Marketplaces Industry Quarterly Report: Q2-2021 Marketplaces Industry Quarterly Report: Q2-2021

Marketplaces Industry Report

Q2-2021

ICSC’s Q2-2021 Report shows the ways in which the Marketplaces Industry is returning to normal while still navigating the ongoing impact of COVID-19. There was an increase in consumers’ monthly expenditures in dining as more business reopened and capacity restrictions eased. The food service sector also saw a gain in jobs, the largest quarterly gain since last fall, and sales experienced three consecutive months of double-digit year-over-year growth. After last quarter’s gradual rise in positive consumer sentiment on current and future economic conditions, more consumers continued to have optimistic perceptions about the current economic situation this quarter. Scroll through ICSC’s Q2-2021 Report in full, or click to the individual sections using the navigation below.

Consumer Price Index

As the U.S. reopens after a year of pandemic–related restrictions and economic activity picks up, prices for goods have risen considerably. The overall Consumer Price Index for all items increased significantly in April (4.2%), May (4.9%) and June (5.3%) from their respective 2020 levels at rates not seen since mid-2008. In May 2021, apparel saw its largest gain (5.6%) since 1991, while the cost of food away from home in June rose at its fastest pace (4.2%) since 2009. Prices for food at home have moderated more recently, growing at a slower rate compared to 2020 when consumers were stocking up on items.

Retail and Food Services Sales Performance

Retail and Food Services Sales* Performance and Overview**

Non-Store Retailers

Food-and-Beverage Stores

General Merchandise Stores

Food Services and Drinking Places

* Seasonally adjusted ** Excluding motor vehicles, auto parts and gasoline

U.S. Dollars (Millions)

Sales

Month-to-Month Growth

April

May

June

Q2-2021 Overall Sales

$1.32 Trillion

+4.9% Q-o-Q

Health and Personal Care Stores

Source: U.S. Census Bureau

U.S. Employment Situation

For Q2-2021, the retail sector added 110,400 jobs, gaining 96,300 jobs at store-based retailers and 14,100 jobs at non-store retailers. Following a loss of jobs in April, the most jobs were added in June, about 30% more than in May. The food services sector gained 610,800 jobs, the largest quarterly gain since Q3-2020. Even with these employment gains, retail is still 264,800 jobs short of pre-pandemic levels, while the food services sector is still down 1.2 million jobs from February 2020.

U.S. Employment (in Thousands)*

U.S. Shopping Center Performance Benchmark

* Seasonally adjusted

Source: Bureau of Labor Statistics

Store-Based Retail Non-Store Retail Food Services and

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April 14,605.30 May 14,657.70 June 14,725.90

Store-Based Retail

Non-Store Retail

April 607.30 May 614.80 June 619.10

Food Services and Drinking Places

April 10,642.20 May 10,851.40 June 11,085.00

April

May

June

Source: NCREIF and ICSC Research

Consumer Engagement

Source: ICSC Research

Shares of Monthly Expenditures by Channel – Q2-2021

Shares of Total Monthly Expenditures at Physical Establishments (Open-Air + Freestanding + Malls)

Source: ICSC Research

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CONTENTS

Retail and food services sales (excluding motor vehicles, auto parts and gasoline) climbed to $1.32 trillion in Q2-2021. Compared to the previous quarter, Q2 sales rose 4.9% and soared 25.7% over Q2-2020, the hardest hit quarter of the pandemic. Q2-2021 saw three consecutive months of double-digit year-over-year sales growth, with April 2021 surging 40.0% over April 2020 when sales were at their lowest. Q2 was particularly strong for clothing stores, electronics stores and food service establishments, which had the most growth over 2020.

Source: U.S. Bureau of Labor Statistics

From Q3-2020 to Q2-2021 base rent at shopping centers across the U.S. decreased 6.9% compared with the preceding four quarters. However, base rent increased 1.1% in Q2-2021 from Q2-2020 and grew 3.2% over Q1-2021. Although NOI at shopping centers across the country fell 9.2% during the previous four quarters, Q2-2021 saw NOI surge 19.6% over Q2-2020 when NOI reached its lowest level, partly due to falling income and rising expenses as properties put health and safety measures in place. Occupancy rates across the industry were 89.8% in Q2-2021, a small increase over Q1 but still at levels not seen in 9 years.

