Cushman & Wakefield: How are commercial tenants doing today?

The pandemic has spared no business, with its consequences felt most strongly by the retail sector, including tenants of malls, shopping parks and shopping streets. Global real estate services company Cushman & Wakefield examines the plight of retail tenants in its latest “Is Retail Confidence Returning?” “.

The survey for the company report included 40 retail tenants in the past 12 months who represented all sectors of the retail market, primarily fashion (20%), housewares (15%) and services (10%). During the successive closings, nearly 70% of the tenants questioned were subject to a general ban on trade which had serious consequences on their financial situation. 24% were covered by a partial ban, and the remaining 8% were not at all limited in their operations due to the pandemic. This required both renegotiating existing leases to agree on rent discounts and continued flexibility on the part of both parties. Almost 74% of tenants have obtained additional rent discounts outside of the crisis shield, indicating that landlords have shown a good understanding of their situation. As regards public aid to tenants, 60% of them did not receive such aid while the remaining 40% received employee salary subsidies or loans from the Polish Development Fund (PFR). The survey found that most businesses have been hit hard by the Covid-19 pandemic. The main consequences of the lockdowns included lower turnover levels, staff layoffs, reduced store portfolios and difficulties caused by supply chain disruptions. Another problem often overlooked by tenants was the significant growth in costs, which affected nearly 54% of survey respondents. Retailers had to purchase additional cleaning and disinfection products and personal protection items, while 21% saw their costs increase due to higher prices charged by suppliers of goods.

The report also presents store closings by market sector. A large majority of closed stores (81%) were in shopping malls, 13% in shopping streets and only 6% of tenants who were forced to reduce their store portfolio permanently closed business units in office buildings . These radical decisions were motivated by factors such as non-profitability and insufficient turnover (for nearly 68% of companies). Some store closures, however, had been planned in advance as part of the restructuring of retailers before Covid-19.
E-commerce looks set to dominate for years to come
The pandemic and the closure of retail stores pushed Poland’s online retail penetration rate to a record high of over 11% in April 2020. The tenant merchants included in the survey are firmly committed to the brick and mortar, but 51% of retailers have also decided to build or strengthen their online presence. Businesses appreciate the value of e-commerce and all have reported a huge increase in online sales during the pandemic. This marks an important step in the diversification of retail channels as protection against various disruptions in the future. However, 70% of tenants say their own e-commerce networks need to grow and will be working on it in the near future; 18% are happy with their online channels while the remaining 12% have no plans to go online at all. Many have decided to combine offline and online channels.

“More than half of physical e-commerce stores accept returns of items purchased online. This is how store operators make returns easier so that their customers do not need to repack and return items by courier. time, they benefit from customers visiting their physical stores who, while in-store, may decide to exchange one item for another or to purchase other products ”, said Anna Oberc-Krzycka, Associate, Retail agency Poland, Cushman and Wakefield.

Tenants continue to seek new opportunities to combine traditional retail with e-commerce, with the latter increasing their bottom line month over month. The survey found that 64% of online stores are operated by the same companies that operate brick-and-mortar stores, leading to the aggregation of revenues from both channels by the same retailer. Most retailers already have an online store, but still see improvements in customer service and offer additional quality, delivery times and online service.

“The pandemic is testing physical retail, but also providing it with new tools for growth. E-commerce is certainly the way forward for retail, but customers’ commitment to physical purchases will be of colossal importance. The psychological aspect of this has a strong impact on customers and the brick and mortar retail business will continue to do well for many years to come given their need to smell and touch items before buying or selling. quite simply their desire to live a pleasant shopping experience away from home ”, concludes Beata Kokeli, Partner, head of the Retail Poland agency, Cushman and Wakefield.

Disclaimer

Cushman & Wakefield plc published this content on November 15, 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on November 16, 2021 03:35:07 AM UTC.


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