The Phoenix retail real estate landscape has seen a 2% point decrease in vacancy since the third quarter of last year, highlighting the desire of Valley residents to return to pre-pandemic shopping habits, which is made easier thanks to the region’s warmer temperatures and plethora of outdoor shopping locations.

Retailers have applied lessons learned from the past two years of pandemic-influenced shopping patterns to position their stores and e-commerce operations for this year’s holiday season, according to CBRE’s annual Holiday Retail Trends Guide. These adaptive strategies are expected to help boost national holiday spending to a 6.9% year-over-year increase in fourth-quarter retail sales to $1.48 trillion, based on CBRE’s analysis of multiple industry projections.

To get ahead of the challenges that upended holiday shopping in recent years—including labor shortages, scarcity of certain merchandise due to supply chain disruptions and outpaced growth in e-commerce versus in-store sales—retailers across the board are largely focusing on three key trends in 2022, according to CBRE’s report.

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1. More Inventory, Less Out-of-Stock

Supply chain disruptions roiled the retail industry in 2020 and 2021 as shuttered factories and bottlenecked ports created shortages of certain merchandise in stores and online. Retailers and e-commerce companies have countered that problem this year by stocking more inventory closer to the customer, be it in stores or warehouses that are closest to large population centers.

This entailed shifting from a “just-in-time” model of stocking only what is forecast to be needed to a “just-in-case” model of amassing deeper inventories farther ahead of the season. In many cases, this has resulted in jam-packed warehouses and larger-than-usual stockpiles of loaded shipping containers behind stores or in storage yards. This is one of the factors that has pushed the vacancy rate of leased warehouse space in the U.S. to a scant 2.8 percent this year from 3.6 percent last year.

2. Solving the Labor Puzzle

The pandemic caused disruption and displacement in the job market that the retail industry, among others, is still grappling with.

Retailers are taking multiple approaches to address the labor challenge. Some have reduced store hours, including several national retailers that have announced they won’t open on Thanksgiving this year. And some are leaning more on their e-commerce operations, as staffing up fulfillment role in warehouses has often proven easier than finding more associates for retail stores.

Another tweak involves store layouts; many retailers have redesigned their stores to dedicate space for employees to fill online orders quickly and separate space for customers to pick up those orders, making stores more efficient and allowing for better connection between retail associates and customers.

3. Come for the Experience, Stay for the Shopping

CBRE’s First Vice President Todd Folger noted the Valley’s temperature during the holiday season makes it an ideal location to shop outdoors and for shopping centers to offer an experience for the customer.

“Outdoor malls like Scottsdale Quarters, Kierland Commons and SanTan Village offer a consumer both an excellent shopping experience and outdoor festivities that make them want to stay longer and drive consumer engagement at the different retailers,” added Folger.

Retailers and shopping center owners have experimented for years with improved placemaking, which often entails adding services and experiences. Many mall owners have converted formerly vacant storefronts into Instagram-worthy moments and exhibits. Examples include the Netflix Stranger Things Experience in Los Angeles, Atlanta and London and Princess Diana exhibits in shopping centers in Las Vegas and near Washington, D.C.

Finally, Santa Claus is here to help. The Santa-for-hire business is up 121 percent from 2019 to 2021 and is even more active building up to the 2022 holiday season, according to Santa-booking company, Hire Santa. The traditional Santa visit has evolved in recent years to include online booking of appointments, online ordering of prints and more photo shoots with pets. Several big retailers, such as massive outdoor retailers with standalone stores, have added Santa visits at their locations.

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