2021 marked the dawn of retail recovery lockdowns

As we say goodbye to 2021, there are three signs that retail recovery is underway. As consumers got vaccinated and pent-up demand sent shoppers to stores, retail performance saw tremendous gains over 2020.

Retail demand surged

Leasing activity soared during the year, with the greatest retail demand seen since 2017. Preliminary data shows net absorption over 76.0 million s.f. for the year. This is a stark improvement from the negative 27.0 million square feet of absorption in 2020.

Demand for retail space was dominated by expansions from dollar stores, discounters and grocers. Fitness centers also stepped up their expansion, particularly lower-cost concepts like Planet Fitness and Crunch. Athleisure, which experienced a huge boost from work-from-home consumers in 2020, seized their opportunity and opened new stores as well. Clicks-to-bricks star Vuori, the maker of buttery soft joggers, announced 100 new stores over the next five years. Athleisure veterans like Lululemon, Athleta and Fabletics are also all actively expanding.

Consumers headed back to stores

2021 saw a resurgence of in-person shopping, but still somewhat short of 2019 levels. This was particularly true during holiday deal days. Black Friday store traffic soared 61% above the previous year, although it remained 27% below 2019 levels. Suburban shopping centers have seen faster recovery than urban retail – a trend that should continue into 2022.

Suburban shopping center foot traffic is close to 2019 levels, but urban destinations still lag

Foot traffic fluctuated over the summer months due to Delta surges but increased during the holidays
 

At the end of December, retail traffic was roughly on par with 2019 levels, with electronics, home improvement and grocery stores seeing the strongest gains. This return to stores resulted in a dampening of e-commerce sales. Although online sales continue to grow, they now represent a smaller percentage of total retail sales than they did during the height of COVID quarantines in 2020. In fact, e-commerce’s retail sales share dipped 270 basis points from Q2 2020 to Q3 2021.

E-commerce growth normalizes in 2021 after spike in Q2 2020

E-commerce sales remain elevated but began to taper at the end of 2020