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Over a quarter of brick and mortar retailers say they will open additional stores this year
The U.S. economy is looking pretty strong lately, with employers adding 517,000 jobs in January, the unemployment rate hitting the lowest it’s been since 1969, and inflation falling (though not fast enough according to economists).
Also feeling good about the way things are headed: brick-and-mortar retailers.
A recent from survey commercial real estate services firm Levin Management Corporation (LMC), found that retailers are largely optimistic about the coming year, though there is still some trepidation about the economy.
The Outlook Retail Sentiment Survey, which polled retail store managers in LCM's 125-property leasing and management portfolio, found that over 76% of them said their 2022 sales matched or exceeded the prior year, which the company notes is the highest percentage the survey has ever seen.
Most of think that will continue into this coming year, as nearly 70% said they are optimistic about store performance in 2023, and over a quarter of respondants even said they anticipate their company will open additional locations in the next 12 months.
When asked what they feel is the top advantage brick-and-mortar provides over online retail, the most popular answer was customer service and support, even though is a fraught area for retailers: most people say the in-store shopping experience is worse now than pre-COVID, acccording to a recent survey, and the reason why is because of understaffed stores, or staff who are poorly trained.
These issues that consumers have with employees should not be taken lightly, either: 50% said they had stopped shopping at a store after having a bad experience with a staff member.
According to the LMC survey, the problems with understaffed stores should be easing, at least, as only about 23% of LMC survey participants said they anticipate labor availability will affect their business significantly in the coming year.
Meanwhile, around half of the survey respondents say they are in hiring mode, compared to over 62% who said the same last year; of those, 56.3% said it is harder to find qualified job candidates than in the past, compared to over 70% in the 2022 report.
The second highest differentiator cited was the social experience of in-person shopping, though this has also been a problem among consumers in recent years: even before COVID, people were dissatisfied with the experience of buying things in-store, as a 2019 survey of shoppers found that 80% said they feel they’re not receiving a personalized shopping experience.
Luckily, the LMC survey found that stores are finally starting to close that gap as well, with nearly 40% saying their companies have recently adapted , or have plans to adapt, their business and, of those, nearly 80% said they would be making changes to increase training and focus on customer experience.
Meanwhile, more than half introduced new or updated loyalty or incentive programs.
Not everthing is going to go smoothly, of course, as retailers still see potential problems in the near future with economy/consumer confidence, which 68% could be a negative factor in the coming year, followed by 62% who said inflation/rising prices.
To wit, more than 80% of LMC survey participants said they have raised prices due to inflation over the last year, though about half said they have increased less than 10%. Of those who raised prices, 34.7% expect to raise prices further.
“Brick-and-mortar retail had an impressive year,” Matthew K. Harding, CEO at LMC, said in a statement.
“Beyond the survey metrics, the evidence is clear at retail properties – especially open-air shopping centers along main retail corridors here in the Northeast – which have fewer vacant storefronts and an array of new brands side-by-side with established favorites.”
(Image source: addictioncenter.com)
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