‘A retail recovery is possible’
The health emergency has changed consumer behaviour but the retail sector can still recover within months if there is no second wave of the pandemic.
‘There can be a retail recovery in the next nine to twelve months if Covid-19 is brought under control’, Thorsten Loose, Senior Manager, PwC Germany, told Living Retail. ‘Growth will return, but retail will have changed significantly’.
The prediction is that the lockdown has changed consumer behaviour permanently. A PwC survey shows there was a surge in e-commerce demand. Now that life is slowly returning to normal it is expected that more shoppers will continue to buy online and more will postpone purchases and will have to be lured back. Most are expected to return to their favourite brands.
‘We believe these profound changes in buying behaviour will change the face of stationary retail,’ she said. ‘Retailers need to adopt a strategy that includes both e-commerce and the store experience to attract and retain their customer base’.
In the UK, initial signs after the end of lockdown point to reduced footfall, partly due to lingering fears over safety and partly to the prospect of recession and large-scale redundancies that has dampened consumer demand. A series of high-profile retail insolvencies have added to the gloomy picture for the sector, while rent decreases vary between -25% and -50%.
‘Pre-Covid-19 retail was entertainment and leisure time spent shopping,’ said Christiane Conrads, Head of German Real Estate Desk, PwC Legal. ‘Post-Covid we see reduced footfall and a change in consumer behaviour which leads us to question whether the basis for business and related lease contracts still exists the way it used to be’.
There will have to be changes in order to go forward. The most important is to create an alliance between landlords and tenants based on shared interests and a common goal.
‘It is in the landlord’s interest to help the tenant and create a common understanding,’ said Conrads. ‘Both parties are in the aftermath of the pandemic together and both want to increase footfall, retain their loyal customer base and gain new customers’.