June 2013

Is the retail market recovering and what lies ahead?

A Message from Sam.... 
 
It is my belief that in a recovering economy, the trends in retail real estate give us a feeling for the speed at which economic improvement is actualizing. I would even call retail real estate the pulse of the economy. If you think about it, retail locations are the place where most people interact with the economy. Even though online stores have taken away some business from brick and mortar retailers, people still do a lot of shopping around town.
 

So, if we accept my assertion that retail real estate is the pulse of the economy, what is our current diagnosis? I believe we are getting healthier with each passing day. There are several recent observations of significance when I look at retail real estate in Springfield and around the country, but the main point is that activity is happening

 

New concepts are out looking for space. A list of the country's most aggressively expanding retailers would be composed of many names that Springfield residents have never heard of. Businesses around the country that have seen success on the small scale are finally building up the confidence to branch out into new markets. With sales on the rise, retailers are signing lease extensions, and looking for ways to expand their portfolios. I think this is the key to being able to say "we are recovering" with sincerity. Retailers are no longer in defensive mode as a whole. They are making decisions based on how to grow their company, rather than how to work within a limited budget.

 

From the consumer's side, I am still optimistic about the economy in 2013. Even though retail and food service spending went up 0.1% in April, consumers on the whole have been characterized as being in deleveraging mode. They have been paying down debt and avoiding new debt whenever possible. When we have seen increases in spending, they have been very modest. I predict that this is creating a pent up demand that will cause an influx in consumer spending later in the year if conditions are right. If job numbers and income achieve growth later in the year, I expect to see consumer spending noticeably increase over the meager increases of the recent past.

 

Finally, the big question is; "if growth happens, where will it happen?" My thinking is that growth will happen in the environments that are most welcoming to new enterprise and business expansion, and nowhere else.  Places that are maintaining their infrastructure, modernizing the appearance of the landscape, and simultaneously offering business incentives and friendly tax structures will be inundated with new businesses. Unfortunately, I predict that places that are waiting for the economy to improve before they take these steps will be waiting for a long time. I believe that the economy wants to expand, and many sectors of the economy have the ability to expand. Still, their recessionary wounds are too fresh to jump into anything new without some evidence of an elevated consumer confidence to give them faith that they can succeed.

 

The way I see it, things are getting better. If job numbers go up this year, I will look forward to watching retail locations continue to expand. If the retail sector expands, office space, industrial space, and development land should also experience expansion and growth.

Sam Perks 

REDUCED - Retail Strip Mall For Sale 
THIS MONTHS QUESTION

 What is the definition of Omnichannel Retail?

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Omnichannel Retail...
What is it and how will it effect your retail experience?

The rise of omnichannel retailing - in which mobile, online and in-store experiences complement rather than compete with one another - will lead to smaller but showier stores in coming years, said Vincent Corno, Saks Inc.'s senior vice president of real estate, at RECon.

 

Saks, which operates 42 Saks Fifth Avenue stores, 66 Saks Fifth Avenue Off 5th stores and Saks.com, is investing $100 million over the next five years to establish an omnichannel sales platform and "tear down the old silos" separating e-commerce and brick-and-mortar sales, Corno said.

  

In the future retailers will be less concerned with individual store sales and more focused on using stores as a brand statement driving sales across all the channels, he predicted. "The four-wall sales-performance measure of a store may be obsolete in our lifetime," Corno said. "Does the store manager get credit for the entire trade area's e-commerce sales, or just for what happens within the store's four walls?"

 


This Months Quote

Innovation distinguishes between a leader and a follower. 
Steve Jobs



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