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Looking Beyond COVID-19: Consequential changes to expect for retail in China

Shaun Brodie • 4/2/2020

Looking Beyond COVID-19: Consequential changes to expect for retail in China

The COVID-19 outbreak has been an unprecedented event in China. Its consequences have been felt across geographies, the society, the economy and the property market in the country. 

The pandemic is anticipated to influence China’s real estate market on many levels. In this report, we draw attention to four retail feature points which real estate investors, developers and occupiers should be cognisant of in 2020 and beyond.

An omnichannel presence: A must-have item 

In the short term, the drop in footfall traffic will dent the retail sales numbers in China. However, going forward in the mid- to long term, we do expect retail sales volume growth rates to return to pre-outbreak levels. What’s more, we will see an acceleration and a deeper integration of offline/online omnichannel retail services in China, given the impact of the outbreak and the recognised importance of these platforms by retailers for driving retail product and service sales.

Retailing: From single channel to omnichannel

Looking Beyond COVID-19: Consequential changes to expect for retail in China

Source: Medium, Cushman & Wakefield Research    

Digitisation/Data intelligence to develop further

Digitisation and data intelligence have become important tools in China’s retail sector, but the COVID-19 outbreak has proved to a number of retailers that these tools can be further optimised. Ahead, through best-practice use of digitisation and data intelligence, we expect many retailers to place a greater emphasis on:

  • Customer relationship management;
  • In-depth data mining;
  • Product personalisation, and;
  • Intelligent supply chain management.

These will further improve the customer shopping experience and, ultimately, retail sales performance. 

Retail digitalisation and data intelligence utilisation

Looking Beyond COVID-19: Consequential changes to expect for retail in China

Source: SQream, Cushman & Wakefield Research

Marketing models to transform

Post COVID-19, we expect more retailers and shopping centres in China to change their existing marketing model and adapt innovations such as live online broadcast channels. Not only they can market their products and services through innovations like this but they can also improve the overall shopping experience for their customers.

The top six online entertainment activities during the Spring Festival in China (2020)

Looking Beyond COVID-19: Consequential changes to expect for retail in China

Source: Kantar, Cushman & Wakefield Research

Bricks-and-mortar retail cleaning, health and hygiene to be prioritised

Ahead, we expect shopping centres in China to prioritise, elevate, widen and deepen cleaning procedures to make sure centre premises are as clean and safe as they possibly can be. Health and hygiene-enhancing measures adopted and implemented by China’s shopping centre property management teams are likely to be many in the future, including:

  • A stepping up of related cleaning, health and safety training; 
  • Cleaning and cleaning checks to be more rigorous; 
  • HVAC systems, elevators, escalators, toilets, counter tops, common area seating and entrance/egress doors to be paid special cleaning attention, and;
  • Hand sanitisers to be made available in all toilets and at all entrance/egress points.

China shopping centre stock and vacancy (Q4 2019)

Looking Beyond COVID-19: Consequential changes to expect for retail in China

Source: Cushman & Wakefield Research

By taking these actions and doing more, shopping centre property management teams in China will be in a better position to ensure that facility cleaning, health and hygiene levels are optimised. In turn, these measures will play an important role in enticing back regular customers to shopping centres in the country over the short term. These will also help in attracting new customers over the mid- to long term, which will all bode well for retail sales and the net operating income of individual measure-adopting shopping centre properties.

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