A Clear Perspective on Retail Real Estate, The Market, and The Economy

RETAIL TRENDS AND FORECASTS

MORE SHOPPERS TURNED OUT FOR BLACK FRIDAY DEALS?

Black Friday shopper traffic grew 2.9% from last year and visits to lifestyle centers, open-air malls and other non-indoor mall shopping venues was up 4.7%, according to early data from Sensormatic Solutions. "Compared to what we had the last few years, it was a real Black Friday," said Stephen Lebovitz, CEO for CBL Properties, which operates nearly 100 US malls. Retail sales for the months of November and December are expected to grow 6% to 8% over last year, according to NRF's holiday forecast.

BLACK FRIDAY BIG WINNER: BNPL

Thanksgiving and Black Friday may have been great days to be a buy now, pay later service provider. Given the economic pressures many shoppers face right now, BNPL payment options offered a way for consumers to still get the goods they wanted.

Orders using BNPL rose by 78% the week of Nov. 19 to Nov. 25 when compared to the week before, according to Adobe. Additionally, overall revenue from BNPL is up 81% during the same period. (Red Flag: high interest rate). Other winners include mobile and electronics.

CYBER MONDAY SPEND REACHES $11.3B WITH A SURGE IN BNPL USAGE: REPORT?

The shopping holiday saw increased demand for electronics and toys, with discounts reaching record highs, according to Adobe Analytics.

MALLS RETHINK THEIR APPROACH TO DINING

Mall owners are increasingly moving away from the traditional food court and instead bringing in celebrity chefs, influencers and food halls to create destination dining experiences. "Our strategy has been to spread the food around," Jennifer Leavitt, vice-president of marketing for Bellevue Collection, said of the company's decision to place larger restaurants throughout their developments in Seattle.

HIGH INTEREST RATES PRESSURE THE WORLD'S LARGEST MALLS?

The world's largest malls in terms of gross leasable space include Iran Mall in Tehran with 21 million square feet, Dubai Mall with 12 million square feet, and the Mall of America in Bloomington, Minn., with 5.6 million square feet. Despite the success of these malls, many retailers are looking at paying higher interest rates over the next several years that could affect the number of new locations they open or investments they make in their current stores.

LATEST RETAIL UPDATES

UNDER FIRE BY LAWMAKERS, KROGER AND ALBERTSONS CEOS VOW TO KEEP STORES OPEN, AVOID LAYOFFS AFTER MERGER

Senators spent more than two hours on Tuesday grilling the CEOs of the nation's two biggest grocery chains, Kroger and Albertsons Cos., over their proposed $24.6 billion merger, with lawmakers raising concerns about whether food prices would increase and store closings and layoffs would ensue as a result of the deal.

DOLLAR TREE, FAMILY DOLLAR INCREASE FOCUS ON GROCERY?

Dollar Tree and its Family Dollar banners are investing in food merchandising in response to rising food sales as more shoppers turn to budget chains to save money. Sales for Family Dollar's private brands have outshone national brands for 39 weeks in a row, according to Dollar Tree CEO and President Michael Witynski.

TARGET, ULTA, BEST BUY DIVERSIFY STORE FORMATS, SIZES?

From Target's plans to build larger stores with more room for online order fulfillment to Ulta Beauty's decision to shift the location of merchandise in its stores, many retailers are modernizing with a variety of new formats. Other retailers including Best Buy have also found a competitive advantage in offering a variety of store sizes at different locations, said Matthew Katz, managing partner at SSA & Company.

CLAIRE’S OPENS SHOPS IN MACY’S STORES?

Starting this month, the accessories retailer can be found at more than 20 of the department store’s locations, including eight flagships.

PETCO PUSHES SALES UP 4% IN Q3?

The retailer reported its 16th consecutive quarter of comparable sales growth, but its net income took a hit during the period.

DOORDASH CUTS STAFF BY 1,250 TO REIN IN COSTS

DoorDash is the latest technology company to cut staff to pare back costs as rising interest rates and economic uncertainty spur investors to focus more on profitability. DoorDash, like many companies, is also navigating shifting consumer habits as trends normalize from pandemic disruptions. After surging growth during the pandemic, food delivery companies have been facing slowing growth as they confronted high inflation and a potential economic downturn.

ECONOMIC NEWS

US GDP GROWTH REVISED HIGHER TO 2.9%

The US economy grew an annualized 2.9% on quarter in Q3 2022, better than an initial estimate of 2.6%, and beating forecasts of 2.7% reflecting upward revisions to consumer and business spending and net trade.

US PRIVATE COMPANIES ADD 127,000 JOBS IN NOVEMBER

Private businesses in the US created 127K jobs in November, the least since January of 2021, and well below market forecasts of 200K. The slowdown was led by manufacturing and interest rate-sensitive sectors like construction, professional/business services and financial activities. Meanwhile, consumer-facing segment was a bright spot.

CONSUMER CONFIDENCE DECLINES

Consumer confidence declined for a second consecutive month in November amid volatile economic conditions, according to a closely watched monthly survey report by The Conference Board, a prominent economic research group.

The group’s monthly composite confidence index was at 100.2 for November, with 1985 used as a base of 100. Numbers above 100 generally signal positive sentiment, but the November number was down from 102.2 in October.

US PERSONAL SPENDING REMAINS ROBUST

Personal spending in the US increased 0.8% month-over-month in October of 2022, following a 0.6% rise in September and matching market forecasts helped by a tight labor market and high savings, despite rising prices and borrowing costs.

FINANCIAL NEWS

US PCE INFLATION LOWEST IN 10-MONTHS

The personal consumption expenditure price index in the United States increased by 6 percent year-on-year in October of 2022, below 6.3% in September. It is the lowest reading so far this year.

FED CHAIR POWELL: "THE TIME FOR MODERATING THE PACE OF RATE INCREASES MAY COME AS SOON AS THE DECEMBER MEETING"

From Fed Chair Powell: “Given our progress in tightening policy, the timing of that moderation is far less significant than the questions of how much further we will need to raise rates to control inflation, and the length of time it will be necessary to hold policy at a restrictive level. It is likely that restoring price stability will require holding policy at a restrictive level for some time. History cautions strongly against prematurely loosening policy. We will stay the course until the job is done.”