Far from the old normal
The domestic retail shutdown is now over. All of the approximately 22,400 domestic retail shops* have been open again since 2 May. However, the situation in most shops, shopping streets and centres is far removed from the normal pre-coronavirus days, and customer frequency and the desire to buy are often less than satisfactory. What’s more, tourists and workers are still out of the picture as some borders remain closed and many firms continue to maintain a work-from-home policy – a trend that is certain to endure for some time to come. As a result of this, and the fact that many retailers still have short-time work schemes in place, a fair number of shops are only open for a few hours a day.
“Many property owners and retailers are now wondering what the situation in the retail landscape will look like in the future”, says Patrick Homm, MA, Head of Commercial Property Marketing at OTTO Immobilien. “At this stage, no one can give a clear forecast of the future. On the one hand, the question is whether the most difficult time is already behind us after this one-time lockdown; on the other hand, the effects of the last few weeks have definitely not yet reached their peak”, added the retail expert. Businesses are starting to go insolvent, especially fashion retailers, and it is feared that more may follow.
The shutdown has caused enormous damage to the retail sector. During the closure up until the first wave of reopenings, stationary retail in Austria lost around €110 million in gross sales per day and around €80 million in gross sales after that.* But landlords also have losses from non-payment of rents and operating costs to report. From the perspective of the retail space inventory manager, the total loss of one month in Austria can amount to approximately €200 million (rent and operating costs).*
Structural change accelerated
The pandemic has accelerated the development of the retail sector, and in some cases the impact on individual retailers and owners is already being felt. And this does not apply only to consumer restraint. “It is reasonable to assume that our travel behaviour and working from home will have a lasting impact on our lives, and this will of course also have an impact on the retail sector”, says Homm.
Search for good solutions
“This is why we can only continue to recommend that open discussions be conducted proactively with the aim of finding an amicable and sustainable solution”, said Homm. Everyone should be aware that both sides are facing tremendous challenges due to the crisis, and that it has not just affected one side. For tenants, it is often unsold goods, new orders, rental charges, adjustments to their own concept and of course lost sales. As for property owners, they have to deal with problems such as non-payment of rents while the costs for loans, maintenance, etc. continue to accrue. Unfortunately, there is no blanket solution to the current difficulties, and every case should be considered in detail. “The requirements and the needs of the individual actors are very different, so the solution for this should again be an open discussion”, Homm declares.
It will be even more important in future for property owners and tenants to work together on the ongoing development of retail. The online sector will play a sustainable role in this development, along with the optimal combination of online and offline retail. “Given the current situation, all sides should above all be willing to compromise and cooperate as partners. This will allow them to look together towards a positive future”, says Homm.
*Source: STANDORT + MARKT