The retail real estate market continues to move ahead despite many cross currents in the space. Total retail sales (U.S.) have been disappointing month over month in the past quarter losing ground in December, January and February; however, March of 2018 reported a healthy gain of .6% based largely on the strength of automobile sales. In addition to automobiles, furniture, electronics, food and beverage, health and personal care and general merchandise all had gains. Food and drinking places – restaurants and bars, posted a .4% increase which was the same pace as February.
Year over year, retail trade grew by 4.5% in March up from 4% in February. The International Council of Shopping Centers (ICSC) recently reported that for every retailer who has closed a brick and mortar store, 2.7 new stores opened in the past year. The big shift is the type of retailers who are expanding vs the closings. As multi-channel retailing continues to mature, the share of e-commerce retail spending grew at approximately 17% in the past year compared to only a 2.2% increase in brick and mortar store increases. Brick and Mortar is still the dominant force with over $3.9 Trillion in current sales in the U.S. vs. “only” $294 Billion in e-commerce sales, but the trend is clear – if you can get it delivered the next day or the same day in some cases, e-commerce has the edge and is having a real impact on real estate decisions by retailers and retail landlords.
Many retail landlords have made the shift to a strong preference for experience-based retail concepts which cannot easily be supplanted by an online, e-commerce alternative. The current data suggests that while e-commerce is having an impact, the term multi-channel is more the trend than an either/or approach to just physical stores or just e-commerce. Amazon’s moves to acquire brick and mortar retail like Whole Foods and to leverage their physical foot print and brand comfort and gain a stronger foothold in the grocery arena countered by traditional grocers adding curbside pick up and delivery services clearly demonstrate this point
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