Retail Perspective. Survey Says: Malls Still Matter. 62 percent of shoppers surveyed visited a mall up to six times in the last three months

Transcription

1 Retail Perspective Survey Says: Malls Still Matter Flash back in time, give-or-take 40 years, to the inception of the U.S. mall as we know it today. It wasn t just a master-planned, airconditioned, box meant to satisfy suburbanites boredom and quench their thirst for material possessions; it was intended to be a community center, a gathering place for families and friends. A place to socialize, see and be seen and today, despite its evolution, the modern mall s principles hold true to its roots. The concept succeeded and still does. Today, there is more than ten billion square feet of retail space in the United States. While consumer shopping habits have changed, it isn t the radical shift you may think, according to JLL s Shopping Preferences Survey, which polled nearly 3,000 shoppers nationwide. The survey s results indicate that despite the expansion of online shopping alternatives, malls and other brick-and-mortar retail options remain an essential venue for consumers to purchase goods. According to JLL research, 62 percent of shoppers surveyed visited a mall up to six times in the last three months, while three in 10 shoppers said they made more than six trips. JLL s Shopping Preferences Survey uncovers what s driving shoppers to their local mall and what s keeping them coming back: Store selection, location and environment ranked as the top attributes to a mall s consumer appeal. Service-and recreation-oriented retailers support the shift from needbased shopping to entertainment-based shopping. New era of consumers want information pushed to them through promotional s, mailers and social media The mall might not be for everyone or for every buying need; however, shoppers who forego a trip to the mall aren t necessarily jumping on their laptop and mobile devices as an alternative to purchase products. More than 75 percent of respondents indicated that if they choose not to shop at the mall, they still venture out to physical retail locations like strip-centers, big-box, discount or wholesale venues. 62 percent of shoppers surveyed visited a mall up to six times in the last three months

2 Four Attributes Driving Shopping Expeditions With 97 percent of shoppers polled reporting they ve visited a mall at least once in the last month, it begs the question what is motivating shoppers to get in the car and go? Not surprisingly, store selection was the top driver of mall visits with nearly half of respondents indicating it s the leading factor for their trip. Having the right retailers as well as the right variety is, and will always be, the lifeblood of a center get the mix wrong and consumers stop shopping. Nearly three-quarters of mall-goers indicated that when they venture to their retail destination of choice, they ll visit up to five stores, with nearly 20 percent hitting between six and eight stores. If consumers take the time to venture to a brick-and-mortar location, they re making it worth their while. JLL research found that while store selection is the primary driver, it s not the only element consumers weigh for their excursion. Shoppers noted that aside from store selection, how well-located and accessible a mall is was the second most crucial influencer. In addition to understanding or anticipating changes in traffic flow patterns to reduce congestion, a mall must perpetually make ease of access paramount to maintaining its sense of place proving yet again that the tried-and-true real estate principle of location, location, location heralds success. Put simply, shopper demand will simply go elsewhere, regardless of the strength of the center, if it s not user-friendly and navigable environment. 97 percent of shoppers polled reporting they ve visited a mall at least once in the last month Regardless of how well-located and connected a retail place is, it will only attract visitors if it has an offer that meets the demanding requirements of its customer base. A mall s environment was the third top driver for shoppers, who indicated they seek out spaces that meet their physical needs with amenities like free WiFi, comfortable seating areas, mobile charging stations and children s play areas. Additionally, malls need to meet an emotional need for consumers, which hinges on safety and security. While new development is generally still slim, there is an opportunity for existing retail places to improve their environment through clever redesigns, and playing to its advantages. Retail places have to create an environment which is attractive and fulfilling enough to draw time-constrained consumers away, which is done by creating an experience that online can t match. 2

