By Joshua Burd
Retailers are increasingly focused on growth in the year ahead, with plans to open new stores and adapt their businesses in hopes of staying competitive.
Those are among the findings of the latest survey by Levin Management Corp., the North Plainfield-based real estate services firm. More than 30 percent of respondents anticipate opening additional locations in 2024, the highest figure since 2017, in a trend that is also playing out nationally as store openings continue to outpace closures.
What’s more, nearly 45 percent of respondents to LMC’s annual Retail Sentiment Outlook Survey say they’ve recently adapted or have plans to adapt their business model to maintain or improve their competitive advantage.
“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, LMC’s chief executive officer. “There is room for them to grow, and opportunity for them to leverage the benefits of consumers’ love for the brick-and-mortar environment.”
Now in its 13th year, the poll asks retail store managers in the firm’s 125-property leasing and management portfolio, which spans more than 16 million square feet in the region, about their performance, plans and expectations. Its findings this year include evidence that retailers recognize the importance of evolving in what has always been a mercurial industry.
Of the nearly 45 percent that have adapted or plan to adapt:
- 4 percent note an increased focus on training and customer experience
- 2 percent are offering new or updated customer loyalty/incentive programs
- 3 percent have augmented their convenience-focused initiatives
“Experience, convenience and loyalty incentives are the clear ‘secret sauces’ for retailers,” Harding said. “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. What they are doing to evolve correlates directly.”
Additionally, more than 25 percent of those who are adapting reported rolling out a rebranding or branding refresh, LMC found. That was especially notable, Harding said, describing brand transformations as “enormous undertakings (that) show a true commitment to the future.”
The Outlook Survey asks retailers to compare their latest annual and holiday seasonal sales to the prior year. In the latest poll, 64.8 percent of respondents reported that 2023 annual sales volume met or exceeded 2022 levels, while 68 percent reported their holiday seasonal sales volume was the same or better year over year.
While those figures top the survey’s trailing averages of 61.3 and 65.9 percent, respectively, they reflect a dip from the past two Outlook surveys. They also mirror forecasts and findings by industry leaders like the National Retail Federation, which report continued sales growth but at a slowing pace.
“After a couple of incredible growth years in this cyclical industry, some normalization is due,” Harding said. “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, according to LMC’s summary of the results. Currently, 41.5 percent of survey respondents are hiring, down from 48.3 percent one year ago and 62.6 percent two years ago. The firm said that, coupled with the most recent U.S. Bureau of Labor statistics, this is likely a sign that more retailers are fully staffed.
The survey also provided a look ahead, finding that 64.3 percent of respondents are optimistic about their stores’ performance in 2024. Of the balance, 21.6 percent said they have feelings of uncertainty, while 14.1 percent reported feeling pessimism.
“Clearly, like all business sectors, retail is facing some unknowns and preparing for potential challenges in 2024,” Harding said. “Our respondents cited inflation/rising prices and the economy/consumer confidence as the top drivers they believe may impact their sales levels this year. 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.”
