Retail: Positioned for Recovery

Retailers & Building Owners Who've Embraced Creativity & Communicated Throughout the Pandemic Are Faring Better Than Others.

By: Sarah Hoban

Nimble retailers have instituted COVID-19-related practices that are likely to carry through in some form during the pandemic recovery. “Retailers that were able to continue to serve their customers through options like delivery, curbside pickup, and connection via social media are likely to benefit the most as economies open up,” says Scott Crossman, CCIM, founder and CEO of Crossman & Company in Orlando, Fla.

Retailers and landlords changed in other ways that will serve them well.

  • Partnering with local vendors—Businesses learned the art of partnership. Ott points to one franchise owner who started working with local vendors to determine ways to save money by adjusting payment schedules and working with other franchisees to order items in bulk. “Because of the changes he made, he thinks now he can operate with fewer employees than he did before—and he thinks he’ll be more efficient and successful because of what he learned,” she says.

  • Using creative solutions—Both groups learned to be flexible, developing creative solutions to keep the doors open. Restaurants shifted to selling premade meal kits; specialty retailers started subscription services featuring local products; and shopping center landlords rented out their empty parking lots for drive-in movies or graduation parades. Jennifer Ott, CCIM, executive vice president of ROI Commercial Real Estate in Las Vegas, says that in one of her leasing projects, a doughnut shop got permission from the landlord to stay open late to make pizzas after the doughnut trade tapered off.

  • Staying in touch with tenants—“Retail landlords who stayed in communication with their tenants through capable property managers and knowledgeable leasing agents have fared much better at mitigating the effects of the pandemic,” Crossman says.
Graph showing retail employment rates from the article Retail Employment Bounces Back

Retail Will Roll Out More Changes

The pandemic led to changes in stores’ physical appearances and layouts. Some of those will stay in place with additional changes ahead. Colliers’ spring 2021 retail report, “Retail Moving Forward,” predicts that over the next three years, nearly 80% of brick-and-mortar stores will “add or extend their service to include an online collection and ship-from-store feature.” More than 60% say they will test or open new store configurations.

“Everybody thinks they need a drive-through,” Ott says. It’s an expensive feature, though. Drive-throughs use up space, they require additional permitting, and “from a new development standpoint, it’s challenging, because it affects the rents,” Ott says.

Another trend is likely to remain: short-term parking spaces dedicated to curbside or parking lot pickup. A recent report from Digital Commerce 360 found that by early 2021, more than 50% of top 1,000 retailers offered curbside pickup.

Editor’s Note: This article was excerpted from “Retail’s Road to Recovery,” published in the Summer 2021 issue of Commercial Investment Real Estate magazine.

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