New Report Analyzes Emerging Trends and Innovations that will Invigorate the Marketplaces Industry
ICSC released its 2022 State of the Industry Report examining the Marketplaces Industry and its ongoing transformation in a rapidly evolving business environment. The report analyzes key indicators and data that point to the strength of the industry, the core challenges facing retailers, the state of consumer confidence, and emerging trends and innovations that will help marketplaces continue to invigorate communities.
The marketplaces and spaces where people shop, dine, work, play and gather, collectively known as the Marketplaces Industry, have faced ongoing challenges in recent years, including the COVID-19 pandemic and an uncertain economy. But these gathering places continue to demonstrate their vitality in communities across the U.S. by adapting to challenging conditions and changes in consumer behavior with a combination of creativity and innovation.
“Data in our industry report paints a clear picture of creative retailers, resilient consumers and steadfast commercial property owners who collectively adapted to ongoing challenges to transform our industry,” stated Tom McGee, President & CEO of ICSC. “We are confident that this ongoing transformation of emerging trends, services, technologies and behaviors are positive signs of a promising and profitable future for the retail sector.”
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“We are confident that this ongoing transformation of emerging trends, services, technologies and behaviors are positive signs of a promising and profitable future for the retail sector.”
The most resilient retail brands and companies emerging from the pandemic have invested significant resources to respond to these behavioral and technological shifts, and data analyzed by ICSC shows these efforts are paying off. More retail stores announced plans to open locations in 2021 than any other year since 2015, according to an analysis by ICSC and PNC Bank. In fact, the more than 5,200 announced openings in 2021 equals roughly the same number of announced locations in 2019 and 2020 combined. In addition, shopping center occupancy rates have averaged 91% since the fourth quarter of 2019, the last quarter prior to the pandemic.
Foot traffic figures are also approaching pre-pandemic levels. According to Olvin.com, April 2020 saw a 97% drop in visits to indoor malls as government mandates called for temporary closures. By July 2022, the visits had rebounded to near pre-pandemic levels. Across all center types traffic is down 7%, from April 2019, but a marked improvement from the 93% drop-off in April 2020.
A closer look at store category performance shows how consumer behavior is changing as people gather to socialize in greater numbers, with the entertainment, apparel, and beauty industries benefiting significantly. Sales per square foot in the 12-month period between March 2021 and February 2022 increased more than 207% for movie theaters, by 60% for shoe retailers, and around 56% for beauty suppliers.
Despite positive movement among retailers and consumers, ongoing challenges remain. In 2022, inflation hit its highest level in 40 years while U.S. consumer sentiment sunk to its lowest level in over a decade. Inflation remains the most influential element impacting consumer spending habits, though there are signs that show easing within the next several months.
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Bank account data shows that most Americans, mainly the highest earners, are significantly better off financially now than they were before the pandemic began, thanks to trillions in savings. Also, compared to pre-pandemic figures in February 2020, U.S. retail sales are up 25% (not adjusted for inflation).
As we look forward, several emerging trends and strategies are helping property owners and retailers reinvent their properties. Many physical properties are functioning as storage and fulfillment centers where digital orders are packed by local stores to enable next-day shipping, while numerous retail brands are using automation to help alleviate labor shortages. Retailers are also investing in creating store-network distribution hubs that allow shoppers to pick up and return online purchases, as well as adapting to new consumer habits by reimagining stores as design centers and e-commerce hubs—making them a key component of an omnichannel strategy.
“Despite ongoing economic and financial challenges, retailers and consumers continue to display remarkable innovation and resiliency. Our industry will always find creative ways to grow and transform, and we’re well positioned for success in an uncertain future,” added McGee.