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Covid-19 and the Belgian retail market Covid-19 and the Belgian retail market

COVID-19 and the Belgian retail market

Cédric Van Meerbeeck • 08/04/2020
In part two of our series, we analyse the effects of Covid-19 on the Belgian retail market and show you how we can help you in the next coming months.

According to latest figures and news, the Belgian economy will be severely hit during this second quarter. The « Fédération des Entreprises de Belgique » estimates the economic impact of the Covid-19 to EUR 2.4 billion per week with aviation, horeca and events sectors as the most impacted.

As such, the Belgian economy should witness a slight GDP decrease in 2020, currently estimated to 0.6%. If the crisis should last 12 weeks, the economic costs of the coronavirus could reach EUR 25 billion and the consequences could bear on the global economy.

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Social distancing measures are generally becoming more stringent (e.g. gatherings of two people maximum in Germany, discussions in the UK about closing all non-essential shops or policing social distancing rules), with people only allowed out to shop for groceries or obtain medical supplies. In Belgium, the Federal Government announced on Friday the extension of the “lockdown” to the 18th April, with a possible new extension up to the 3rd May 2020.  

 IMPACT ON THE RETAIL SECTOR
In Belgium and across Europe, most retail, leisure and entertainment venues are now closed for an unforeseeable future, either by decree or in response to a dramatic decline in footfall. Many F&B outlets which are closed to in-house customers have been able to provide takeaway and home delivery services (a trend we are seeing globally – and one which could be a lifeline for many F&B operators). However, some food retailers such as Quick have decided to stop all their activities, also take-away services up to the end of the lockdown.

In this context, retailer responses are quite different by country, but most asking for rent and service charge reductions/deferrals until there is greater clarity on when they will reopen. There is a question for retailers around whether non-payment of rents will constitute a serious breach of contract under the current scenario.

On the other side, landlords and investors are slightly slower to respond given the need to consult with lenders and investors on strategy; no sense of any common approach emerging yet. Bigger retailers and landlords have started talking to each other, but conversations are at an early stage in most countries. 

It’s almost certain that negative impact on the rents will be observed in the short term, especially where rents are turnover-based.  It is too early to say how much time it will last in the medium to longer term, as the likely duration of the crisis is unknown.

 HOW HAVE CONSUMERS BEEN RESPONDING?
Initially, many countries saw panic buying which created a shortage of staple products but the situation is calming down and people are getting used to the restrictions on movement. Grocery/food sales are up, as are health/medical related products but sales in most other categories are sharply down. In the medium to longer term, the impact on the sales will depend on how quickly consumer spending rebounds and what sort of shape the retailers are in during the coming months.

 WHAT HAS BEEN THE IMPACT ONLINE?
Countries where data is available shows a sharp increase in online, notably for food & grocery, with some of the big name retailers struggling to fulfil orders within their usual time slots. As the containment measures could potentially last to the 3rd May, we could observe a growing use of online retail for non-food products as well.

Despite current circumstances, the impact of the Covid-19 on the F&B could remain limited as operators are using alternative ways to sell, namely by seeing increases in takeaway and home delivery services, which is helpful as most outlets closed to in-house diners. Delivery services such as Ubereats or Deliveroo tend also to propose specific actions to promote their business with some positive impacts on the F&B industry.

 HOW CAN WE HELP RETAILERS?
In this particular context, more than ever, we have developed a full range of consultancy services to provide you the best answers and the most relevant tools to help you in your real estate strategy.

With 20 years of records, more than 20,000 transactions recorded, 50,000 points of sales across Belgium & Luxembourg, we built an in-house toolkit based on business intelligence, analytical capabilities and expertise, going from a basic drivetimes to the most accurate portfolio optimization.


1. STARTER

Customer and Market Mapping

A visual display of the optimal locations for an occupier, identified by an assessment of demand, supply and competition. Detailed customer analysis to help brands understand who they are targeting and where similar, potential customers are located. Include:

❖ Catchment areas and drivetimes
❖ Population, demographic profiles, expenditures
❖ Market segmentation

2. PREMIUM

Store performance and/or site specific assessment

Framework to understand key drivers of performances and efficiently assess the store or site performances and market potential based on different data items. Complementary to the Starter package, the Premium package includes:

◆ Location type, demand and supply, competitor and complementary operators
◆ List of recent comparables
◆ Rental analysis
◆ Hotspot maps showing areas of saturation and gaps of opportunity
◆ Recommendations

3. ULTIMATE

Portfolio Optimisation

Comprehensive market knowledge to support the decision-making process (market entry, expansion and/or portfolio optimisation). Complementary to the Premium Package, the Ultimate package covers our full range of services:

✤ Optimal rents definition depending on the location and retailers’ specificities
✤ List of recent comparables
✤ Weighted ranking matrix of individual markets based on a combination of data items 
✤ Commentary on availability of properties
✤ Analysis of actual sales data from existing retail units to quantify the value of custormers by average spend and sales by category / channel (collaboratively with the retailer)
✤ Recommendations

 

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