Retail, which continues to evolve in response to changing consumer preferences and expectations, has once again had to adapt to the new reality quickly. The global pandemic has left many stores and restaurants closed for business. Industry forecasts that a number of brands will permanently close this year. Every day brings a set of new challenges as we navigate this unexpected crisis. How are the unprecedented challenges of the global pandemic impacting retail?
Two sides to the story
Due to the trading restrictions imposed on shopping centres sized more than 2,000 sqm on 14 March 2020, only stores selling essentials or providing essential services were permitted to remain open.
“Although contrary to earlier announcements, shopping centre restrictions will be lifted on 4 May as part of the second phase of the reopening of the economy, how shopping centres will operate remains in doubt. On the one hand, property managers and landlords will have to introduce a number of measures to ensure a safe shopping experience, but on the other hand, we are unable to foresee how customers will behave in the new reality and how quickly, if at all, they will return to their previous shopping patterns. Experience from other countries shows that this will be a rather slow process,” says Małgorzata Dziubińska, Associate Director, Consulting & Research, Cushman & Wakefield.
Many retailers, restaurants and services closed their doors, which put thousands out of work. Brands have shut distribution centres as demand for clothing, footwear and accessories have dramatically declined. Conversely, grocery stores, pharmacies, and big-box stores are struggling to keep up with demand, working around the clock to stock shelves and keep stores clean. Online retailers are hard-pressed to meet the demand, adding thousands of new employees to keep up with consumer needs. It’s rare for an industry to experience such distinct highs and lows, with one sector struggling to keep up and one struggling to survive.
The industry responds
One thing is for certain – the retail community will be changed forever by this experience. We know, though, that in times of crisis, retailers come together to meet challenges and raise money and awareness. This innovative, passionate industry is mobilizing to address the country’s immediate health care needs. Luxury brands, brewers, and distillers are converting factories to make hand sanitizers. Fashion retailers such as LVHM, the owner of such brands as Louis Vuitton, Kenzo, Bulgari, and Christian Dior, are making masks and hospital gowns instead of ball gowns. In Poland, OTCF, the owner of 4F, has decided to donate 20 percent of the revenue of its online store to the MSWiA hospital for infectious diseases in Warsaw. Other entrepreneurs have taken similar action.
Partnering is essential
As brands rally to survive, partnering with landlords, developers, and financiers will be critical. This may be the most important time in our nation’s history for owners and occupiers to support each other. Real estate brokers, consultants, and advisors can facilitate these relationships, ensuring that together this eco-system is focused on industry employees and consumers. Formulating these relationships now will benefit both sides in the near-term and in the future.
Be data driven
Retailers, landlords, and developers will need to use data to make complex decisions during this time. Strategically evaluating locations and assets will drive decisions that improve profits and deliver value long term. Businesses need to understand the changes occurring in the sector including legislation, competition, and international trends. They need to evaluate liquidity, rationalize the store portfolio, and look for savings in the supply chain. Making the right commercial real estate decisions will require data, analytics, and competitive insights. Aggregating the right information will set both parties on a path to success.
Cushman & Wakefield is ready to support developers, landlords, and tenants as we move through this health and economic crisis. Working together, we can identify opportunities through strategic consulting and expert brokerage teams. The retail industry has some of the best and brightest minds, and by joining forces, we can weather this storm and reposition the retail landscape for future growth.
To meet the new circumstance, we have developed programs to assist commercial real estate market players:
“Six Feet Retail and Retail Recovery Readiness How-to-Guide are parts of our conceptual program to support retail property owners in preparing buildings for reopening, implementation of government guidelines in shopping centres, renegotiation of lease conditions with regard for the Anti-Crisis Shield legislation, recommercialisation and repositioning of shopping centres, and development and implementation of marketing and PR strategies in response to the rapidly changing market conditions and shopping patterns,” says Joanna Kłusek, Partner, Retail Asset Services, Cushman & Wakefield.