ATLANTA—When the holiday season officially kicks off the day after Thanksgiving, retailers will be scurrying to make the most of a compressed shopping season that is six days shorter than last year. In addition to timing considerations, increased competition is also pushing retail operators to re-evaluate their strategies and service offerings this year.
The National Retail Federation is projecting a 3.9% increase in sales this November and December to $602.1 billion. To achieve this forecasted growth over last year, retailers will need to bring in $9.9 billion per day. Thankfully, according to a recent survey by Accenture, approximately 20% of American shoppers surveyed plan to increase holiday gift-buying budgets by $500.
Jones Lang LaSalle's Retail experts have identified five key strategies retailers should employ this holiday season to capture and maximize their share of the projected sales increase:
1. Ignore the “Official” Calendar: The holiday season drives 20% of retailers' annual sales volumes, and last year, sales were $579.5 billion, translating to approximately $9.5 billion each day. However, this year the critical sales time between Black Friday and Christmas is 19% shorter, putting pressure on retailers to attract shoppers earlier. “With fewer official shopping days this season, only 26 to be exact, we expect 'Christmas Creep' to expand to new levels,” predicts Greg Maloney, president and CEO for Jones Lang LaSalle Retail. “For the first time ever, Macy's and J. C. Penney are opening their doors on Thanksgiving, and other retailers will follow suit in hopes of spurring early sales.”
2. Create Almost-Instant Gratification:JLL's Big Box Outlook report projects e-commerce sales will more than double over the next four years, one-third driven by the retail sector. Clearly, Americans have embraced online shopping but they are less enamored with the time it takes to receive their orders. To address this gap, smart retailers will foot the bill to expand store hours and add capacity to fulfill online orders locally in-store. Already, Apple, Wal-Mart, Nordstrom and BestBuy have announced an extension of their online offerings to their bricks and mortar locations so shoppers can order online and pick-up in-store at their convenience. “The demand from e-commerce is shaping the retail landscape more than ever before, and bricks and mortar retailers with locations that double as online fulfillment centers will see an uptick in their sales,” says Lew Kornberg, leader of retail tenant representation for JLL. “Retailers with an online-only presence are also rethinking their need for traditional space.”
3. Drop-in or Pop-Up to Increase Profits: Holiday season short-term deals and pop-up shops present opportunities for retailers to expand their reach and test new markets without a long-term commitment. By securing short-term space in a high-traffic location, retailers can increase exposure to large volumes of shoppers in key markets—without the risk of a long-term lease. Retailers currently looking to capitalize on pop-up shops include: Crate and Barrel, which is opening at least four pop-ups called Tree Lot; Hermes, opening the Silk Bar in Time Warner Center; and Birchbox Local, opening a pop-up at Chelsea Market. For instance, JLL's specialty leasing team is on track to execute approximately 5,500 short-term license agreements for its client base. “The holiday season is a critical sales time and prime, unleased space in shopping centers can drive incremental yields for retailers, and allow them to capture a new customer base. We also expect retailers to test their luck with new product launches through these pop-up shops,” says Jennifer Adams, the firm's director of specialty leasing.
4. Maximize Space to Maximize Sales: Real estate is one of the largest overhead expenditures for retailers, and optimizing space usage continues to be top of mind. Retailers are aligning business and real estate goals so that single storefronts are the gateway to multiple shopping opportunities. Large-format stores are leveraging their space to be one-stop-shops for all holiday purchasing needs, irrespective of how a purchase order is fulfilled. “For retailers, store locations are strategic enablers of business success,” adds Larry Jensen, JLL Retail's director of development and operations. “Doing more with less is the new normal, so today retailers are maximizing their existing format to showroom goods and keep shoppers enticed. Once a shopper has crossed the threshold, creating an engaging environment to harness their buying power is key.”
5. Create a Seamless Shopping Experience: Consumers are using multiple channels to cross items off their shopping lists, and 89% of buyers consider it important for retailers to make cross-channel shopping easy. By year-end, Cisco predicts there will be more mobile devices on earth than people so it behooves retailers to figure out how to best integrate digital tools to create a seamless, omni-channel shopping experience. If a website takes longer than five seconds to load, retailers can say goodbye to nearly 75% of their viewers. “Savvy retailers are more focused than ever on responding to customers' demands, expectations and shifts in buying strategy,” says Julie Rickey, director of consumer marketing. “They are optimizing their websites for mobile pre-shopping research and deal surfing, offering free Wi-Fi connections and equipping their staff with tools such as iPads for speedy mobile check-out.”
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