Simon Property Group is leveraging technology to maintain shoppers’ visits to on-site stores in the face of growing competition from eCommerce players.
The largest mall owner and developer in the U.S. has driven revenue increases, reporting Monday (Feb. 5) that, in the final quarter of 2023, it saw a 9% year-over-year uptick, with revenue for the full year up 7%.
David Simon, the company’s chairman of the board, CEO and president, noted on a call with analysts that the firm is leveraging consumer-facing technology to drive loyalty to brick-and-mortar retailers on its properties.
“We still are in the pursuit of bringing technology to our loyal consumers that allow[s] them to enhance [their] shopping experience with us. So, we’ve got a lot of initiatives on the marketing, the loyalty,” Simon said. “Simon Search is a great example where our consumer, either in-property or pre-visit, can search our tenant base. [For instance,] if they’re looking for a black dress, where in the center can I buy it? At what retailer?”
He added that this technology’s aims are centered on “reinforcing their shopping behavior, rewarding loyalty, expediting their trip, [and] making it more useful.”
Last quarter, the company reported leasing growth, particularly in the Sunbelt region, and positive sales figures in California and Woodbury Common in New York, indicating a resurgence in tourism. Simon emphasized the robust performance of the outlet business, possibly due to consumers seeking affordability amid increasing inflation.
While Simon noted that the retailers on its properties have seen “resilient consumer spending,” some challenges remain, especially with consumers whose budgets are under pressure.
“The overriding theme was, the lower-income consumer still, with inflation embedded, even though inflation has subsided, [is] dealing with things that cost a lot more money than they used to,” Simon explained. “And the good news is, their income is increasing, but it’s still not in a position that they have that discretionary income that they need and they deserve. And we need to figure that out as a country.”
The latest installment of PYMNTS Intelligence’s “New Reality Check: The Paycheck-to-Paycheck Report,” dubbed “The Pessimism About Pay Rises Offsets the Effect of Falling Inflation” edition, explores U.S. consumers’ financial lifestyles economic outlooks, drawing from a December survey of more than 4,300 U.S. adults. The results reveal that 19% live paycheck to paycheck with issues paying bills, and 60% live paycheck to paycheck overall.
Ninety-two percent of those in the former group are at least somewhat concerned about current and near-future economic conditions, as are 82% of those who live paycheck to paycheck without issues paying bills.
Overall, the study revealed, 36% of consumers with incomes under $50,000 a year expect income growth below inflation, and 31% expect their incomes to increase at least on par with inflation — significantly lower than the 45% of those who make more than $100,000 a year expecting income growth to match or exceed inflation.
Notably, digital shopping now outpaces brick-and-mortar. The PYMNTS Intelligence study “Consumer Interest in an Everyday App,” which drew on insights from a survey of more than 3,300 consumers in the United States and Australia, revealed that, of the 61% of consumers who had shopped for a non-grocery retail product in the previous month, 72% did so via connected device at least some of the time. Plus, 61% did so via traditional channels at least some of the time.
Overall, retail spending is on the rise. The U.S. Census Bureau’s advance estimates of U.S. retail and food services sales for December 2023 noted a 0.6% month-over-month increase and a 5.6% year-over-year uptick. Overall retail growth seems to be slower than eCommerce growth, suggesting that brick-and-mortar retailers may be losing share, with eCommerce sales in Q3 2023 (the most recent month on record) up 7.6% relative to the year prior.
The rise of convenient eCommerce options promising lower-priced products is whittling away at traditional retailers’ share of consumers’ spending. For instance, the report “The Replenish Economy: A Household Supply Deep Dive,” a PYMNTS Intelligence and sticky.io collaboration, which draws from a survey of more than 2,000 U.S. consumer, found that, of the 42% of retail subscribers who participate in Amazon’s Subscribe & Save program, about half are shopping in stores less often.
As Simon Property Group continues to face the challenges posed by the rise eCommerce, it is leveraging digital loyalty technology to enhance the brick-and-mortar shopping experience for its customers. By embracing technology and adapting to changing consumer preferences, the company aims to maintain its position as a leader in the retail industry.