Even before the pandemic began, real estate investors had reason to be concerned about an impending retail apocalypse. With consumers increasingly moving away from stores in favor of online purchases, shopping center and mall REITs (real estate investment trusts) had already been struggling to retain tenants.
But then the pandemic hit, and that really made things take a turn for the worse. Not only did many stores shutter in 2020, but even more consumers took to online shopping as a means of keeping themselves safe.
Still, the news isn't all bad for shopping centers and malls. That's because recent data points to the fact that despite a shift toward e-commerce, consumers still rely heavily on physical stores for their purchasing needs.
Physical stores are still relevant
In a recent survey by Uberall and MomentFeed, 74% of respondents said that their shopping preferences include the option to visit a store at one point or another. By contrast, under 18% of respondents said they prefer to research and purchase products online only. Furthermore, 66% of respondents say they're more likely to buy something online when they know they have the option to return it to a physical store.
This data falls in line with a recent TreasureData survey of U.S. consumers about their holiday shopping plans. A good 47% of respondents said they plan to employ a combination of in-store and online shopping for the upcoming holiday season.
Additionally, 75% of respondents said they plan to shop locally after the pandemic comes to an end, while 22% said they commonly take advantage of BOPIS -- buy online, pick up in store.
All of this tells us that consumers aren't ready to let go of physical stores. Whether it's to compare products, return products, or retrieve purchases, there's clearly a need to have a place to go for live, in-person transactions. And as long as that attitude prevails, shopping centers and malls can continue to thrive.
This doesn't mean that physical retailers shouldn't adapt to changing consumer needs. E-commerce is clearly here to stay, so rather than fight it, stores should instead find ways to capitalize on it. BOPIS -- an offering that grew increasingly popular during the pandemic -- is one way to do this, and it's an option that can easily drive more foot traffic to stores even as consumers continue to make purchases from their phones, tablets, and computers.
Supporting local businesses
The fact that 75% of consumers in the TreasureData survey said they intend to shop locally post-pandemic is notable, too. The pandemic destroyed a lot of small businesses, and communities need those businesses to thrive. In the coming years, consumers may be more likely to go out of their way to support local establishments for the sake of keeping property values at strong levels.
Shuttered stores can impact the value of residential and commercial real estate. And so once things improve on the coronavirus front, we could see some consumers shift away from e-commerce in an effort to help local businesses stay afloat.
The Millionacres bottom line
All told, it's clear that consumers still want and need physical stores, even in an age when digital shopping may be quicker and, in some cases, more cost-effective. Shopping center and mall REIT holders can take some comfort in that fact as we navigate an ever-changing consumer landscape.