Retailers finding new ways to provide value; Restaurants move toward fast-casual atmosphere to hit consumer sweet spot
Colliers International, a global commercial real estate leader, notes that with the housing and job markets on the road to recovery, retailers are seeing increased consumer confidence and spending across North America. In fact, the six markets with the most shopping center leasing activity are also cities where long-term growth in employment and housing have taken hold, according to Colliers International’s 2013 Q1 North American Retail Highlights report, released today. What’s more, retailers are finding new ways to provide value to consumers with a customized approach to varying lifestyles and shopping behaviors.
“Although the economy is improving, retailers are still focusing on value,” said Mark Keschl , national director of retail services for Colliers International and contributor to the report. “Today, value does not necessarily mean the cheapest price. The consumer is looking for quality, brand and price transparency in a dynamic shopping environment. Shoppers also want the ability to purchase the product in the manner that best suits their lifestyle, whether it is in a brick-and-mortar location or online.”
Colliers market experts point to several key trends in 2013 that indicate economic growth in both the retail and restaurant industries:
- Jobs and Consumer Confidence on the Rise: These key drivers of retail spending have been a mixed bag in recent quarters, but with recent growth, both point to an improving economy. In April, the U.S. economy added 165,000 new jobs, and The Conference Board’s Consumer Confidence Index (CCI) rose to 76.4 percent, up more than 20 percent sinceNovember 2008.
- Shopping Centers Recovering: The national vacancy rate for shopping centers dropped slightly from 10.09 to 10.06 percent in the first quarter of 2013. In addition, shopping centers absorbed nearly 4.5 million square feet in the first quarter.
- Housing Recovery Bolsters Spending: Housing recovery is another key indicator of economic growth. New construction on homes rose by 28 percent last year, and both the number of homes for sale and average price of homes are on the rise.
- Canada and Mexico See Retail Growth: Canada added eight million square feet of shopping center space last year and more than 10 million additional square feet are in development for 2013, including outlet malls, enclosed malls and mixed-use developments. The growth is bolstered in part by American retailers tapping into the robust Canadian market. Mexicois also experiencing a surge in the retail market, with more than 1.5 million square feet of new shopping center space developed this past year.
- Restaurants Position for Tomorrow’s Consumer: With restaurant sales forecast to grow nearly four percent in 2013, chains are relying heavily on franchisees to support expansion. In addition, casual restaurants like Applebee’s, Red Robin and Famous Dave’s are testing the fast-casual segment to strike a balance between quality and value, though the market could quickly become overcrowded.
“From U.S. retailers that have refined their businesses to an art form, to international retailers who still find the U.S. the best retail market in the world, today’s shopper has an exciting menu of possibilities to choose from,” said Keschl. “Restaurant choices are also more interesting than they have ever been, with new concepts providing unique, healthy food arriving daily.”
A complete PDF version of the eight-page report is available at www.colliers.com/us/retail-Q1. For more insight into this report, visit Colliers International at ICSC’s RECon 2013, the global retail real estate convention, May 19-22 in Las Vegas, at booth S243R.