Retail Sales Stayed Strong in H1 But Expectations are Moderating

Retail continued its strong pace through the first half of 2022, but a new midyear survey indicates moderating expectations in the coming months. 

Nearly three quarters of all respondents to Levin Management Corporation’s recent retail sentiment survey reported sales levels at or above last year’s mid-year total and “well above “the decade-old survey’s historic average of 59%. And nearly 71% say shopper traffic volume is at the same or a higher level year over year.

“The strong sales results are no surprise, mirroring anecdotal accounts from tenants within our management portfolio as well as reports from industry sources,” noted LMC’s Matthew K. Harding, chief executive officer. “The traffic figures reflect the reality that people like to shop in stores, and they are doing so,” Harding added. “And where during the pandemic store visits tended to be strategic and driven by purpose, shoppers today may be making more frequent trips because they enjoy the experience.”

Shopping center traffic in April was just slightly (3.1%) below pre-pandemic levels, according to JLL. Depending on future COVID variants, Placer.ai’s Ethan Chernofsky predicted earlier this spring that malls could bounce back better than ever.  

“These venues were still feeling the pressure of new challenges when comparing visits to 2019,” Chernofsky says. “The improving visit gaps for open air lifestyle centers and outlet malls in the latter part of April shows the potential that the appetite for a longer trip to ensure a value oriented or single-location retail and entertainment experience could be growing once again. And the timing here is critical. While the relative strength shown in recent months is impressive, especially considering the external pressures, the summer season presents a uniquely powerful opportunity for top tier centers across categories.”

But nearly 58% of the LMC survey participants said economic shifts during the first half of the year have impacted their performance outlook for the rest of the year, and almost 61% said they have raised or anticipate raising prices in response to inflation.

Labor continues to plague retailers, with over 70% of respondents saying they are actively hiring and nearly 59% of that cohort reporting it is harder to find qualified job candidates than in the past. According to the US Department of Labor, there were 1.1 million retail job openings in May, down from a historic peak of more than 1.3 million last summer.