3 Consumers Demand an Experience or Convenience Today's consumers need a reason to come to the store, beyond making a transaction, because that can take place anywhere. According to JLL s survey, consumers are spending money at the mall, with more than three-fourth of shoppers shelling out on average $100 in each visit; however, the pressure is on for shopping centers to maintain and increase that traction. In a world where time is the new commodity, nearly 80 percent of shoppers surveyed would be more inclined to visit a mall if it had more convenient service or health businesses. Nearly a quarter of the space in U.S. shopping centers is occupied by businesses other than shops and restaurants1, and increasingly - dentist offices, medical urgent care clinics, yoga studios and grocery stores, are becoming standard tenants. While unconventional, these tenants can attract a regular shopper base, and benefit retail owners by bringing up occupancy rates, resulting in increased rent roll revenue. Shoppers expectations of shopping venues have shifted dramatically with two-thirds of survey respondents indicating they would visit a mall more frequently if there was an entertainment component. The share of non-retail shopping center revenue continues to rise as malls become destinations, with ice rinks, bowling alleys, theme parks and performing arts centers. Today, offering the right balance of the tangible and intangible is how retail centers remain resilient. Owners of retail real estate can make strategic changes and additions to increase the likelihood of consumer visits. Two-thirds of survey respondents indicating they would visit a mall more frequently if there was an entertainment component JLL research found that while store selection is the primary driver, it s not the only element consumers weigh for their excursion. Shoppers noted that aside from store selection, how well-located and accessible a mall is was the second most crucial influencer. In addition to understanding or anticipating changes in traffic flow patterns to reduce congestion, a mall must perpetually make ease of access paramount to maintaining its sense of place proving yet again that the tried-and-true real estate principle of location, location, location heralds success. Put simply, shopper demand will simply go elsewhere, regardless of the strength of the center, if it s not user-friendly and navigable environment. Regardless of how well-located and connected a retail place is, it will only attract visitors if it has an offer that meets the demanding requirements of its customer base. A mall s environment was the third top driver for shoppers, who indicated they seek out spaces that meet their physical needs with amenities like free WiFi, comfortable seating areas, mobile charging stations and children s play areas. Additionally, malls need to meet an emotional need for consumers, which hinges on safety and security. While new development is generally still slim, there is an opportunity for existing retail places to improve their environment through clever redesigns, and playing to its advantages. Retail places have to create an environment which is attractive and fulfilling enough to draw time-constrained consumers away, which is done by creating an experience that online can t match. 3

4 Information Overload, How to Gain and Retain Shopper s Attention Consumers are bombarded with, but are also seeking out, information, data and knowledge before and during their shopping visit. Digital marketing budgets are expected to increase by eight percent in 2015, as companies and brands are forming connections with customers2. Likewise, having the right communication plan is integral for a mall in reaching its target shopper audience, maintaining loyalty and helping them filter out the noise. According to JLL s study, the most effective way to reach shoppers is overwhelmingly through promotions (78%), but in a congested inbox it s about quality over quantity. Retailers and shopping centers will need to take proactive measures to push out custom, relevant promotions to their consumers that drive true engagement and action. This year it s expected that mobile users will overtake desktop users3, making it the tool of choice for consumers to engage with retailers. More than half of JLL s survey respondents say they use shopping apps like RetailMeNot and ShopKick, or subscribe to direct text messages from retailers for promotions. Social media channels, particularly Facebook, Instagram and Pinterest have become increasingly important to shoppers. With more than 70 million photos shared each day on Instagram4, five Facebook profiles created each second, it s not surprising that JLL s survey reveals that 42 percent of shoppers indicate social media is how they connect to retailers. The pressure is on retail owners to continually innovate and improve in order to stay ahead of (or just 'in') the game. While e-commerce will continue to challenge traditional shopping, the two will blend together just as catalogue and brick and mortar have done for decades. The future of retail holds a mix of both physical retail space, which remains not only relevant but attractive, and online mediums as retailers embrace multi-channel sales platforms. Retailers plan to open approximately 76,545 stores in the next 24 months, according to RBC Capital Markets. While several major closings were announced early this year, many others are stepping up expansion plans and taking advantage of vacant spaces in strategic locations. The retail real estate market is alive and well, just evolving. 4

5 For more information, please contact: Karen B. Raquet, CSM, CRX Executive Vice President, Director of National Retail Property Services Philadelphia, PA Holly Rome, CRX, CLS Executive Vice President, Director of National Retail Leasing Minneapolis, MN Greg Maloney President & CEO, Retail Fort Lauderdale, FL About JLL JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual fee revenue of $4.0 billion and gross revenue of $4.5 billion, JLL has more than 200 corporate offices, operates in 75 countries and has a global workforce of approximately 53,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.0 billion square feet, or million square meters, and completed $99.0 billion in sales, acquisitions and finance transactions in Its investment management business, LaSalle Investment Management, has $50.0 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit About JLL Research Jones Lang LaSalle s research team delivers intelligence, analysis and insight through market-leading reports and services that illuminate today s commercial real estate dynamics and identify tomorrow s challenges and opportunities. Our more than 400 global research professionals track and analyze economic and property trends and forecast future conditions in over 60 countries, producing unrivalled local and global perspectives. Our research and expertise, fueled by real-time information and innovative thinking around the world, creates a competitive advantage for our clients and drives successful strategies and optimal real estate decisions Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof. 1 ICSC, 2 Gartner, 3 ComScore, 4 Instagram