sector on its toes? So it goes. For every pandemic punch in the economic gut, there are countless economic cycles that turn on you seemingly without warning, as well as the aforementioned tech disruptions, fickle consumer trends and other shifts, switches and transitions. Change is the only constant. For the retail sector, that’s business as usual, even amidst the very unusual.
