Online retailers are due for a reckoning as operating costs grow and profits dwindle, according to consulting firm Forrester. Consumers are reverting to pre-pandemic behaviors, and pandemic-spurred demand for e-tail won’t feature in 2023, the firm predicted. Forrester expects online sales to settle down next year, growing at 1.5%. That’s a steep drop from 2020’s 3.5% growth, and it means 76% of total U.S. retail sales still will occur offline. Only the strongest brands will survive such a reversal. In 2023, start-up and midsize pure-play brands will need to open physical stores or place their products in other companies’ physical stores if they want to last, according to Forrester vice president and principal analyst Brendan Witcher.
Consumers Want More Ways to Pay, and Retailers Are Delivering
An online shopping boom during the pandemic drove retailers to add a variety of payment services. Now, a tight economy has consumers seeking payment flexibility, and retailers again are responding with a variety of payment services from peer-to-peer services to easier processing of EBT payments.
Ahead of Black Friday, Amazon, for one, is rolling out Venmo as a payment option to its nearly 90 million active U.S. customers. Venmo joins existing Amazon payment options of credit cards, debit cards, store cards, gift cards, health savings accounts, flexible spending accounts and EBT cards. Venmo will be available for all U.S. Amazon accounts by Black Friday, offering consumers a way to spread their spending among payment options.
Meanwhile, buy-now-pay-later is hitting the big time. The BNPL sector will process some $1 trillion in payments globally by 2030, according to consulting firm GlobalData.
The high demand from both merchants and customers will make this sector popular with big tech and large payments providers; companies like Apple, Google, Mastercard, PayPal and Visa will lead the market by 2030, according to GlobalData. “Big tech and large payment providers can seamlessly incorporate BNPL into their platforms whether they’re profitable or not, forcing fintechs with unsustainable revenue models out of the market,” said GlobalData thematic analyst Maddy Irwin. “For Visa and Apple, BNPL does not need to be profitable and is merely an incentive to keep existing customers in their ecosystems.” Spreading the cost of payments is an attractive option for consumers amid a period of rising inflation, Irwin said. “BNPL is also convenient for merchants, as the lending provider is taking on the risk of default.”
More on Payment Options
Klarna Wants to Be Much More Than Buy-Now-Pay-Later
What Stores Accept Venmo? Restaurants, Gas Stations, Retailers and More
Target Now Accepts EBT for Digital Orders
Iconic Empire State Building Will Add Ultimate Starbucks Store
Readers planning to attend ICSC New York this December might add the Empire State Building to their agendas. An innovative Starbucks occupying three floors will open Nov. 16 then at the iconic skyscraper. The 23,000-square-foot Starbucks Reserve Empire State Building will feature hands-on workshops and tasting flights, and an extensive menu of shareable plates, entrees, coffee and cocktails.
“The Starbucks Reserve Empire State Building store will bring people together in this diverse and dynamic city over incredible coffee and food experiences that celebrate human connection, which is at the heart of the Starbucks experience,” said Mark Ring, senior vice president of U.S. retail at Starbucks. The building’s landlord thinks the store will make the property even more of a tourist attraction. “Tenants and visitors to the Empire State Building, recently named Tripadvisor’s No. 1 attraction in the U.S., will benefit from this amazing new store, as will everyone in the neighborhood,” said Anthony Malkin, chair, president and CEO of Empire State Realty Trust, which owns the building.
Flow of U.S. Pension Fund Money into Commercial Properties Will Slow in H2
Institutional investors are making fewer big bets on commercial properties as interest rates climb. Pension funds, in particular, are pulling back after having plowed huge amounts into the sector, according to experts.
In the first half of 2022, U.S. public pension funds made $32.6 billion in new commitments to commercial real estate, an almost 40% year-over-year increase, according to talent management and human resources firm Ferguson Partners. Since then, however, interest rates have climbed and inflation, labor and supply chain disruptions have made buildings more expensive. That likely will cause the volume of investment in such properties to dip in the second half of 2022, according to the firm.
Meanwhile, commercial real estate funds managed by private equity firms also find it harder to convince such funds to invest. From January through Oct. 20, they raised $112.8 billion from pension funds and other institutional investors, down from $157.9 billion in the same period last year, according to data firm Preqin. Experts say this reduction in such an important pool of buyers likely will slow deal volume in the second half and in early 2023.
Kite’s Savannah Lee Has Died
ICSC member Savannah Lee, an Orlando-based leasing associate with Kite, has died. “Savannah was incredibly talented, bright and kind to everyone who had the pleasure of being in her presence,” the company said. “Within the world of retail leasing, she was a rising star at KRG and across our industry. Savannah held a true passion for our business and building relationships, and she approached everything she did with a genuine and inspired work ethic. She possessed a beautiful spirit and has left us far too soon.”
By Brannon Boswell
Executive Editor, Commerce + Communities Today