While brick-and-mortar businesses have struggled over Covid’s long, anxiety-inducing reign, a new study revealed that physical retail isn’t going down without a fight.
On Thursday, the International Council of Shopping Centers (ICSC) spoke to the sector’s performance over the holiday season. While the group predicted in October that stores would see just 1.9 percent year-over-year growth during the November-December shopping period, the physical retail sector—which includes malls, boutiques, department stores, grocers, specialty shops and big box stores—ultimately saw a much higher growth rate of 3.5 percent from 2019.
“It was absolutely a fantastic holiday season,” Stephanie Cegielski, ICSC’s vice president of public relations, said at the briefing. “It was much higher than we had forecasted, which means that consumers really took to heart that they wanted to go to and support those brick-and-mortar locations,” she added, ultimately injecting about $857 billion into the economy.
“These are great numbers, because we we have been living in a pandemic for 10 months,” she said. Shoppers have been anxious about the economy and record unemployment rates, she added. Over the 2020 holiday period, 86 percent of shoppers made purchases of gifts or decorations—a six point drop from the same period a year prior, which Cegielski called “not completely unexpected” given many families’ financial challenges. But “while fewer people made those purchases, they spent more money on them,” she said, making up for the shoppers who stayed home.
Consumers have also clearly embraced the concept of omnichannel shopping, she said, with 79 percent shelling out in physical stores and 91 percent taking advantage of a combination of brick-and-mortar and e-commerce channels—bolstered by the heavy emergence of services like buy online, pick up in store (BOPIS), curbside pickup and same-day delivery. More than two-fifths (44 percent) spent online and picked up in a physical store, Cegielski said. What’s more, a whopping 86 percent of shoppers made more purchases when they went to pick up their items, she said, “so that one online transaction resulted in a second, in-store sale, which is great for those retailers.”
In the purely physical space, box retailers emerged victorious, with 64 percent of shoppers copping to making their purchases at Target, Walmart and more. “They did this out of a strong desire for promotions,” Cegielski said, with 41 percent saying they chose these channels based on their low prices and discounts.
The No. 2 destination for holiday shoppers was department stores, she added, “which is surprising to people, because we hear so much about the struggles and the bankruptcies.” Still, Cegielski said, the holiday season usually sees department stores within the top three physical retail destinations, especially for shoppers looking to gift clothing or accessories. Dollar variety stores and off-price channels took the No. 3 slot, she said, which ICSC found unsurprising given the especially pronounced consumer need for low prices and bargains last year.
Overall, 62 percent of total spending took place at retailers that had a physical presence she said, even if they are also attempting to bolster their online channels. “The bulk of last year’s sales, whether online or in store, went to a retailer that offers both to their consumers.”
While 2021 stands to remain challenging while most citizens wait for their turn to receive a Covid vaccination and economic relief from Congress, Cegielski said ICSC, like many economists and retail analysts, believes that by Q4, “things will be back on track” for retail. A pent up desire to travel will increase shoppers’ propensity to spend on other goods and services, like apparel and dining out, she said.