Compared to Q2-2020, the shares of consumers’ total monthly expenditures at open-air centers dipped slightly in Q2-2021, while that of malls increased a bit. There was also a rise during Q2 in the proportion of total dollars spent online from both brick-and-mortar and internet-focused retailers. This uptick can partially be explained by retailers’ promotions during the last full week of June, including Amazon’s “Prime Day,” Walmart’s “Deals for Days” and Target’s “Deal Days.” In comparison to the same period pre-pandemic (Q2-2019), consumers allocated more dollars toward open-air centers and online, but fewer dollars to freestanding establishments and malls.

3.9%

Online via brick-and-mortar retailer

3.3%

Online via Internet-focused retailer

13.5%

Malls

35.2%

Freestanding Establishments

44.0%

Open-Air Centers

Thematic Survey: Post-COVID-19 Trends

After a gradual rise throughout Q1-2021 in the percentages of U.S. adults expressing positive sentiments about current and future economic conditions, more consumers continued to have optimistic perceptions about the present economic situation. This is most likely due to continued vaccinations, low COVID-19 positivity rates at the time, loosening of restrictions and an improving employment situation. In April, there was a moderate decrease in the percentage of consumers saying economic conditions will improve over the next year, following the highest reading in March. However, May and June saw a slight increase in positive economic sentiment and are near the highest levels since surveying began.

Consumer Economic Sentiments

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Q2 Sales by Tenant Category

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Consumer Price Index

Retail and Food Services Sales Performance

U.S. Employment Situation

U.S. Shopping Center Performance Benchmark

Consumer Engagement

Thematic Survey: Post-COVID-19 Trends

Shares of U.S. consumers

Percent Change

Building Materials and Garden Equipment/Supplies Dealers

Percent of U.S. Adults

April 10-12

Economic situation will "IMPROVE" over the next 12 months

Current economic situation "BETTER" than a month before*

4.2%

Online via brick-and-mortar retailer

3.6%

Online via Internet-focused retailer

13.7%

Malls

35.2%

Freestanding Establishments

43.4%

Open-Air Centers

Shares of Monthly Expenditures by Channel – Q2-2020

Consumers allocated fewer dollars to goods in Q2-2021 compared to Q2-2020 when they were stocking up on staples. Q2 also saw a continued rise in the share of monthly expenditures going toward dining as more of those businesses reopened and pandemic-related capacity restrictions eased. Compared to a year ago, the share of dollars allocated to dining increased 4 percentage points and rose nearly 1 percentage point over Q1-2021. In comparison to 2019, consumers allotted fewer dollars towards goods in Q2-2021 with a greater share of expenditures going toward dining and all other services.

Source: ICSC Research

Drinking Places

Year-Over-Year Growth

+25.7% Y-o-Y

January 15-17

*Reference period changed from "2 weeks before" to "a month before" in October 16-18 survey.

All Items

July 17-19

October 16-18

March 5-7

June 11-13

$441,556

$437,137

$442,151

Apparel

Food at Home

Food Away from Home

Year-over-Year Percent Change

Data based on seasonally adjusted figures

85%

Concerned about the current rate of inflation

61%

Brick-and-mortar stores are valuable in delivering the experiences and engagement expected from retailers

77%

Prefer to do their grocery shopping in person

52%

Will partake in various activites more than before the pandemic because they couldn’t do them for over a year

71%

Bringing in food from a restaurant to eat at home is not the same as in person dining, which is preferable

48%

Expect pandemic behaviors to fade rather quickly as the COVID-19 situation improves

63%

Visiting stores more often and shopping online less as businesses fully reopen

46%

Much less willing to spend on goods and services if prices keep rising due to inflation

A member organization for industry advancement, ICSC promotes and elevates the marketplaces and spaces where people shop, dine, work, play and gather as foundational and vital ingredients of communities and economies. ICSC produces experiences that create connections and catalyze deals; aggressively advocates to shape public policy; develops high-impact marketing and public relations that influence opinion; provides an enduring platform for professional success; and creates forward-thinking content with actionable insights – all of which drive industry innovation and growth. For more information, please visit www.ICSC.com.

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