Adjusting and adapting seemingly have become the “new normal” for retailers as COVID-19 hasn’t shown much sign of going anywhere anytime soon.
Despite stock shortages due to supply chain issues, price increases and difficulty with employee retention on the part of retailers, customers still are shopping — and they are doing so in person.
A national survey by the International Council of Shopping Centers (ICSC) indicated 78% of U.S. adults — about 200 million people — shopped or spent money over the Black Friday weekend. Of those shoppers, 61% spent money inside a brick-and-mortar store.
Mike Murray, principal and senior vice president of retail for Grand Rapids-based Advantage Commercial Real Estate, said the data indicates a new pattern for the retail industry.
“(ICSC) reported that for the first time in years, online retail sales over Black Friday decreased and in-store shopping sales increased,” Murray said. “… So, people are still wanting to get out and shop.”
A trend Murray said has continued over the years is the demand for “Main and Main” retail corridors “right at the heart of retail,” including areas such as the intersections of 28th Street and East Beltline Avenue, Alpine Avenue near I-96, and Rivertown Parkway and Wilson Avenue.
“Those areas have continued to stay hot and be very attractive to retailers and restaurants,” he said, noting developers are paying high-ticket prices for these sites. Even if properties do not currently house retail, there seems to be a willingness to redevelop the sites and reuse them strictly for retail purposes.
“… They realize that these main retail corridor spots are going to be strong for a long time, so they’re kind of doubling down and buying up some properties and they’re going to redevelop them. … So that’s something exciting that we’re seeing is that people are still willing to invest a lot of money into our market, into these retail corridors, because they’re seeing that the ‘Main and Main’ areas are still very important in our marketplace.”
Retailers dubbed nonessential back in 2020 and sellers of automobiles and commodity items such as furniture, appliances and clothing still are playing catchup.
“When you go to like a Woodland Mall or even a power center like the Shops at CenterPoint, there were a lot of those retailers like the TJ Maxxes of the world and Carhartt and Macy’s and all them that were not allowed to be open, and so it’s just this huge upheaval in their supply chain of the products that they got that they couldn’t sell, because they couldn’t be open,” Murray said. “… And so, there’s really a lot of that stuff that got put on the back burner. That’s why there’s so many shortages of everyday items. There’s this shortage around everywhere, I mean, even with automobiles, and so there’s a lot of ripple effects that affect everybody.”
With the supply chain not expected to see much relief anytime soon, Shawn O’Brien, vice president and retail land adviser for Colliers, said consumers may have to get used to not always buying their first choice of goods — if they haven’t already.
“There was a big push in the home accessories, furniture, home improvements, that kind of thing and all the pandemic did is make that even stronger because so many people spend so much time in their homes and they wanted to make changes,” O’Brien said. “They wanted to make changes because they use their homes differently now, working from home a significant amount of time. So, there was always a big push and demand in some of those areas, and supply chain was the factor that held things back.”
Shoppers everywhere now expect long wait times on ordered items, and seeing bare shelves at brick-and-mortar stores doesn’t come as much of a surprise as it once did. O’Brien said from personal experience that he ordered a refrigerator in May of this year and received it in October and added a friend’s experience of only having the option to buy a red truck because it was the only one available on the lot.
“I believe that we’re going to see dealerships with a lot less cars and a lot more made to order, and it’s going to plug in that, you know, when you go to get a car, you’re probably not going to walk off the car lot with that car a lot of times unless you’re just shopping for a used car. It’s changed the outlook and the retailers and manufacturers are kind of looking at it as, OK, how can we make this a better change for our business model?”
O’Brien said there is national pressure in the commodity retail space to move out of older-concept, big-box stores in enclosed malls. Stores like JCPenney and Macy’s that once were primary traffic drivers filled with commodity clothing and goods likely will continue to downsize and move much of their inventory online, he said.
“The reason (anchor stores and malls) were put in years ago is they were a destination, they were a traffic driver. Well, no longer are they a traffic driver. So, we are going to see the anchor space in malls slowly shifting to other traffic drivers, whether retail or ancillary entertainment, experiential retail like a Top Golf or indoor karting, that kind of thing. That’s going to create traffic,” O’Brien said.
After nearly two years of quarantines and mandates, many consumers have started to see shopping as more of an experience rather than a rushed, in-and-out transaction. In the same 2021 Black Friday weekend survey from ICSC, 56% of shoppers spent money on dining, personal services, or entertainment over the Black Friday weekend, representing an increase from 48% in 2020. Similarly, even if consumers ordered products online, they still managed to continue to shop in-store after pick-up as 72% of customers who purchased items online and picked them up in-store continued to spend additional money at the store or at the same shopping center. These shifting shopping patterns are causing retailers to reevaluate their business models while still grappling with low employment and product shortages.
“Retailers have (been) pushed, and they’re going to be pushed further to upgrade their experience, and people are willing to pay for it. So, I think that we’re going to continue to see that in 2022, the shift for commodity-type retail goods to be something you’re ordering online. And again, the big-box stores will be carrying this, but they’re all being pushed to be better operationally, and I think that’s a positive thing,” O’Brien said. “Since retail has started, there’s been a continual shift from what’s popular and what’s meeting the needs of the customer base and expanding the customer base, it’s a constant shift. So, it’s nothing new, it’s just that the pandemic really created an opportunity and a seismic shift and being nimble and being able to capitalize on (these changes).”
Both experts said another major shift from the pandemic is the focus on making food retail and restaurants more accessible for takeout, drive-thru and grab-and-go orders.
“Consumers are proving every day that they can’t get enough food and they’re sick of making it themselves. But they’re willing to sit in very, very long lines to get (food) from the nationals. The family-style takeout dinners at the sit-down restaurants are still popular.”
Murray said fast food and quick-service restaurants still are trying to find space around Grand Rapids.
“West Michigan is probably at a higher clip right now than we’ve ever seen before, because so many of those restaurants are doing so well right now and they’re redesigning their buildings to, you know, be able to move traffic around the property more and have less people coming inside,” he said.
Changes have ranged from designing buildings in a way that decreases barriers for food delivery service providers like Uber Eats and DoorDash — like implementing “hot lockers” where delivery personnel can use a barcode to release the pickup without having to interact with restaurant staff — to more restaurants implementing multiple drive-thru lanes and reducing indoor seating areas to make takeout flows more efficient. Even in downtown areas, city governments have found ways to increase traffic by allowing and extending the use of “social zones” for grab-and-go food and beverages, along with dining igloos and shelters providing additional outdoor seating options in the winter.
Despite constant shifts and myriad challenges within the retail landscape from increased prices on goods to expected shortages in stores and a move toward grab-and-go dining, consumers still are willing to get out of the house and spend. Murray said he believes if retailers can attract more labor and get a few more products a little bit easier, it will help in making things feel a bit more “normal.”
“But I think all in all, retail is still very healthy in our market. We’ve survived through this a lot better than a lot of people thought we would have in terms of the retail stores and the tenants — whether they’re a mom and pop, a franchisee or a national — being able to weather the storm, reset themselves and stay relevant, and be able to make it to the other side. We see a lot more of them make it than we thought we would.”