With the announcement of more than 8,600 retail closures in 2019 alone, the fate of brick-and-mortar retailers has been extremely uncertain. These store closures and unpredictability can be largely attributed to the growth of e-commerce, as well as to the consistently evolving needs, expectations, and desires of shoppers.
As the 2019 holiday season vastly approaches, how will this uncertainly impact shopper traffic and compare to historical trends? Because of these concerns, traditional retailers must identify strategies that will encourage consumers to not only visit, but also to make in-store purchases.
Read ahead to learn about predictions for the upcoming holiday season, how traditional retailers can position themselves for a successful season.
What is the outlook for the retail industry for the upcoming holiday season?
According to Deloitte’s annual holiday retail forecast, which includes both brick and mortar and e-commerce, the outlook for the season is positive. This prediction stands even with consumers losing almost an entire week of holiday shopping, due to a later Thanksgiving than last year, which typically marks the kickoff of the holiday retail season. In fact, this year’s sales are predicted to see an increase of anywhere from 4.5% to 5% during the November to January timeframe, significantly higher than last year’s 3.1% rise in sales during the same three-month period. Additionally, the report indicates that e-commerce sales are expected to grow 14-18% compared to the 2018 season.
This season, total sales are expected to reach $1.1 trillion, up from last season’s $1.09 trillion. According to Accenture’s 13th Annual Holiday Shopping survey, this growth is unsurprising since the majority of shoppers in the U.S. plan to spend as much or more this season than they did last year. Additionally, Accenture’s research of 500 consumers in 17 major cities suggests that most shoppers plan to visit brick-and-mortar stores to perform their holiday shopping.
What factors are driving the holiday season’s favorable outlook?
These favorable predictions for the holiday season’s growth are likely a product of the current health of the labor market, record-low unemployment rates, and continuous monthly job creations. Each of these factors contributes to a growth in disposable income and spending amongst shoppers, leading shoppers to make more purchases.
How can retailers benefit from a strong holiday season?
For struggling brick-and-mortar retailers, the holiday season presents an opportunity to bounce back from a year of declining sales. However, to reap the benefits of a strong holiday season, retailers must properly prepare themselves to successfully attract shoppers.
One way that traditional retailers can drive increased traffic to stores during the holidays is by more heavily focusing on a ‘buy online, pick up in store” strategy. With this method, retailers are able to provide shoppers with the online experience they desire, while eliminating the tedious store navigation process.
How could a strong holiday season impact Industrial asset classes?
According to the 2019 State of Logistics Report, the vacancy rate for industrial warehouses is at a record low of 4.8%. This means that retailers should begin securing space for inventory in order to meet the demands of the peak season. With the yearly holiday season “hustle and bustle”, frenzied shoppers expect 2-day, 1-day, and even same-day shipping even more frequently than they usually do. The combination of a spike in orders and increasing demand for rapid shipping can impact the supply and demand of distribution centers, leading to the development of additional on-demand, or pop-up, distribution centers.
Pop-up distribution centers provides a temporary location for added capacity during peak seasons. These centers are created out of temporarily allocated spaces, which can be used for storing and shipping high-demand inventory to enable better service levels and lower delivery costs. On-demand fulfillment centers like these are particularly useful for retailers who do not have a large enough footprint to support the “buy online, pick up in store” or “ship from store” alternatives.
The projected success of this year’s holiday season presents exciting opportunities for the retail sector to have a strong, fresh start in 2020. Retailers who offer seamless experiences, accurately prepare for inventory and fulfillment center supply and demand, and deliver items at rapid speeds are the most likely candidates for rising to the top this holiday season.
Read 20 Trends That Will Shape Commercial Real Estate in 2019 for more predictions concerning the future of the industry.