Retailers need to rethink - but in which direction?
The Hahn Group's new ‘Retail Real Estate Report’ has been published - a classic for anyone involved in retail property. We have been contributing to it since 2018 and have once again presented the most important retail sectors, economic developments, forecasts and trends.
New retail sales records, but not in real terms. The retail sector cannot escape the challenging environment. Keywords such as urbanisation, supply chains, mobile working, migration, digitalisation and energy efficiency require retailers to constantly adapt to new framework conditions under high cost pressure. Nothing new, really. The slogan ‘Retail is change’ has always been true. But one thing is new: the expansion of the last two decades seems to be over. Cities are losing a massive number of retail outlets, entire shopping centres are shifting or being abandoned.
The large chain stores are optimising their store network and concentrating on what they consider to be the best, good locations. At the same time, they are rethinking their space requirements. Large chain stores have had to file for insolvency or are in insolvency proceedings. Owner-managed businesses are going out of business, partly because there is no succession plan. Overall, demand for retail space is falling, which is increasing the pressure on rent levels. This presents local authorities with new, far-reaching challenges. Formerly well-functioning shopping streets are characterised by high vacancy rates. Property values are falling. As a result, many cities are also losing their appeal. And the retail parks and retail park locations? They seem almost immune to this.
Speciality stores and retail warehouse locations with positive signs
While administrators, politicians, urban planners, city managers and many other stakeholders are looking for solutions that are not yet in sight, retail parks and retail warehouse locations with their food anchors appear to have a solution in store. In particular, food retailers, drugstores, DIY stores and non-food discount stores non-food discount stores in particular are focussing on bricks-and-mortar retail and are stable consumers of space, as the retailer survey in this report once again shows.
Urban shopping centres face challenges
The many advantages that numerous city centres have enjoyed as a result of expansive retail are suddenly being reversed. Many stakeholders say that a rethink is needed, although it is completely unclear how and where. One thing is clear, the situation will probably never be the same again as it was with retail-led urban development. Something else must now follow. Residential and catering-based development components will become more important, but it will be a slow and difficult path that will require a lot of patience from all stakeholders.
The effects of the coronavirus pandemic are diminishing, dealing with an increased inflation rate is becoming more routine and new challenges are coming into focus.
As always, trade will also master this phase, despite temporary stagnation.
Note: We can also send you a printed version of the report on request. Please do not hesitate to contact us. Further information is also available on the Website der Hahn AG.
Contact: Dr Joseph Frechen, Head of Retail and Branch Manager Hamburg, frechen@bulwiengesa.de and Andrea Back-Ihrig, Partner, back@bulwiengesa.de.
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