WHAT S DRIVING THE CLICK AND COLLECT MOVEMENT?

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1 Fall 2018 Quarterly Retail Spotlight Report WHAT S DRIVING THE CLICK AND COLLECT MOVEMENT? colliers.com/retail

2 What s Driving the Click and Collect Movement? Anjee Solanki National Director, Retail Services USA Andrew Nelson Chief Economist, CRE USA Neil Saunders Managing Director and Retail Analyst GlobalData Retail Contents 1 Introduction 2 Consumer Behavior 3 Click and Collect 4 Retail Spending Data 5 Holiday Views 6 In Conclusion QUARTERLY RETAIL SPOTLIGHT REPORT FALL

3 INTRODUCTION Anjee Solanki Consumers are excitedly embracing their 24/7 shopping superpower and it continues to become much more convenient and speedy! Click and collect is just another way to capture those seeking to have their purchases immediately it s a growing market and retailers are embracing how its done. Think of Walmart s new TV ads and drive through pick-up model for purchases made online. The popularity will continue blending the in-store and digital experience. More recently we have seen digital assistants such as Google Home, Amazon s Alexa, and Apple s Home Pod devices becoming the go-to for grocery and household purchases. As Google calls it Shopping Actions allows you to buy what you want when you want, handsfree. It s safe to assume that the retail revolution is underway. Fueled by innovation and inspiration from some unlikely places, brands are stepping up to capture consumers attention every which way. With all the activity, are we seeing an increase in retail spend in certain categories based on the ease of ordering? Are retailers adapting to the demand? We know one thing, immediate gratification is here to stay QUARTERLY RETAIL SPOTLIGHT REPORT FALL

4 CONSUMER BEHAVIOR DATA Number of Retailers Used by Broad Retail Sector Consumers are using more retailers than they did both last quarter and last year. Elevated levels of shopping and higher levels of spending mean that people are now visiting more stores both to browse and to buy. The strengthening of spend on apparel has resulted in a significant uplift in the number of retailers being used since last year. Number of Retailers Used by Shoppers in Each of the Following Retail Sectors Over the Past Three Months Average Number for Each Retail Sector Source: GlobalData Consumer Panel (n=15,000) Q Month Period Apr, May, June Q Month Period Jan, Feb, Mar Q Month Period Apr, May, June Change From Last Quarter Q v Q Change From Last Year Q v Q Food & Grocery Clothing Beauty Homewares Electricals Leisure Books, Music, Film QUARTERLY RETAIL SPOTLIGHT REPORT FALL

5 CLICK AND COLLECT Stores Are Playing More of a Role in Online Purchases As online continues to grow, the number of consumers who are picking up online purchases in store is increasing rapidly. The share of consumers who say they regularly use click and collect for online orders has almost doubled over the past five years. Many retailers, like Walmart, have expanded their collect from store services, even offering customers discounts for picking up over having orders delivered. Share of Consumers Who Regularly Collect Online Orders from Physical Store Percentage For Each Year Source: GlobalData Consumer Panel (n = c5,000 shoppers each year) 38.5% 28.9% 32.7% 15.4% 17.2% 19.3% 21.5% QUARTERLY RETAIL SPOTLIGHT REPORT FALL

6 Top Five Reasons for Using Click and Collect Percentage of Click and Collect Users in 2018 Source: GlobalData Consumer Panel (June 2018, n=5,250) REASON % More Convenient Than Home Delivery 57.5% Enjoy Visiting The Store 39.4% Cheaper Than Home Delivery 34.7% Can Get The Item Sooner 30.1% Can Easily Return The Item, If It Isn t Right 28.8% Click and Collect Drivers: Incremental Purchases The majority of consumers who pickup online orders from shops go on to make additional purchases when in the store. On average, an additional $8.59 is spent. Across all transactions in 2017, this equated to an extra $1.14 billion of spend made in shops. With the number of people using click and collect services increasing, this benefit will also grow over the next few years. QUARTERLY RETAIL SPOTLIGHT REPORT FALL

