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Expect online and discounts to drive holiday sales this season

The 2017 CBRE Annual Holiday Outlook Report, which comes out Monday, predicts that online shopping will be at record levels during this holiday season and that discount retailers will make out well among price conscious consumers.

Kerran Thompson, visual manager of Village Outfitters, places a reindeer decor item on a clothing display for the upcoming Christmas season at Peddler’s Village just outside New Hope.
Kerran Thompson, visual manager of Village Outfitters, places a reindeer decor item on a clothing display for the upcoming Christmas season at Peddler’s Village just outside New Hope.Read moreKAIT MOORE / Staff Photographer

Online will play a much bigger role in how people make their holiday purchases this year than in the past, while discounts will drive many of the buys with "off-price retailers" poised to do well this season, concludes an annual holiday outlook by CBRE, the region's largest commercial real estate firm.

E-commerce sales will account for 11.5 percent of $930.2 million in total retail sales in the November-December stretch, representing an increase from 10.2 percent in 2016 — and more than double the 4.5 percent share of total sales it represented in 2008.

Retailers have invested heavily in new technologies this year to capture the online buying dollar quickly and efficiently. These include mobile apps and in-store scanning that gives customers instant access to detailed product information and reviews, wish lists and customized product offers.

"The mobile phone is being used more and more on site as part of the transaction, whether for a price comparison reason or as a deeper dive into the product specifications," said Steven H. Gartner, CBRE's managing director of retail services, who highlighted the report's key findings. "National retailers are using data more than ever. They use that data to learn how to satisfy the customer better than ever."

The report, which will be released Monday, also noted "an increased focus on mobile sales and advertising platforms. As consumer expectations for convenience and speed continue to rise, brick-and-mortar brands are adding mobile technology as an integral component to omni-channel success."

The firm e-Marketer, which tracks online sales, forecasts 38 percent growth in retail sales made through a phone or tablet in 2017, accounting for 34.5 percent of all e-commerce purchases. Most of those sales will go to brick-and-mortar brands, as outlined by the CBRE report.

The annual report provides a snapshot of national retail indicators and has served as a guide for retailers, brokers, landlords, and consumers on what to expect in the November-December holiday shopping season.

Last month the National Retail Federation put out its holiday sales projections, with an anticipated increase of 3.6 percent to 4.0 percent growth this year over 2016. The CBRE report cited those numbers.

Another big trend this year is discounting, "as retailers seek to compete on price and win the wallets of increasingly price-sensitive consumers," said the CBRE report. "Retailers in nearly all categories have faced considerable pricing pressures over the past few years," driven by "off-price" retailers — such Ross, Burlington, TJ Maxx, and Nordstrom Rack — that offer discounts of 30 percent or more on designer brands and other merchandise. They have been expanding stores, and are expected to do very well over this holiday season.

JP Morgan recently announced that key brands, such as TJX (owner of TJ Maxx and Marshalls), Ross Stores and Burlington are expected to see sales growth of up to $19 billion by 2021, mostly at the expense of department stores.

Karen Thompson, 56, owns seven stores at Peddler's Village, an outdoor shopping center just outside New Hope, which has traditionally been a huge draw during the fall and holidays. This is her 28th holiday season at the center and she expects a 5 percent to 10 percent increase in sales this holiday season compared with last year.

"We are really encouraged by the healthy fall shopping climate going into the holiday season," she said Thursday, "because of the new product assortment and just the general momentum with the pattern of shopping. We felt it in September and October. There has been no letup. You see the pattern of guests returning week after week."

Thompson, who also owns shops on Washington Street in Cape May and in Princeton's Palmer Square, has been tracking what her regulars have been asking for and buying.

She said she started to push for additional goods from merchandisers that have been trending well all fall, identifying them by Nov. 1, and with products to flow in by mid-December.

Such data collecting, especially at this time of year, considered the Super Bowl for retailers, is not uncommon, said Gartner at CBRE.

"Holiday trends carry throughout the year," he said. "New and improved methods are deployed during the holiday season because this is the best time for retailers to get the biggest data set [and] get the biggest impact on results."

All the factors — new technology, increased online demand, and the need to better manage inventory in real time and match merchandise with what's trending — will converge to create more pop-up stores and short-term warehouses, the CBRE report projected. Pop-ups are makeshift temporary stores with short leases.

"Both landlords and retailers will leverage pop-ups — short-term installations either in traditional retail storefronts or nontraditional venues such as shipping containers or kiosks — with even more features than ever," states the report.