Even as COVID-19 cases continues to rise in the United states, from an overall perspective it is clear that we are deep into an economic recovery that is showing us the resiliency of consumer demand. We are also seeing a retail landscape that is in the midst of critical changes – some that are being sped up by the current pandemic, believes Ethan Chernofsky, VP of Marketing at Placer.ai, a location analytics company that harnesses mobile data to analyze foot traffic by applying AI, machine learning, and big data analytics.
“Finally, there are unique performances being witnessed that may show both long term shifts in consumer behavior and the rise of different forms of retail success that could have real staying power,” he adds.
Future of brick and mortar
Brick and mortar has never had the opportunity to show its value more as even huge growth in e-commerce has not been able to offset offline drops, adds Chernofsky, while pointing out that brands are increasingly seeing the critical importance of ‘owning’ their offline presence as a means of maximizing its effect. This is leading to more brands trying shifting attention away from pure wholesale and towards adding channels that give them a direct connection to customers. Nike and Levi’s are expanding their offline presence while DTC leaders like Allbirds are raising huge sums of money to do the same.
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On September 28, Allbirds announced a $100 million Series E funding round led by Franklin Templeton, with parcitpation from others like T. Rowe Price, Baillie Gifford, TDM Growth Partners, Rockefeller Capital Management among others. The eco-friendly digitally native footwear brand said it will use the new capital to enter new product categories and fund expansion of its international business and brick-and-mortar stores.
For Levi’s, Placer.ai analysis shows, while visits to its stores are returning at, the recovery rate has been more in line with department stores than faster-moving sectors like off-price or athleisure. Visits in August were down 55.3% YOY, which is a shade better than the July performance (-57.0%). Though this doesn’t account for the August heights normally reached during the back to school season, it does serve to highlight an aspect of Levi’s offline reach that could receive greater focus, notes Chernofsky.
Of course, there was an entire class of retail that depended heavily on cities having their normal bustle and flow. “Once this was removed, these players saw massive declines that were outliers even within the pandemic context. In so many way, many very strong brands have been dealt a near perfect storm of challenges. Should they show the capacity to recover, it will serve as a huge testament to their strength,” he adds.
Interestingly, a recent analysis by Placer.ai of customer traffic numbers found that the outdoor shopping centers were recovering faster. In terms of overall customer visits compared to 2019, August traffic showed a marked improvement from June, it found. Visits in the week beginning August 31 were down 24.6% for outdoor centers, while for indoor malls the numbers were down 37.2%, an improvement from early June when outdoor centers were down 34.2%, and indoors down 42.1%.
New York and big cities like it were hit uniquely hard by the pandemic as the combination of school closures, declines in tourism, drops in commuting, and a documented ‘exodus’ from city life have left it without its core constituencies. So, even though a recovery is on the way here, but it may take many more months for “normalcy” to return, thinks Chernofsky, who sees one of the key indicators in these cities will likely be the return of office workers. “Looking at a group of over 20 large office buildings, visits were down 76.3% as of the week of September 28th year over year. This number rising, alongside a return of tourism in any shape should provide a significant boost,” he points out.
