This panel discussion explored how COVID has delivered 5 years of disruption to the retail sector in just 3 months with the move from bricks and mortar to on-line shopping, and how the Australian, Asian and US retail sectors have fared as a result.
Some of the key insights were:
- While globally there has been a shift in what people are spending their money on, the beneficiaries of those shifts have differed regionally. US customers are reallocating their restaurant dollars to grocery purchases, with retailers in that sector experiencing a 25-40% increase in sales during the COVID pandemic. While Asian customers are reallocating their travel dollars to luxury goods, Australian customers are spending their spare cash on alcohol, hardware, building and garden supplies and electronics.
- COVID has not only accelerated the shift to online shopping, but also changed the key drivers in customers’ behavior. With customers now having a global market place at their fingertips, value for money is now more important than ever; followed closely by trust, safety and ease of shopping experience.
- Ian Fredericks (Hilco Capital, Chicago, USA) observed that the speed of delivery with online shopping had significantly increased, and that his son had managed (without parental approval) to have an Apple watch delivered to him at school in an hour and a half. Something to concern all parents!
- Holly Etline of AlixPartners LLP (USA) noted that everyone is in a lease negotiation at the moment. Whilst the first round of negotiations was focused on securing temporary abatements and deferrals, retailers are now pushing for long term rent reductions and COVID has certainly helped push landlords to the table in this respect.
- Dr Henry Chin (CBRE) noted that Asian retail landlords had been savvy and creative in response to COVID.
- Given concerns about the retail sector, for retailers looking to undertake a restructure – getting in early and having sufficient liquidity to run the process are key!
Related materials prepared by Baker McKenzie