Share:

Small Steps on the Road to Retail Recovery in Asia and Europe

Yvonne Court • 06/05/2020

With a few European countries now taking the first tentative steps towards the lifting of some COVID-19 restrictions, what can be learnt from experiences in Asia? The latter continent is generally thought to be in advance of Europe in terms of emergence from the pandemic crisis. However, it should be borne in mind, that as in Europe, so in Asia, the context and outcome vary by country, largely dependent on the government’s approach to the dealing with the spread of the virus. Some countries have had very strict quarantines/lockdowns (China, Hong Kong, Singapore) and others have continued to operate pretty much business as usual (notably Taiwan and South Korea). Other countries lie somewhere in between these ‘extremes’, and indeed a number (e.g. Japan, Indonesia and India) are behind Europe.

There are a few common themes that have emerged from China and Hong Kong, though even in these markets, it is still early days. In China and Hong Kong consumers are emerging slowly and returning to work and to the shops, but footfall and retail sales are still down on the same time in 2019. In South Korea shopping centres (stores were never forced to close) are now very busy and reporting footfall at 85% of pre-COVID-19 and sales have recovered sharply over the first half of April. It is too soon to have any definitive sales or footfall statistics.

Many global brands closed their stores in China and Hong Kong during the lock-down period and staff were laid off. Some of these closures may now be permanent, as part of a strategic realignment, as sales have been significantly impacted (something that is undoubtedly likely to happen in Europe too). While some mass market fashion brands have suffered recently during the COVID-19 crisis, there were already other underlying factors which have arguably speeded up the process, notably the rise of domestic competition, particularly in China. The sentiment is however that consumer spending is still there, and it will come back (known sometimes as ‘revenge’ shopping following being the lockdown). 

Restaurants and other food & beverage outlets have been heavily impacted first through enforced closures, and now through social distancing requirements of 1.5-2m distance between tables. Additionally, in China consumers have to have their temperature taken upon entry and provide their personal details for future tracing (if required later). WeChat (Chinese WhatsApp and used for everything) can monitor individual movements for the previous 14 days, which in turn can also restrict entry into shopping malls and offices, if people have been in a still restricted area. All these measures combined have resulted in a reduction in the number of possible covers and turnover. Generally other forms of leisure such as cinemas and gyms are still closed and are likely to remain so for some time. 

Online retailing has been important and particularly for online platforms such as Alibaba in China, rather than brands’ own websites. Some brands represented in Hong Kong have been reporting record online sales volumes (for example Estée Lauder’s sales reportedly increased three-fold). Supply chains have been impacted, with one of the main concerns being getting the stock to service the purchases made online.

The response from landlords of shopping centres has varied over time. Back in February for instance landlords in China were prepared to offer some rent concessions for a few weeks, there are few free periods now. In Hong Kong, major landlords are offering rent concessions on a case by case basis and these are largely determined by a tenant’s performance in the past and currently. Some examples include offering a 20% concession on a monthly basis; leases due to expire are being extended by 12 months at a more attractive rental level, or tenants may be asked to pay half of the rent owed now with the balance to be paid after 6 months in instalments. From the end of April there are unlikely to be any short term rent concessions in South Korea. Going forward, across all markets there are likely to be corrections to retail and F&B rental levels.

Much remains uncertain and it is still early days, though we do know that how people will think, feel, shop, play and even work, has likely fundamentally changed and there is unlikely to be a return to ‘normal’ (pre-Covid). In the future, underpinning these changes in attitudes and behaviours will be a sense of confidence that they are as protected as possible when shopping, eating and drinking out and socialising. 

Some key learnings from China, Hong Kong and South Korea have shown that a healthy workforce is crucial, so getting employees back to work in shopping centres and shops is important. Hygiene will be key in all its forms, whether it’s through thermal scanners/thermometers, more hand sanitisers, the provision of masks, clear social distancing guidelines, increased ventilation, regular and visible cleaning of common areas, limiting the number of people allowed in stores, one-way systems, or through customer tracking (though this may raise privacy issues in Europe) etc. 

