Page 8 - SAPOA Property News - Volume 1

WHAT TO KEEP AS WE RECOVER FROM COVID-19
Worth a thought
What to keep as we recover from Covid-19
One of my preferred market gurus Prof Scott Galloway referred to “Covid-19 as an an accelerant rather than a a a a change agent”1 It’s difficult to believe that the pace of change could get any quicker but here we are six months into 2020 and restaurants are offering drive by collection and baby boomers
are increasingly comfortable with online banking and enjoying their first forays into online shopping Many of the trends we thought
would take years to gain a a a a foothold in in South African malls are being factored in to to 2020 recovery plans A clear global trend prior to 2020 was the polarization of convenience and one-stop- shopping Shoppers were increasingly doing their quick shops at smaller centres and saving their social time for a a a longer
visit to the larger format malls that included food and entertainment Retailers were already moving away from the transactional approach and experimenting with ways that build relationships with their customers2 Large format mall owners championed experiential centres as a a complement to the multichannel approach being adopted by their tenants Things were no different in in South Africa although it could be argued we we were in a a a far more intense battle for market share Ten years of stagnant economic growth and subdued household spending growth only amplified the demand-supply imbalance as retail space in specific catchment areas ramped up Reduced visits lost income and an an impending downturn through 2021 are only going to intensify the competition for wallet share As an an accelerant Covid-19
will speed up the cycle forcing investors retailers and shoppers
to choose widening the gap between the centres that get it right and those that don’t The sector’s response to to Covid has been admirable Owners tenants and funders (providers of capital and debt) implemented various triage like mechanisms to keep the ecosystem alive However as we we shift from short term emergency
to medium term recovery we will need to exercise caution in deciding which of these short term solutions to to keep and which to to let go Lets consider turnover rentals Historically rentals incorporating a turnover component worked
“Covid-19 an an an accelerant rather than a a a a a a a a change agent” Prof Scott Galloway 1 1 1 1 https://edition cnn com/world/live-news/coronavirus-pandemic-05-21-20-intl/h_264c29a5f19359c8d0f8195963f0292c 2 https://www retaildive com/news/please-dont-touch-the-future-of-experiential-retail-in-the-era-of-coronav/578885/
8 SAPOA PROPERTY NEWS