Black Friday In-Store Shopping Was Down This Year: What Real Estate Investors Need To Know

The pandemic has changed the way many people shop. Over the past year, many consumers have adopted online shopping habits in order to stay safe. This was understandable given the lack of COVID-19 vaccines.

This year, things are very different on the vaccine front. Not only are they widespread, but a larger segment of the population is entitled to them.

Even so, consumers may still prefer shopping online over visiting physical stores. And the latest Black Friday shopping data confirms that the online shopping trend is anything but short-lived.

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Shopping in the store had failed

According to Sensormatic Solutions, retail store traffic decreased 28.3% on Black Friday 2021 compared to 2019. This is somewhat surprising for a number of reasons.

First, as mentioned earlier, many Americans now have protection against COVID-19 in the form of vaccines. Second, while the Omicron variant is now fueling a spike in COVID-19 cases, the Thanksgiving holiday weekend variant didn’t really matter.

Now the good news is that Black Friday store traffic was up 47.5% compared to 2020. But the fact that physical store visits nowhere near 2019 levels is bad news for real estate investors.

A persistently precarious situation for stationary retail

Since the outbreak began, REITs in malls and malls or real estate investment trusts have been sluggish. Widespread store closures have left many shopping center operators and shopping malls empty – and making investors nervous.

Of course, the numbers in stores on Black Friday alone won’t determine whether or not retailers make the decision to close additional locations. But it could be the total Christmas shopping pattern. And while the season is still on, retailers can decide to close underperforming locations, adding extra vacancies if the final 2021 numbers aren’t as impressive.

Supply chain issues could help physical retailers

For months now, supply chain bottlenecks have been causing inventory shortages and annoyance for retailers and consumers alike. To some extent, this arrears can benefit physical business. If consumers cannot find the goods they need online or cannot get them shipped on time, they may be more inclined to pick up and go to stores to look for alternatives or avoid delays in the delivery of the items.

Nevertheless, these bottlenecks in the supply chain will ideally resolve themselves in good time. And so real estate investors are really counting on strong Christmas business in stationary retail.

In late October, the National Retail Federation forecast that total holiday sales could increase up to 11.5% from 2020 numbers. However, whether this increase is due to in-store versus online purchases will make a world of difference for real estate investors.

Of course, a decline in physical store purchases can be bad news for shopping center and mall REITs, but it could benefit industrial REITs. As the demand for online purchases grows, the industrial space, which includes warehouses and distribution centers, should be enormous. But that doesn’t help investors who already have shopping center and mall REITs in their portfolios.