While there was much uncertainty headed into the 2020 holiday shopping season, our thesis at Agree Realty (NYSE:ADC) that retailers with an omnichannel presence (brick-and-mortar, mobile and online) would outperform, proved correct. Many like to cite the success of eCommerce shopping, but 2020 holiday data shows that consumers engaged with both physical store fronts and digital shopping in a significant way.
Data from the National Retail Federation showed that holiday sales rose 8.3% in 2020 from the previous year. Leading sectors included home improvement stores and general merchandise, which we are proud to have largely represented as tenants of our real estate holdings.
Physical stores allow customers several purchasing options, such as buy online pick up in store (BOPIS), click and collect, and same day delivery.
Since 2010, Agree has invested billions of dollars to transform our portfolio to focus on retailers adapting into the new omnichannel world. Our full portfolio is comprised of 1,129 properties with our largest tenants including: Walmart (NYSE:WMT), Home Depot (NYSE:HD), Lowe’s (NYSE:LOW), Target (NYSE:TGT) and Best Buy (NYSE:BBY). These brands have invested significantly into their digital and brick-and-mortar presences.
As an example of the omnichannel model, let us examine Target, which reported a 17.2% increase in December sales from the previous year. Over the past several years, Target has invested more than $7 billion to refresh how it interacts with customers in store and digitally. Target thinks of its stores not only as a place for consumers to purchase goods, but also as showrooms for product discovery and locations for same day pick-up and drive-up fulfillment. Target also fulfills many of its digital purchases from their brick-and-mortar retail stores. This is what omnichannel is all about – being on-demand for all customers.
On the other end of the spectrum, brands which heavily rely on just an in-store experience fared worse this holiday season. Nordstrom reported a 22% decline in December sales while Signet Jewelers reported a flat December on a year-over-year basis. The pandemic accelerated the already occurring conversion to omnichannel experiences. As the world transitions back to a post-pandemic state, our expectation is that brands who invest in omnichannel will continue to win while those who focus on either just brick-and-mortar or just digital will fall behind.
Even eCommerce giant Amazon (NASDAQ:AMZN) embraces the omnichannel approach with physical Amazon stores and its acquisition of Whole Foods Market.
Our portfolio speaks for itself – 86% of the portfolio is comprised of national retailers, 67% of our tenants have investment grade ratings, the highest in the industry, and we boast the highest occupancy rate of our peer group at 99.8%.
See the recent interview with Agree CEO, Joey Agree, here: