The National Retail Federation (NRF), today reported that retail sales in May held steady despite fluctuations from month to month that obscured near-record results. On Tuesday, the Commerce Department reported that May retail sales fell 1.3 percent month over month. The largest trade […]
The National Retail Federation (NRF), today reported that retail sales in May held steady despite fluctuations from month to month that obscured near-record results. On Tuesday, the Commerce Department reported that May retail sales fell 1.3 percent month over month. The largest trade association in the industry says that May sales data does not tell the entire story.
“While May retail sales fell slightly due to supply chain constraints in May, the better indicator is the year-overyear data, which, according to the NRF, showed growth exceeding 17 percent,” NRF CEO Matthew Shay stated. Retail sales have increased 17.6 percent in the first five months this year, compared to the same period of 2020. This gives us more confidence in our revised sales forecast for growth of 10.5 percent to 13.5 percent to over $4.44 trillion by 2021. There are risks associated with labor shortages and supply chain bottlenecks as well as tax increases and overregulation. However, overall households are healthier and consumers are spending more.
Total Retail’s Consideration: It is important to take the ominous headlines about May’s decline in retail sales, which suggests a slowdown of the economy’s recovery with a grain. A combination of factors has led to solid growth in retail sales during the first five months, including increased vaccination rates, stimulus packages and consumer confidence. NRF expects these trends to continue for the second half 2021 as illustrated by its recently revised annual sales forecast.
“The YoY comparison indicates a strong rebound in May,” states Naveen Jaggi (president, retail advisory services, ). We can expect consumer confidence to continue its upward trend as more people return to work, socialize, shop and eat at their local restaurants this summer. Particularly, theater is a great indicator of sentiment and how people feel. The pandemic continues to affect domestic demand for movies in theaters, but movie theaters enjoyed their best weekend since the outbreak. According to Placer.ai, Cinemark saw a 54% increase in traffic between April and May. Traffic has also increased by 90 percent since the beginning of the year. data.
“Additionally in July and August, we expect back-to school shopping to be one the highest we have seen as many students return to in-person learning for the first time since over a year.”
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Shifting Sands – How recent trends are causing permanent change for shoppers and cities
It takes a lot of work to make cities successful. It can take years, or even decades, to change a city to adapt to changes in our lives. That’s why city planners, real estate agents, and businesses are constantly monitoring the latest trends regarding how we shop, live, and work.
Now we are familiar with the COVID-safe behavior that will get us through a typical week. It’s easy to work from home, outside, or order groceries online. They provide convenience and we value them so much that permanent change is being imposed on cities and businesses by the expectation of safety measures.
The shift to remote work is one of the most important and far-reaching trends. The resulting changes could reshape city design and core business operations, as our remote workforce expands.
The acceptance of remote work has changed the habits of a large U.S. consumer group, white-collar workers. Even if you split your workweek between home and office, the absence of daily commuters has caused shockwaves in cities and industries. Retailers who have built their businesses around working with office workers are experiencing dramatic drops in revenue.
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Starbucks, for example, reported in July its first quarter loss in seven years. It also projected a 10%-20% drop in same store sales for 2020, even though 95 percent its U.S. locations reopened after the lockdown. There is a dire need to reinvent the restaurants, dry cleaners, fuel stations, and other businesses that were created to serve commuters as well as lunchtime office traffic. Many businesses won’t survive as online shopping and services offer physical fulfillment closer to home.
Remote employment has also uncoupled workers from certain locations, resulting in a renewed interest in moving. The headlines would lead us to believe that huge numbers of people are leaving cities due to remote employment opportunities. But, Zillow 2020 real estate data shows that suburban properties saw a 0.4 percent drop in pageviews, while urban properties saw a 0.2 percent increase. This means that viewing patterns were almost unchanged from 2019.
The real story is redistribution among cities and not migration towards the outskirts. Real estate data indicates that America’s largest metropolitan areas (like New York City and San Francisco) are seeing their population shrink as more people move to smaller cities such as Austin, Texas and Atlanta. There will be new challenges once the excitement of having lots of parking and friendly neighbors is gone. As the sudden increase in residents puts significant strain on secondary cities, it adds traffic and strains existing services. This will cause home prices to rise before additional taxpayers are benefitted.
Moving to a smaller town often means that you expect big-city services. This includes 24-hour grocery stores and late-night drive-thrus. Same-day delivery is possible for online orders. Businesses will be forced to offer these services as more people demand them. Increased retail sales and the effect of delivery traffic on cities will cause congestion and construction. Tax and price hikes are necessary to pay for solutions. All cities will experience a need for safe community retail, walkability, and local parks. Essentially, small cities have the potential to become big cities without having the resources and time to adapt.
Changes in large cities will also be driven by the fallout of remote work. COVID-19 is repositioning daily life closer to “local bubbles” and retailers have already begun to rethink how they can serve their customers. The rise in online shopping has caused more than 15,000 store closings in the retail sector. This has prompted large retailers to reposition themselves around community-based shops that allow for quick delivery and support online orders.
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Retailers are able to open temporary and pop-up stores to test new markets, and to move quickly to be close to their customers. There is also a drop in rents in big cities due to increased store vacancies. These vacancies offer big cities an opportunity to transform crowded retail and office space into green spaces and multipurpose hubs. However, they will be challenged to pay.
These trends can be seen from a planning perspective as they reflect two seemingly opposite behaviors: the need to stay close to home and the desire to socialize. These behaviors show the need for cities, retailers, and companies to innovate around a dispersed network model.
For years, “Disbursement” will be a key focus for businesses and cities. To manage and support remote workers, companies must create a wider network of smaller workspace hubs. Cities will also need to provide cleaner transportation options and green space in their neighborhoods to support shops and services.
Local communities will need to have access to centralized services such as online student test centers or outdoor gyms. Retailers will have to form partnerships with one another to meet consumer demand for multichannel convenience and hyperlocal bricks-and-mortar experiences.
These trends will continue to influence our lives and create permanent changes in the way we use cities and businesses. This presents enormous challenges for rebuilding our environment. Old cities must be redesigned to accommodate new lifestyles.