Where is retail? Online…at the moment
May 14, 2020
Valerie Conway
639 Views
I suspect the wider recovery will begin with WACD (What Amazon Can’t Do), the problem is that a lot of this is about socialising and that is likely to be the last thing that will come out of restriction.
The major supermarkets are seeing a revival in fortunes under lockdown not felt since the 90s as we have all gone back to the big weekly shop rather than little and often which tends to favour the smaller stores. This is a huge reversal in shopping habits, and with everyone now having three meals a day prepared at home (interspersed with the occasional takeaway), rather than lunch at Pret, meals out and sandwiches on the go, we are also buying more food direct from the retailers than pre-lockdown.
Those who can afford it are also making up for not going out by having treats at home, and more alcohol at home, again benefitting the supermarkets. They are also cashing in on being able to sell the non-food items during the weekly shop, be it kitchen equipment, bedding etc in the Tesco Extra type model, or clothes and shoes. It is not by accident that the local M&S here guides you through the clothing area to get into the food hall…
My view is that there will no doubt be a major shake out, and the natural contraction of retailing areas already happening will be significantly accelerated by the impact of Covid. As a result, retail floorspace will have to get cheaper – rents will fall as landlords have to compete for a smaller number of occupiers and as rents fall, so will rates. This will create a better environment in the longer term for new businesses to emerge and a whole new set of retail-based experiences to start to develop. Commerce and innovation always find a way to fill a vacuum.
Many of our older larger shopping centres, those that were still just too valuable to be development sites before Covid, will now become financially obsolete, and will in the relatively near future come forward more quickly for redevelopment, accelerating the provision of residential floorspace in the heart of the town centre. There will still be a shortage of housing, but the anticipated post Covid recession will see some adjustment in values, and even greater emphasis on the provisions of more affordable housing, and housing for rent. Local Authorities will inevitably have a stronger role to play in the delivery of development, particularly in town centres, as they always do after periods of national economic crisis.
Sadly, I anticipate that the recent and welcome re-emergence of smaller builders in the housing market will be significantly set back, as they will be more susceptible to the downturn, and increased rates of unemployment, and we will be back to the bigger housebuilders controlling the private market.
Challenging times ahead…
Valerie Conway is a Development Consultant at David Lock Associates. The views expressed are personal.
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