What Do Black Friday Figures Tell Us About Retail?

By Scott Baltic

Karen Raquet, Director of Property Management, JLL

On Black Friday, JLL conducted an extensive retail survey, asking managers from 60 retail malls managed by the company to report on several key aspects of the first wave of holiday-season shopping.

In some respects, properties on both coasts had similar experiences. In both groups, apparel was the strongest category at 75 percent of malls and electronics comprised the strongest category at the other 25 percent.

Moderate to strong initial traffic on Black Friday morning was reported at 57 percent of West Coast malls and at 59 percent of East Coast malls. The number of onsite experiences or services to draw visitors increased versus last year at about 29 percent of West Coast malls and at about 23 percent on the East Coast.

In other measures, in contrast, the two coasts did differ substantially. On the East Coast, about 9 percent of malls opened by 5 a.m. and only 18 percent opened at 8 a.m. or later. On the possibly more laid-back West Coast, no mall opened before 6 a.m. and fully 86 percent opened at 8 a.m. or later.

About 86 percent of retailers in JLL-managed West Coast malls reported about the same level of traffic as last year, and none reported more traffic. The situation on the East Coast was more varied: About 32 percent of retailers reported more traffic than last year, while 23 percent reported less traffic and 45 percent reported about the same as Black Friday 2017.

Getting behind the numbers

To add depth and context to these results, Karen Raquet, director of property management at JLL, agreed to a Q&A with Commercial Property Executive.

What do these results say about changes in the retail sector?

Raquet: The biggest change in the retail sector that this survey demonstrates is the elongating of the Black Friday shopping season. While in previous years malls were opening up on Thanksgiving Day to accommodate eager shoppers, many stores are now pulling back, reinforced by the fact that none of the malls surveyed on the West Coast opened before 6 a.m. this year.

With many Black Friday deals continuing well into the weekend, consumers are feeling less rushed to be the first one in the store, since deals are running at both physical and digital locations before, during and after Black Friday.  

What do the results indicate about retailers’ and mall owners’ expectations for holiday shopping?

Raquet: Expectations that this would be a strong holiday season for both mall owners and retailers have held true. While mall owners didn’t indicate massive upticks in traffic, the focus on experiences will allow them to bring in more customers as they continue to redefine their role as a retail channel. For retailers, in line with early predictions about popular retail categories, our mall managers noted the strength in the apparel and electronics categories at their malls this year.

Does the survey say anything about the outlook for malls going into 2019?

Raquet: The biggest outlook for malls coming into 2019 is redefining their role in the retail chain. Gone are the days where people would go to a mall to “browse” and do research on what they would like to buy. While the process may begin online, the vast majority of the time it ends with a purchase in a physical store.

First, brick-and-mortar margins are actually higher, since it’s easier to ship to one central location versus multiple end locations. Second, there are aspects to malls that still can’t be replicated online in terms of being able to view the product, have an in-store experience, and the ability to leave with your item the same day. These facts show that malls still have an important role to play even as retail becomes more digital.

Has the growth of e-commerce been slowing, that is, are we seeing signs of a viable equilibrium between it and brick-and-mortar?

Raquet: Yes, the growth of e-commerce has slowed in recent years with recent census data showing a downward trend when it comes to year-over-year growth of e-commerce sales. This slowing of e-commerce sales growth reinforces the idea that we’re heading to an equilibrium point that is closer to the omnichannel model that’s been discussed recently. As we get closer to hitting this point, brick-and-mortar and online retail will no longer be seen as competing retail channels, but rather referred to as simply retail.

Does this survey hint at all about the future of shopping malls, including values and investor interest?

Raquet: While this survey was done more as a barometer for the activity occurring at our properties on Black Friday, it does seem to hint at some of the big trends in the changing retail landscape, especially when considering last-mile fulfillment and the role brick-and-mortar retailers will play in omnichannel retail.

In the past, the traditional sales funnel would be trying to entice and capture the sales of shoppers walking in the mall, and mall traffic on Black Friday was seen as having a direct correlation to sales. Now with consumers educating themselves and doing much of their “browsing” online, malls tend to be the location consumers go to pick up the products they already decided on.  

From a value perspective, investors and owners may consider revamping their malls to focus more on experiential offerings and offering more options in terms of click-and-collect services. While last-mile fulfillment has decreased the amount of product stores need on hand, retailers get better margins from customers who make or pick up their purchase in-store, since they avoid the cost of shipping units to customers directly.

Image courtesy of JLL