7 Spending Dynamics of Click and Collect Shoppers In-Store 2017 Full-Year Data Source: GlobalData Consumer Panel (February 2018, n=6,750) 59.6% $8.59 $1.14B Percentage of Consumers Who Usually Buy Other Things From Stores When Picking Up C&C Average Additional Amount Spent By Click and Collect Consumers When In-Store Total Benefit to Physical Retail in 2017 Landlords are embracing click and collect as technology is changing the shopping environment. We are supportive of initiatives that will enhance the customer experience and make our retailers successful long-term, but we must always consider the needs and restrictions of all of our tenants when considering possible pick-up locations. -Perry Chudnoff, Invesco QUARTERLY RETAIL SPOTLIGHT REPORT FALL

8 RETAIL SPENDING DATA Retail Spending Growth by Sector Beauty continues to be the highest growth sector, fueled by a number of favorable trends including an ageing population and strong retailers like Sephora and Ulta. Apparel has reversed its position from last year when growth was lackluster; it is now the second fastest growth retail category. Home segments continue to benefit from the relatively strong housing market, with the homewares and home improvement categories posting above average growth. Total Retail Spending Growth for Q2 Year-Over-Year % Growth Source: GlobalData 5.1% 4.9% 4.8% 4.7% 4.3% 3.9% 3.2% Beauty Apparel Homewares Home Improvement Furniture Food Electronics QUARTERLY RETAIL SPOTLIGHT REPORT FALL

9 Retail Spending Growth by Region Spending growth for Q did not vary significantly by region as all states enjoyed the benefits of the strong economy. The West came in below average, pulled down by significantly higher gas prices in California impacting spending. Stronger consumer sentiment in the Southwest, along with more moderate gas price increases, helped to boost growth. The Northeast came in around average. Total Retail Spending Growth for Q2 Year-Over-Year % Growth Source: GlobalData WEST +4.3% MIDWEST +4.6% NORTHEAST +4.4% SOUTHEAST +4.7% SOUTHWEST +4.9% QUARTERLY RETAIL SPOTLIGHT REPORT FALL

10 HOLIDAY VIEWS How Will Your Holiday Spending This Year Compare to Last Year? Percentage of Consumers Source: GlobalData WILL SPEND MORE WILL SPEND THE SAME WILL SPEND LESS 63.1% 24.3% 12.6% The Vast Mojority of Consumers Will Spend More This Holiday Season Thanks to higher consumer confidence and a robust economy, this holiday season looks like it will be a good one for retailers. A record 63.1% of consumers say that they plan to spend more than they did last year. Almost a quarter will spend the same, while a relatively small 12.6% are planning to spend less. IN DECEMBER, WE LL RELEASE OUR NEXT SPOTLIGHT REPORT, AND DELIVER METRICS COMPARING FOURTH QUARTER SALES TO DATE. QUARTERLY RETAIL SPOTLIGHT REPORT FALL

11 IN CONCLUSION Andrew Nelson The bad press about the nation s shopping centers continues, but meanwhile, physical retail is on a bit of a roll. With unemployment at a 17-year low, home prices at new highs and wages finally starting to climb, consumers are feeling confident enough to increase their shopping in stores as well as online. Even better, traditional retail categories like beauty and apparel are seeing some of the biggest gains. Still, the retail evolution continues in other ways. Click and collect is gaining acceptance and picking up momentum. Retailers and shopping centers will need to adapt to facilitate this trend. But there s a payoff: more incremental spend when consumers come to retrieve the goods they already purchased. Which retailers will lead the way? With high expectations for the upcoming holiday season, will someone crack code to enable easier click and collect? Stay tuned. The strength of the holiday spend in stores just might depend on it. About GlobalData GlobalData is one of the largest data and insights providers in the world, delivering unique data, expert analysis and innovative solutions to more than 4,000 companies across the globe. Copyright The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report. QUARTERLY RETAIL SPOTLIGHT REPORT FALL

12 Anjee Solanki National Director, Retail Services USA Andrew Nelson Chief Economist, CRE USA Neil Saunders Managing Director and Retail Analyst GlobalData Retail colliers.com/retail