IMMOFINANZ suceeded in its effort to swiftly react to the Covid-19 crisis. Gerald Grüll, Head of Retail, explains why and how that happened in an interview with ACROSS.
This article appeared originally on 28 September 2020 at ACROSS Magazine.
What have operators and developers – as well as your company – learned from the current crisis?
Two factors are particularly important in a crisis: Sufficient liquidity and close contacts with customers. We have both and, as a result, were able to act quickly and flexibly and react to the changes in our operating environment. Active communication with all parties was one of the most important success factors. However, we also benefited from the availability of up-to-date information, like turnover statistics and visitor frequency in the shops.
Has Covid-19 had a sustainable impact on retail property operators‘ business model? Will these changes remain in the future?
That depends to a certain extent on the further course of the pandemic and its containment. However, we do not expect another lockdown in any of our core markets. There will be changes, above all, in the shopping center business: safe distancing and subjective security will play a greater role. The emphasis in this first phase is more on shopping and less on entertainment activities where larger groups come together. Here, the focus is on affordable products which are always in demand during economically difficult times. Retail parks have a decisive advantage because visitors can enter the shops directly from the parking areas and, in this way, avoid added contact points. Visitor frequency in our STOP SHOPs has quickly returned to the pre-crisis level. Another important point in our retail formats includes low rental and operating costs for tenants.
Will Covid-19 change the “face“ of new projects, and does Covid-19 have an influence on the layout of future projects?
The solution, obviously, is not to develop even larger facilities to increase distancing. Investments are concentrating more on building services, e.g. air quality and exchange, and on increased hygiene standards. Technical access solutions for the center and shops as well as on-site rapid tests are also conceivable. The design of the customer journey will also place greater importance on an enjoyable customer experience, for example through easy, clearly visible visitor guidance and orientation in the shopping center.
The past has seen a massive increase in the shopping center space allocated to gastronomy. Could that turn out to be a mistake?
In recent years, the strategy followed by many shopping centers has been to extend the time consumers spend in the center. This objective was achieved primarily by adding leisure and entertainment tenants, for example cinemas and play areas. This strategy was good and right, but corona has created a situation where people now almost completely avoid this form of social contact and recreation. The adaptation of gastronomy concepts to allow for more distance and flexibility can, however, effectively counter this development.
What are the general effects of Covid-19 on the tenant mix and the demand for space in the centers?
Corona has had an impact on most of the retail property tenants – but to a very different extent and, especially, with different long-term effects. The fashion and shoe branches have been harder hit – they currently occupy a large part of the space in shopping centers but have also been faced with rising online business, especially during the pandemic.
A similar effect can also be expected in the electronics branch. Over the long-term, the demand for space will shift more towards personalised services – for example, beauty and wellness offerings.
Discounters in all branches have been very successful due to consumers‘ rising price-consciousness during a difficult economic period. We can also see this in our portfolio, which is focused on cost-efficient formats and, consequently, is relatively crisis-resistant.
Does Covid-19 mean the end of experience shopping, and will the trends towards “leisure and entertainment“ become less important over the short-term? If yes, what is a possible direction for the repositioning of retail properties?
As previously mentioned, certain concepts in the leisure and entertainment area will be modified. We expect a greater focus on services, especially health, beauty and wellness, in the future. The issues of sustainability and product origin will also play a role because consumers are placing greater value on regional origin. This trend has also been intensified by the shortage of certain products from Asia during the corona crisis.