The Fourth Year of Volatility
No sector is immune from universal challenges and uncertainty as new economic and operational realities unfold in 2023.
RECESSION OR SOFT LANDING?
PROFITABILITY
LABOR REBALANCE
CONSUMER PERCEPTION
GEOPOLITICAL TENSIONS
CLIMATE EMERGENCY
Reasons for Optimism
"Close scrutiny will show that most 'crisis situations' are opportunities to either advance, or stay where you are."
Maxwell Maltz, American surgeon, author of "Psycho-Cybernetics"
economic paradox
renewed focus
visionary entrepreneurship
wellness prioritized
social impact
green sinking in
Key Demand Drivers
The uneven return to office and reversal of the migration-fueled housing market are redefining urban and suburban landscapes while tourism steadily rebounds across all segments.
58%
of U.S. job holders work remote at least part time
40%
decline in existing home sales since 2020 peak
49%
of Americans plan to travel more in 2023
THE OFFICE INFLECTION POINT
Physical vs economic occupancy
Office is the new retail
Remote work is the new retirement
Blurred lifestyles
HOUSING NORMALIZES
Housing highs and lows stabilize in 2H 2023
Magnet markets in secondary and tertiary markets
COVID-19 migrants drive future of urban core
Rentership rising
TOURISM REBOUND
"Bleisure" - blending of work and personal
Group, business and midweek recovering
New forms of travel - wellness, medical
Domestic and international ambitions
Source: McKinsey, Bloomberg, Finances Online, Seeking Alpha, Forbes Advisor
Property Trends
Proprietary data and omniretail-led strategies provide the cross-channel shopper experience at the shopping center level driving traffic, sales, NOI, and ROI for each asset.
Property Management & Marketing
The Omniretail Strategy
- Data-led, consumer-centric approach at the core of management, operations, marketing, activations, and retailer engagement
- Holistic correlation between digital, physical and sales
- Innovative alternative and sustainable revenue streams
- Leveraging data for in-depth property diagnostic and integrated marketing
- Continued heightened awareness of safety, security and social risk
Leasing
Data-led Strategy & Execution
- Lack of new construction, record low vacancy, and rent growth
- Data-driven merchandising, leasing, and cannibalization studies
- Unencumbering leases to diversify tenant mix
- Requiring sales reporting and compliance
- Tenants demand increasing flexibility and uncertainty protections
- The "Pop-up & Grow" Powerhouse
Source: Madison Marquette Retail Services, Datex Property Solutions
Transforming Retail Operations
Retailers are deploying technology online and in-store to optimize efficiencies and profitability while enhancing customer experience.
TECH STACK
Intrinsic to success and growth
Technology to meet customers
Conversational commerce
Next Gen AI, ML, automation, headless commerce
OMNICHANNEL
Addressing cost and inventory pressures
Combatting crime and fraud as a service
Elimination of free or subsidized returns to boost profitability
Improve loyalty to drive CVR, AOV, LTV
DIGITAL BRICKS
Inevitable unification of in-store and online
RMN - conversation vs revenue
Flexible store footprints and formats
Combatting retail theft and crime surges
Source: Forrester, NRF
Supply Chain Trends
Supply chain vulnerability is ongoing amid global and economic crises and tension in trade agreements.
TECHNOLOGY TO REFORM
- Enabling greater forward-looking visibility and forecasting of inventory, manufacturing and chain of custody
- Digitization for greater agility and resilience
- Automation, simulation, data mining, cloud computing
- Going green - circular replacing linear supply chains
REDUCING COSTS FOR PROFITABILITY
- Cost-cutting advantages of nearshoring and onshoring
- Optimization vs absorption
- Cyber-security to combat crime and theft
LOGISTICS AS A SERVICE
- Own it or outsource it
- Warehouse and distribution networks are new revenue stream for retailers
- The new customer experience - delivery experience and transparency
Source: EY, Converged by Propel, Supply Management
Retail Bankruptcies, Store Closures & Openings
Inflationary pressure, interest rates and weakening consumer demand are igniting another wave of distressed retailers, some who delayed the inevitable during the post-pandemic consumer spending boom.
BANKRUPTCIES & STORE CLOSURES
- The 2023 Filed & Watch List - Regal Cinemas, Party City, Tuesday Morning, Bed Bath & Beyond, AMC, Rite Aid, The Gap, Mattress Firm.
- Over 500 store closures announced as of February 2023, led by department store closures.
STORE OPENINGS & EXPANSIONS
- Sporting goods, discount apparel and general merchandise, warehouses, smaller format department stores and big boxes, digitally native brands, and select fashion flagships are leading store openings in 2023.
- Nearly 1,900 announced store openings as of February 2023.
Source: Coresight Research, BDO, UBS
The Metaverse
A game-changer that isn't ready for retail mass-adoption yet.
TRAJECTORY
- Union with Web3 technologies
- Led by gaming and sports
- Office is next - onboarding, training, collaboration, employee engagement
- Accessibility/cost, privacy and security issues
- Apple's Reality Pro AR/VR, Microsoft HoloLens, Meta Quest Pro
- Microsoft Mesh - "here can be anywhere"
Source: WGSN, VentureBeat, Steve Dennis, Microsoft