Survey: Retailers optimistic; new store openings up
An annual survey finds retailers optimistic about the future despite inflation and pricing concerns.
The new year signals an opportunity for growth and strategic change for retailers in a moderating climate, according to Levin Management Corp.’s (LMC) 13th annual Retail Sentiment Outlook Survey, which surveyed retail store managers in the firm’s 125-property, 16 million-plus square feet leasing and management portfolio.
More than 30% of survey respondents anticipate opening additional store locations in 2024 – the highest figure since 2017. This aligns with national trending in which store openings continue to outpace closures, noted LMC.
“Despite ongoing concerns tied to rising prices and economic uncertainty, our tenants are moving forward on the momentum of strong post-pandemic performance,” said Matthew K. Harding, CEO. “There is room for them to grow, and opportunity for them to leverage the benefits of consumers’ love for the brick-and-mortar environment.”
The LMC survey also provides evidence that retailers recognize the importance of continually evolving. Nearly 45% of respondents said they have recently adapted or have plans to adapt their business model to maintain or improve their competitive advantage. Within that cohort:
- 67.4% note an increased focus on training and customer experience;.
- 47.2% are offering new or updated customer loyalty/incentive programs; and
- 39.3% have augmented their convenience-focused initiatives.
“Experience, convenience and loyalty incentives are the clear ‘secret sauces’ for retailers,” Harding noted. “These areas continually rate among their top priorities in our survey, punctuating the attributes that distinguish physical retail from its online counterpart. In fact, our survey participants ranked in-person customer service and support, and the social experience of in-person shopping as brick-and-mortar’s top advantages.”
Additionally, more than 25% of those who are adapting reported rolling out a rebranding or branding refresh.
“While not in the ‘top three’ adaptations, this is an impressive data point worth noting,” Harding said. “Brand transformations are enormous undertakings and show a true commitment to the future.”
Return to Normalcy
The Outlook Survey asked retailers to compare their latest annual and holiday seasonal sales to the prior year. Over sixty percent (64.8%) of respondents reported that 2023 annual sales volume met or exceeded 2022 levels, and 68% reported their holiday seasonal sales volume was the same or better year over year. While these figures top the survey’s trailing averages (61.3% and 65.9%, respectively), they reflect a dip from the past two Outlook surveys.
“After a couple of incredible growth years in this cyclical industry, some normalization is due,” Harding noted. “Still, our numbers show solid performance for a majority of our survey participants.”
More evidence of a return to normal can be seen in staffing and labor. Currently, 41.5% of LMC respondents are hiring, down from 48.3% one year ago and 62.6% two years ago. This is likely a sign that more retailers are fully staffed.
“This point is very good news following the extreme labor shortage the industry recently faced,” Harding said. “In August 2021, retail job openings peaked at nearly 1.3 million. The DOL’s most recent report of 616,000 openings in December shows this deficit cut in half and falls on the lower side of typical pre-pandemic numbers.”
Expectations and Drivers
Looking ahead, retailers’ overall sentiment regarding the coming year leans positive: 64.3% of LMC survey respondents are optimistic about their stores’ performance in 2024. Of the balance, feelings of uncertainty (21.6%) far outweigh pessimism (14.1%).
“Our respondents cited inflation/rising prices and the economy/consumer confidence as the top drivers they believe may impact their sales levels this year,” Harding said. “Yet all told, they are focusing on the ‘knowns’ over the unknowns and taking advantage of opportunities they can control to position themselves for success.”
For seven decades, North Plainfield, N.J.-based LMC has served as a single-source commercial real estate services provider for institutional and private owners. The firm’s next Retail Sentiment surveys will be conducted in June and October, exploring technology trends and mid-year performance, and gauging expectations and plans for the holiday season, respectively.