While we may learn from some Asian countries’ experiences to date, with more European markets beginning to reopen, monitoring their progress will arguably be more relevant given the greater similarities in social demographics and shopping habits. The key will be one of phased openings over the next few weeks with restrictions on store sizes that can open, customer numbers in stores, sanitation of both stores and products. With reduced tourism in some markets in the short term and uncertainty in the medium term, lower footfall levels and customer spending will exert pressure on retailers’ margins. The most important factor will be to increase consumers’ perceptions of health, cleanliness and increased confidence that it will be safe to shop, spend and in turn create value for tenants, owners and investors alike.

desk by window of skyscraper
Insights • Commentary

Who Wanted Normal Anyway?

Richard Pickering, Chief Strategy Officer, UK reviews how things have changed since the virus, he points to some positives, and questions why in fact we would want to revert to the way things were either in the short or long term. 
Richard Pickering • 06/05/2020
diners outside London pizza restaurant
Insights • Retail

Steps to Retail Recovery in Asia and Europe

Dr Yvonne Court looks at retail recovery in Asia and considers what European retailers can learn from the reopening of shops in the region.
Yvonne Court • 06/05/2020
graph and numbers on blue screen
Insights • Investment

Capital Markets - What's Next?

Jason Winfield, Head of Investment Agency UK & Ireland reports resilience in Central London offices, supported by interest from overseas buyers who see good value, and in logistics and industrial as a consequence of investor belief in the structural shift to online.
Jason Winfield • 06/05/2020
UK London City
Insights

The Challenge for London Construction

Nic Wilkinson, Head of London Project & Development Services considers how the development of new protocols has enabled sites to reopen with reasonable levels of productivity, albeit with compromised supply chains.
Nic Wilkinson • 06/05/2020
Empty office modern clean
Insights • Occupier

Is The Office Under Threat?

Ben Cullen, Head of Occupier Representation, London Markets considers whether the office is under threat and whether when the pandemic is over there will be no need for offices as everyone works remotely. 
Ben Cullen • 06/05/2020
red steel building

COVID-19: UK Real Estate Perspectives

As the COVID-19 pandemic envelops the globe, we are committed to providing our clients with up to the minute intelligence and commentary as to what is happening in the real estate markets.
Digby Flower • 01/07/2020
Recovery Readiness guide (image)
Research • Workplace

Recovery Readiness: A How-to Guide for Reopening your Workplace

The “Recovery Readiness: A How-to Guide for Reopening your Workplace,” outlines some of the best thinking and practices that our more than 53,000 professionals have compiled across the globe and also includes insights from key partners.
22/04/2020
shoppers on an escalator
Insights • Retail

Retail & Leisure Trends In Europe

A snapshot of the current physical retail and leisure landscape across Europe and which retail sectors are seeing early recovery.
Yvonne Court • 22/06/2020
Small steps on the road to retail recovery in Asia and Europe
Research • Insights

Small steps on the road to retail recovery in Asia and Europe

With a few European countries now taking the first tentative steps towards the lifting of some COVID-19 restrictions, what can be learnt from experiences in Asia? The latter continent is generally thought to be in advance of Europe in terms of emergence from the pandemic crisis. However, it should be borne in mind, that as in Europe, so in Asia, the context and outcome vary by country, largely dependent on the government’s approach to the dealing with the spread of the virus.

