Gary Burrows, Managing Director and Rupert Wood, Executive Advisor, Malls and Meeting Places at FitForCommerce, a global strategy and advisory company take some time out to discuss how companies must adapt to the merging of the digital and the physical customer journey, experience and the growth of online as a result of Covid-19 and its effect on retail, landlords, malls and meeting places.
It is going to be interesting to see who can adapt and evolve to the brutal pace of change we are currently experiencing within the retail property and wider real estate industry. On average it takes humans 21 days to establish a lasting behavioural change. As we have been on lockdown or isolation for 10 weeks, those 21 days have come and gone.
During a recent (new normal) Zoom meeting, one of our colleagues was telling us that his eighty year old parents are now grocery shopping online and have gotten used to the process and ease of delivery. As a result, it’s unlikely that they will ever return to the old method of getting in a car and driving to the mall. This is only one example; however it is probably a trend that is repeated across millions of households worldwide.
So, has shopping for basic necessities such as groceries and bulky household items changed forever? After all, it is never as emotionally rewarding as buying a new coat, shoes, bag or shiny new gadget. The historic primary drivers that used to trigger the family hypermarket shopping trip, (as an anchor in a mall or meeting place) are effectively over. We have seen a rapid increase to online grocery shopping over the past ten weeks, however, has it been established as permanent consumer behavioural change?
If this is indeed the case, then the hypermarket and its attraction as an anchor tenant are diminishing. Therefore, so is the ability to charge higher rents to stores that feed off the proximity to the hypermarket or department store. Other tenants/occupiers could initially see turnovers reduce, as footfall drops and cross-fertilisation of customer spend falls away. This will trigger further rent reduction requests from these tenants and occupiers and put further pressure on the existing business model of landlords, owners, investors and operators.