Retail's Year Ahead
Although predictions about the year ahead involve a certain degree of guesswork instead of surefire strategy, it is possible to plan somewhat accordingly for the new year. The good news is that 2014 looks like it could shape up to be great for the retail industry.
Jim Sullivan, managing director, REIT research, of Green Street Advisors Inc., believes the real estate community will shy away from multifamily real estate investments in favor of malls. In 2013, the mall sector significantly underperformed as investors anticipated a decline in consumer spending and a tax increase. Consequently, high-quality malls look cheap in the public real estate market.
“Investor angst in relation to investor spending is legitimate but the mall sector was overly discounted,” said Mr. Sullivan. He also notes that new construction is beginning to change “in a pretty meaningful way” after hitting generational lows.
Beyond real estate, the retail industry can look to several encouraging signs while setting up for 2014. Simple as it might seem, even the way the calendar lines up should prove more favorable this year than it did last year. For example, Easter will fall on April 20th, which is late in the season and should allow for strong Easter sales. Chanukah will begin on the evening of December 16th, putting it much closer to Christmas than last year, when it started the night before Thanksgiving. This will allow for stronger December sales.
Additionally, factors such as social media, more advanced credit card security, and style shifts are poised to create the most important element in retail: confident consumers. Not only are present day customers more knowledgeable about products than ever, also unemployment is abating and the stock market has been giving consumers some extra spending power. This year we should be able to do some discretionary spending and keep boosting retail.