Retail Waits To Reopen, Recover

Right now, retail is a tale of two markets: the essential and the nonessential. Or the “haves” and “have nots.” This is particularly true in California where current stay-at-home orders limit retail capacity to 25 percent, while dining- whether indoors or outdoors – is not allowed in most regions. This has forced many retailers and restaurants to embrace ecommerce, omnichannel and third-party delivery apps.

“COVID-19 has been an accelerant of the trends – good and bad – that were already underway,” explains Mark Sigal, CEO of Datex ~ Property Solutions in Woodland Hills, Calif. “As that pertains to retail, this is a segment that is in a permanent state of disruption and reinvention. On the positive front, necessity is the mother of invention, especially in retail – a technology laggard industry – and more retailers are innovating and experimenting because they must. One clear area of accelerant is supporting omnichannel for ordering, pickup and/ or delivery.”

The Nielsen Global New Shopper Normal Study notes 66 percent of the general population now takes an omnichannel approach to shopping, while 72 percent of “constrained” (those with income challenges since the pandemic) shoppers embrace this approach. The October 2020 study further noted that only 9 percent of global consumers were regularly shopping online before the pandemic hit.

This leaves retailers who haven’t embraced the ecommerce and omnichannel models in a precarious spot, especially as restrictions linger. Those that are hanging on, waiting for restrictions to lift and life to resume, may not have to wait much longer, though each day that passes can feel like a lifetime for a struggling retailer.

“By late quarter-one 2021, the vaccine program should be hitting scale,” Sigal says.” That, coupled with the 18 million Americans who have recovered from COVI D-19, starts to get us in the herd immunity zone. This should increase in the second quarter and consumers’ hunger for a summer fall and holiday season should drive growth over the course of 2021.

“We see pent-up demand for anything that satisfies lifestyle,” Sigal notes. “Be that going to the gym, shopping with friends or going out for dinner. Humans are social creatures and we have been deprived of those experiences in 2020., something the holiday season has exacerbated.

In response, we expect to see an over-correction in 2021.”When consumers do return., they’re likely to be met with heightened protocols on airflow, sanitization and mask wearing. Sigal notes many retailers are also increasing innovation efforts around experiential retail, including more showroom-centric operators with an emphasis on exceptional customer experience. He says movie theaters may also be a question mark moving forward, as Warner Brothers announced it will release its entire slate of 2021 movies simultaneously on HBO Max and in theaters.

Sandy Sigal (brother of Mark Sigal), president and CEO of NewMark Merrill Companies in Woodland Hills, believes another question mark will be what happens at the end of 2021. The answer to this, he asserts, may determine retail’s future direction.

“With the vaccine and stimulus, the re-opening of indoor dining, gyms, etcetera, seems very doable by April, even with limitations,” he says. ”We would expect a pretty good uptick in traffic and activity. 1 would project a very strong summer as gathering activities resume, again with limitations.

I think the third quarter could be very strong as well, but the fourth quarter will be the test. That’s the time when stimulus wears off, depending on state and local tax policy, assuming the virus is in our rearview mirror.”

Though no one can predict the future, current s ales can give some indication of what may lie ahead, especially if restrictions loosen.

Sandy Sigal states that restaurants that introduced delivery mechanisms during the pandemic were able to recover between 60 percent and 75 percent of their sales. Industry aside, the second stimulus bill multiple vaccines and a desire to return to the outside world has built up demand for more services., experiences and “normality” across the U.S. Just where any one industry may fall on that demand spectrum remain5 to be seen., though it’s a safe bet that the future will look brighter for many Americans and business owners in the 12 months ahead.

Extract from a Western Real Estate Business publication.

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