This weekend we asked the question, “Which had the biggest impact on retail in-store sales this holiday season?” The choices for the answer were: the weather, online shopping, the economy, and gasoline prices. There were a total of 47 votes. According to our poll result, the leading response was online shopping, with 53% selecting it. 21% chose the weather as being the most impactful, 15% chose the economy, and 11% gasoline prices.
Let’s discuss the bottom three answers first. The weather in much of the country has been bizarrely warm. It is a truism in the retail industry that cold weather spurs clothing sales. More seasonal late fall/early winter weather sends shoppers into department stores and clothing stores to buy sweaters, coats, and winter fashions. There is kind of a delicate balance because stormy weather can keep shoppers at home if it is too bad to travel. The nice but unseasonably warm weather could have been ideal for people to flock to malls and retail centers.
The economy, while much improved, has not left people in all income groups feeling confident enough to really open their wallets and run up their credit card bills. This is reinforced by the rhetoric by presidential candidates on both sides of the aisle. Then, add to this the nervousness about being in crowds propagated by recent terrorist activities here and abroad.
The 11% that answered gasoline prices were, I think, indicating that they were more inclined to shop in stores because less of their disposable income was being used to fill up their gas tanks. Gas prices have been relatively low all year, and that has left an extra few hundred dollars in most car owners’ pockets. Whereas the other three choices were likely negatives for in-store sales, gasoline prices presumably were a positive.
Online shopping as the dominant response for what has most impacted holiday in-store retail sales should not be a surprise to regular readers of the QuantumListing Blog. At the beginning of December, we conducted another one question, 24 hour Twitter poll, “Where do you plan on doing most of your holiday shopping?” The result for that showed that only 52% of the respondents were planning on doing most of their shopping in retail stores. A combined 42% said they were going to do most of their shopping on Amazon (27%) or other retail websites (15%). An article published on Christmas eve in Fortune cited evidence that in-store sales and traffic fell the weekend before Christmas, compared to a year earlier. The same article also said that Amazon had 55% of all online sales, which is not too far off from what our poll suggested might be the case.
Bricks and mortar retailers have an uphill battle. They are up against the convenience of online shopping, which is time saving, can provide fast delivery and easy returns, and has pricing transparency, allowing shoppers to easily compare one site or store against another. Faster internet speeds available to most online shoppers and websites that are better designed and work better than they used to, add to the appeal of online shopping.
I’ve been in the retail real estate industry for almost thirty years. I’ve seen several disruptions which have caused the industry to reinvent itself several times. Retailers and landlords are creative and dynamic and up to the challenge. I expect a lot of soul searching to occur amongst them over the next few months, with some really interesting responses to follow. In-store retail is not dead, it is just in need of a periodic makeover.
I think that we’ll see omni-channel retailing continue to gain in importance. Even Amazon has opened its first store! So whether it is a company like Warby Parker that started online and moved into retail locations, or good local retailers wanting to expand their footprint online, successful retailers are going to have do things differently than they have been.
Landlords who want to have great shopping centers will have to create places that provide experiences in addition to providing goods and services. Giving people a reason to leave their homes where they can binge watch tv and movies on their home entertainment systems is an important part of the equation for future in-store retail success. Creating social spaces is an important part of successful shopping centers’ and downtowns’ futures.
In the end, we will all benefit from the rise of online shopping. We’ll end up with better shopping experiences. The variety of goods available to just about anyone, just about anywhere at the best prices is unprecedented. And, we should expect nicer environments and better experiences when we go out shopping. Not bad, right?
David Perlmutter is the author of the QuantumListing Blog and publisher of the QuantumListing App. He is also the owner of Perlmutter Properties Inc. in White Plains, NY.