Yvonne Court • 02/06/2020
Foodhallen, Rotterdam
Insights • Retail

Food Halls of Europe

The phenomenal rise of the food hall doesn't look set to slow down with over 100 already open across Europe. They offer lower rents for food and beverage operators and more choice for customers but what should landlords, shopping centre owners, managers and food vendors provide? Where should it go? And how much of it should there be? 
Yvonne Court • 16/11/2017
Yvonne Court -London
Yvonne Court

International Partner
London, United Kingdom


+44 207 152 5028

Yvonne.Court@eur.cushwake.com

Download VCard

Name
Bryan-Boisi
Version
1
FullPath
/sitecore/media library/cw/Americas/United States/People/New York/Bryan-Boisi
UpdatedDate
20190914T133831Z
PublishDisplayDate
1/1/0001 12:00:00 AM

Previous COVID-19 articles

modern office with lamps and Vitra style chairs
Insights • Workplace

The Challenges of Returning to Work

The return to work is considered across 3-time horizons and across 5 key areas from integrated facilities management, work space, people and future work patterns, to buildings and portfolio.
Nicola Gillen • 21/04/2020
high rise apartment block looking up
Insights • Investment

COVID-19 and Alternatives

Investors in specialist sectors such as student accommodation, life sciences, retirement living, data centres, healthcare, co-working, hotels and residential are seeking to understand the impact of COVID-19 on the underlying operational businesses as quickly as possible.

David Haynes • 21/04/2020
University laboratory US petridish
Insights • Lab

Life Sciences Looking Forward

Life science: from academia, to businesses and clinicians, the sector has never been more at the forefront of society.
James Sheppard • 21/04/2020
empty lecture theatre
Insights • Education

Student Accommodation

The lack of certainty over the 2020/21 academic year and impact on student intake has caused some investors to be more cautious. 
Sarah Jones • 21/04/2020
elderly gentleman's hand place over each other on walking stick
Insights • Lab

Senior Living Resilience During Uncertainty

As a needs-based product, senior living real estate has historically proven to be more recession-resilient and stable than traditional real estate sectors.
Caryn Donahue • 21/04/2020
sand timer with red colour sand
Insights • Residential

Residential - Timing Is Everything

The UK residential market continues to be impacted further with the Government’s advice to close down the new homes and secondhand markets.
 
Charles Whitworth • 21/04/2020
Manchester
Insights • Commentary

Rethinking Density

Putting people together creates value. This principle is now being significantly challenged by COVID-19. Do we need to rethink density? If so, do we also need to rethink cities and offices?
 
Richard Pickering • 21/04/2020
red steel building

COVID-19: UK Real Estate Perspectives

As the COVID-19 pandemic envelops the globe, we are committed to providing our clients with up to the minute intelligence and commentary as to what is happening in the real estate markets.
Digby Flower • 01/07/2020
shoppers on an escalator
Insights • Retail

Retail & Leisure Trends In Europe

A snapshot of the current physical retail and leisure landscape across Europe and which retail sectors are seeing early recovery.
Yvonne Court • 22/06/2020
Small steps on the road to retail recovery in Asia and Europe
Research • Insights

Small steps on the road to retail recovery in Asia and Europe

With a few European countries now taking the first tentative steps towards the lifting of some COVID-19 restrictions, what can be learnt from experiences in Asia? The latter continent is generally thought to be in advance of Europe in terms of emergence from the pandemic crisis. However, it should be borne in mind, that as in Europe, so in Asia, the context and outcome vary by country, largely dependent on the government’s approach to the dealing with the spread of the virus.

Yvonne Court • 02/06/2020
Foodhallen, Rotterdam
Insights • Retail

Food Halls of Europe

The phenomenal rise of the food hall doesn't look set to slow down with over 100 already open across Europe. They offer lower rents for food and beverage operators and more choice for customers but what should landlords, shopping centre owners, managers and food vendors provide? Where should it go? And how much of it should there be? 
Yvonne Court • 16/11/2017
Yvonne Court -London
Yvonne Court

International Partner
London, United Kingdom


+44 207 152 5028

Yvonne.Court@eur.cushwake.com

Download VCard

CAN'T FIND WHAT YOU'RE LOOKING FOR?

Get in touch with one of our professionals.