Retail Commercial Real Estate on Road to Recovery with Recent Consumer Data
By Natalie Jones / 07.23.21 / 3 min read
Retail commercial real estate has endured it all over the past year – declining rental rates, store closures, changing consumer preferences at restaurants, fluctuating foot traffic at malls, the growth of e-commerce, and more. Additionally, retail sales dropped by 1.3% in May after spending exceeded the pre-pandemic trend just one month before.
Recent insights published by Forbes acknowledge less-than-ideal findings that will impact the industry moving forward. However, they also provide a glimpse into positives that can shape the industry’s near future and other indicators that can illustrate progress.
The e-commerce share decreased in May despite this sector’s momentum throughout 2020 and 2021. This, paired with rising total retail sales, increasing vaccination rates, and declining COVID-19 cases signal a return to normal for brick and mortar stores.
Consumer behaviors are also bound to change as seen with 32 percent fewer respondents in a survey stating that they are less concerned about COVID-19 than they were in 2020. A lower number of respondents surveyed by Forbes indicated this year compared to last year that they are, for instance, hesitant to use dressing rooms at stores and try on shoes.
More people may be at ease with COVID-19, but this isn’t reflected in consumer purchase decisions yet. Forbes reports that six out of 10 respondents in a survey indicate that they are still spending less than they did before the pandemic’s onset. There’s comfort in saving right now due to the pandemic’s lasting effects, presenting a challenge for retailers.
Retail sales may be impacted by consumer preferences in this way, but three other indicators can provide a good idea of where the industry stands according to Forbes:
Personal Consumption Expenditures
Industries that were hit hard during the pandemic including leisure, hospitality, and travel aren’t included in the retail sales indicator, illustrating the importance of looking at PCE for the full picture of consumer spending.
Necessary vs. Discretionary Spending
Analyzing consumers’ spending allocation between essential and non-essential items can strengthen the understanding of consumers’ shopping behavior.
As mentioned above, savings are a trend coming out of the pandemic, and this is supported by the finding that the savings rate increased to 27.6% in March 2021 from 12.9% in 2020.
As we return to the life we knew before the pandemic, several measures for retail commercial real estate are expected to improve. In the meantime, experts and retailers have various data points to consider as we navigate present-day challenges in economic recovery.
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