Study: Retail store managers’ optimism at record high

shopping customer returning product to the seller; Shutterstock ID 1709614225

Store managers say they are optimistic about performance in 2025.

Store managers entered 2025 with a favorable attitude fueled by strong annual and holiday sales volume.

A majority (75.7%) of store managers say they are optimistic about performance in 2025, according to Levin Management Corp.’s 14th annual Retail Outlook Sentiment Survey. (LMC’s retail-focused portfolio includes 125 properties totaling more than 16 million square feet with locations in the Northeast and Mid-Atlantic states.)

More than three quarters (76.1%) of LMC poll participants said that their 2024 annual sales reached the same or a higher level than 2023. Just under three quarters (73.6%) indicated same-or-higher holiday sales year over year. These percentages compare to survey trailing averages of 61.6% and 66.0%, respectively.

“Tenants in our leased and managed shopping center portfolio had a strong year, with our survey findings mirroring reports of record retail spending and better-than-anticipated holiday seasonal sales in 2024,” noted LMC’s Matthew K. Harding, chief executive officer, LCM.

Industry Drivers and Growth Plans

For the second consecutive year, inflation/rising prices topped the list of drivers LMC survey participants feel will have the biggest impact on their retail or service business over the next 12 months. At the same time, inflationary increases seem to be easing somewhat, with 24.2% of respondents saying they did not raise prices last year, up from 22.5% and 18.8%, respectively, in LMC’s two prior Outlook surveys.

Of those who did raise prices in response to inflation last year, 25.4% expect to raise prices further in 2025, down from 30.4% and 34.7% in the two prior Outlook surveys.

The economy/consumer confidence ranked second among anticipated 2025 industry drivers. Shifting consumer expectations and shopping patterns came in third, displacing supply chain/inventory availability, which had been a “top three” driver since 2022.

LMC’s Outlook survey also asked tenants about their plans for growth in the coming year. In the latest poll, 40.9% of respondents say they are hiring; 17.0% anticipate expanding, renovating or reformatting their location; and 22.0% expect to open additional locations in 2025.

Survey respondents ranked customer service and support, and the social experience of in-person shopping as the top two advantages of physical retail over its ecommerce counterpart. Their most popular enhancements fit in that context:

72.3% of adapters are placing more training and focus on customer experience.
36.9% of adapters are increasing their emphasis on community programs and engagement.
32.3% of adapters are working on new or updated customer loyalty/incentive programs.

AI

The survey also asked retailers about the adoption of artificial intelligence technology.

“While AI plans didn’t make our ‘top three’ adaptations in this year’s Outlook survey, the shift in that data point is well worth a mention,” Harding said. “In our 2024 Outlook, 14.6% of our adapters reported new plans involving AI. This year that number more than doubled, jumping to 29.2%.”