Good news for transactions at the store and the branch as brick-and-mortar shopping returns in force
As COVID’s initial lockdowns drove consumers en masse off the high street, out of malls and boutiques and headlong into the digital realm of online shopping, analysts predicted a grim future for retail. Adding to buying trends that existed pre-pandemic, all signs seemed to point to a retail reality in which people would permanently abandon physical shopping in stores altogether for the convenience of ecommerce. And while online shopping increased 40% in 2020 – its fastest growth in two decades – early indications are that physical retail is looking at a true resurgence as people head back to malls and shopping centers, eager for experiences, not just clicks.
A recent Wall Street Journal article highlights new findings that show foot traffic increased 86% in March from the same month last year, according human mobility data collected at a sampling of 52 malls. Many mall retailers and restaurants also saw big jumps in Valentine’s Day sales, according to the National Retail Federation, a trend they’re expecting to continue as consumers – flush with last year’s savings and a new round of stimulus funds – are eager to get back out there and spend.
As the WSJ notes: The positive outlook for mall retailers has come as a bit of a (welcome) surprise, even among the industry itself. “There’s no question things are better. Sales are also better than anticipated four months ago,” according to Bill Taubman, president and COO of Taubman Co, an owner/operator of 27 enclosed and open-air malls across the country. Shares of Simon Property Group, the nation’s largest owner and operator of malls and retail centers in the U.S., are up 45% this year. Retail landlords are likewise enjoying a better-than-expected recovery. As Ami Ziff, director of national retail at real estate firm Time Equities says, “Our collection rates are above 90%, [and] that’s really good news.”
As the economy’s consumer-driven bounce back continues – with the GDP growing at 6.4% in the first quarter, putting the economy within 1% of its pre-pandemic peak – the outlook for people continuing their return to in-store shopping behaviors appears strong. Those behaviors may well extend to what we can expect to see at bank branches, despite massive migration to digital channels, as a sizable majority of people expect to return to their pre-COVID banking habits – just like they’ve headed back to the mall.
While financial institutions invest in better digital experiences, they must also invest in branch network design and locations that deliver the more personal, humanized advisory experiences people seek as they emerge into the next normal.