Retail: How the Pandemic Is Reshaping Shopping Malls and Inner Cities

By | 14 June 2021
Retail in malls and inner cities: People walking in a shopping street.

A return to normality — or not?

The coronavirus outbreak is changing the roles of malls and inner city shopping areas. Samuel Vogel, owner of retail and real estate consultancy The Bird, has talked to Targomo and walks us through the changes affecting the retail market, from more local shopping to the diversification of a mall’s tenants.

In many European countries, shops have been allowed to reopen again, but lower footfall traffic is still very noticeable in top retail areas, such as malls and inner city areas. Samuel, who advices businesses on expansion and real estate strategies, sees this as the main challenge for retailers in top locations.

Big chains halt move into inner cities

“When we don’t have reliable pedestrian data it is difficult to determine a location’s attractiveness. Rental prices have dropped considerably,” Samuel says during a video interview with Targomo. “I think in half a year we can truly see what the impact of the pandemic will be on inner city retailers. Which can survive, and which ones will throw in the towel?”

Footfall in inner city areas have suffered so much that in Germany even big chains such as drugstores DM and Rossmann and supermarkets like Rewe, Aldi or Alnatura have slowed or halted their expansion plans in these top locations, Samuel has noticed. Before the pandemic, there was a trend of these chains moving into the cities’ centers.

Samuel Vogel advises clients such as shopping mall manager Unibail-Rodamco-Westfield and safe deposit box company Trisor. He has worked for several other retailers, including VIU Eyewear and bakery chain Zeit für Brot.

A good moment to expand

On the positive side, he sees the current market as an ideal moment for companies to expand or move to top locations. “I think and I hope that we’ll get a bit more variation in inner city areas. Smaller players which previously were located in B or C areas now have a better opportunity to move into A locations, simply because they can afford it.”

He has seen that rental prices have dropped up to 35 percent in top areas, and that some retailers have decided to move to a next-door location to benefit from lower rents.

Diversify shopping malls

In addition to inner city areas, malls have suffered from the pandemic as consumers favored local, outdoor stores. Indoor shopping centers would probably benefit from new and different tenants to remain attractive, according to Samuel. “Some of them will have to repurpose retail space. Perhaps it would help if they house a big medical practice in a mall, or accommodate other use concepts to become attractive again or remain attractive.”

New retail concepts: Delivery hubs

A third retail trend that the expansion manager finds noticeable is the arrival of instant-delivery companies, which operate micro-fulfillment centers in urban areas. Startups like grocery delivery firms Gorillas, Weezy or Flink are expanding rapidly.

“Flink, Gorillas and the like are companies that are not eying to rent top locations in inner cities. Instead, they want to locate their logistics hubs, of about 200 to 300 square meters in size (2,200 – 3,200 square foot), in the neighborhoods where people live. This allows them to reach their customers extremely fast. This is not immediately impacting inner city locations.”

About The Bird

Samuel Vogel founded consultancy The Bird in Berlin in 2020 after a decade-long career in retail. He has an extensive network in the retail and real estate industry in Germany and abroad. He supports retailers and other businesses with a B2C focus in finding the right location and right retail space. He advises or has advised a diverse group of clients, such as shopping mall group Unibail-Rodamco-Westfield, safe deposit box company Trisor, drugstore chain DM, VIU Eyewear and bakery Zeit für Brot. More info: the-bird.de

About Targomo

Targomo helps business and public organizations harvest the power of advanced spatial analysis. Targomo was founded in 2013 and is based in Berlin and Potsdam. The Location Intelligence company has customers in more than 20 countries and was selected as one of Europe’s top five Deep Tech companies at the EIT Digital Challenge in 2020.

The AI-powered location analytics platform TargomoLOOP allows users in retail, hospitality, real estate, logistics and public services to optimize their location networks and services. Users obtain valuable insights to increase revenue, save costs and gain decisive competitive advantages. Everyone can sign up and start analyzing for free.

Comments

No comments. Be the first to post!

Leave a Reply

Your email address will not be published. Required fields are marked *