Real Estate Indicators from Director Aaron Johnson in HFF's Dallas office.
Despite all the changes in retail, one thing remains constant: The holidays are the most crucial season of the year for retailers.
Retailers can generate upwards of a third of their annual sales during the holiday shopping season from Black Friday through Christmas Eve, often times making the difference between ending the year with a profit (in the black) or loss (in the red).
As the retail landscape evolves, investors, retailers and landlords are continually watching data to better understand consumer behavior. Understanding the motivation of customers has never been more important than right now. Consumers want convenience and a unique shopping experience.
This year’s ICSC (International Council of Shopping Centers) data reveals that, despite the persistent the-retail-sky-is-falling crowd, “it has been a busy weekend for stores, malls and shopping centers, with 88 percent of U.S. adults buying merchandise from physical retailers — either directly in-store or from store websites — on Thanksgiving Day and Black Friday.” Accounting for 151.2 million people, this represents a 4.3 percent increase in mall and shopping center traffic over 2017.
As for spending, NRF (National Retail Federation) reports consumers averaged $313 between Thanksgiving Day and the end of day Sunday. Millennials reported the biggest spending at $413 each. Spending is forecasted to reflect up to a 4.8 percent increase over last year.
According to NRF, “retailers’ investments in technology continued to pay off with consumers seamlessly shopping on all platforms throughout the weekend. The survey found more than 89 million people shopped both online and in stores, up nearly 40 percent from last year. The multichannel shopper outspent the single-channel shopper by up to $93 on average.”
As for sales volumes, Adobe Analytics reports 2018 Thanksgiving Day and Black Friday sales of $9.9 billion, representing a healthy 25 percent increase over 2017 volume of $7.9 billion for the same time period. Multichannel, also referred to as omnichannel, was a large contributor to this sales growth experiencing a 50 percent increase in sales via buy online, pick up in-store, with 64 percent of those sales resulting in additional in-store purchases at pick-up. For information on Cyber Monday sales, click here to read HFF's analysis by Eric Kathrein.
So what does this mean for retail commercial real estate? With in-store traffic up 4.3 percent, spending up 25 percent and omnichannel shopping up almost 40 percent over last year, it is evident that brick and mortar retailers are getting better at utilizing their online presence and technology to enhance their brick and mortar store traffic and sales.
Aaron Johnson is a director in the Dallas office of HFF. He has more than 10 years of experience in real estate finance and primarily focuses on retail investment advisory throughout the South and, specifically, North Texas. Throughout his career with HFF, he has participated in more than $5.1 billion in commercial real estate transactions.
Mr. Johnson joined the firm in September 2011. Prior to joining HFF, he worked with Behringer Harvard as an investment manager specializing in management of diverse investment portfolios. Prior to that, he worked with LaSalle Investment Management as an associate asset manager, where he specialized in the management of retail and industrial assets for separate account and fund clients.
HFF is a top-producing capital markets intermediary for retail assets having closed more than $101 billion in over 5,000 transactions since 1998. Our capital markets advisors are experts in investment advisory, providing construction, interim and permanent debt alternatives, ground-up development capitalization and equity placement options, including joint ventures, participating debt and mezzanine financing structures. Learn more about HFF's Retail Group here.