Page 51 - December 2020 January 2021

The ImpacT of covId-19
To begin with, let’s not sugar-coat this, Covid-19 has had a lease transactions in 2021. Additionally, private equity and venture
devastating impact on global retail, and of course with a market capital funds are actively seeking to finance new retail ventures
the size of the one in the US, the effect on the retail industry has provided they offer justifiable risk-return rewards.
been particularly prominent. The ongoing effect of the virus has hit brands of all shapes
According to Kevin Thorpe, Chief Economist and Ken McCarthy, and sizes, no matter their reputation, prestige or age. This was
Principal Economist, both of Cushman & Wakefield in their article evident as earlier in the year the 200-year old Brooks Brothers
‘How Covid-19 is hitting the rest button on the global economy’ an iconic retailer in the American market, went bankrupt and
in ‘The Edge Magazine, Volume 5’ the US collapsed at a 31.7 per was eventually purchased for $325M by a group backed by the
cent annual rate in the second quarter of 2020 and the economy mall owner Simon Property Group and licensing firm Authentic
lost more than 20 million jobs in one month as schools, stores, Brands Group. The buyers, SPARC Group committed to continue
restaurants, hotels, theatres and other places people congregate operating at least 125 Brooks Brothers retail locations. Before
were closed. the pandemic, the company operated 424 retail and outlet stores
Retail bankruptcies in the first eight months of 2020 nearly globally, including 236 in the US.
exceeded the 48 in all of 2010 following the Global Financial To gauge the monumental effect of this virus on the US retail
Crisis. Research from CBRE’s ‘Retail 2021 U.S. Real Estate Market market in 2020 as a whole, we need look no further than the
Outlook’ forecasts that retail store closures in 2020 and 2021 each numbers behind the holiday spending amongst consumers. The
exceed the 2019 record of 9,800 reported by the International ‘Retail Holiday Survey: Shoppers will cut their holiday budgets
Council of Shopping Centers (ICSC). Many of the bankruptcies thanks to Covid’ research report from JLL. Their report
and store closures will result from Covid-related failures of surveyed 1,089 US consumers online back in September and the
structurally declining categories such as department stores and per-person average holiday budget decreased over 20 per cent
apparel, along with an unexpected cyclical reversal in restaurants, from last year. On average, shoppers were cutting their holiday
gyms and restaurants. spending budgets from $873 to $694. The survey revealed that
The research goes on to say that new retail concepts, along all ages and incomes were set to spend less on average and that
with digitally native brands, medical uses, health and wellness, Covid was shifting holiday spend online.
automotive showrooms and service centres, pet services, The report goes onto explain that the decline in holiday-
franchisee-driven operations and salon suites will absorb some of related spending plans is being fuelled by the 44 percent of
the vacancies and capitalise on opportunistic market conditions shoppers who planned to spend less than they did in 2019.
left by retailers who have not survived the Covid-era. Grocers, This number is consistent with spending trends since the onset
convenience stores and quick-service restaurants are others of Covid, as there has been a clear shift towards essentials
that will grow aggressively. Greater availability of prime second- like groceries and health supplies, and a marked reduction in
generation space, declining rental rates and motivated landlords discretionary spending on entertainment, dine-in restaurants,
offering concessions and pandemic-related protections will drive apparel and department stores.