Retail: a story of challenges and opportunities
Retail has had a particularly difficult time over the past two years. On the one hand due to the compulsory closures, on the other due to the flourishing of e-commerce that followed. Are physical shops a thing of the past? Is there only a future in residential or logistics real estate? Is the solution to be found in our existing shopping areas or is there a need for a shift of mentality?
We sat down with five experts:
- Nicolas Damman, Director at consultancy firm PwC
- Jan De Nys, CEO and founder of real-estate company Retail Estates
- Stijn Thomas, co-founder of Avenue Real Estate
- Nicolas Beaussillon, Managing Director of Wereldhave Belgium
- Christophe Leenesonne, Senior Business Developer at ION
The COVID-19 crisis has given e-commerce an enormous boost. Is this evolution the big culprit for the struggle physical shops are facing?
Stijn Thomas: “Online and physical retail can definitely co-exist. The lockdown in the Netherlands in late 2021 and early 2022 showed that physical shops absolutely have a future. During that lockdown, the turnover of shops in Antwerp increased by 30%. This proves that the popularity of e-commerce does not mean the death of the physical shop.”
Nicolas Beaussillon: “During the lockdown, customers had no choice but to shop online, but afterwards we clearly saw them returning to the physical shops. That shows the interest in these shops and their importance. Today we have almost the same number of visitors as before the pandemic.”
How do you think retail should deal with the increasing popularity of e-commerce?
Nicolas Damman: “E-commerce is nothing new, of course. The first online shops appeared twenty years ago and physical shops still exist. The retail sector’s sales strategy is clearly omnichannel.”
Jan De Nys: “The big revolution is that mixed forms are emerging. For example, I hear that since shops have reopened, at Vandenborre, Click&Collect has accounted for 28% of all sales. This means that consumers who are tired of waiting for their parcel at home pick it up themselves in the shop. So these people are willing to make the trip to the physical shop if they are sure that the product is there. For the shop this means no transport costs, no chance of damage and an opportunity for sales people to sell accessories. It is a very profitable business strategy.”
Nicolas Damman: “The retailers of tomorrow are those whose physical and digital shops are perfectly aligned. Customers want a shopping experience that seamlessly continues in the digital realm. For example, you fill an online shopping cart during the week, head to the shop on Saturday, find those items there in your size, add some other items too and at checkout you choose whether to take everything home straight away or have it delivered to your door.”
Are we, as consumers, spoiled?
Jan De nys: “Definitely, but that is also because we do not pay all the costs ourselves. Free delivery is a given for many people, but that will change. There’s a social movement linked to climate change, for which we will also have to bear the costs.”
“On the other hand, retailers also draw many benefits from digital sales. They can gather a huge amount of information about their customers and tailor their communication and sales to them accordingly.'’
All of this has resulted in commercial property being a hot topic for a while now. How do you see this developing?
Nicolas Beaussillon: “The location of a retail property or retail centre is important, but so is the manager. An owner of a number of superstore buildings along major roads can offer a nice mix of traders and has some leeway in terms of price. That’s the difference with property owners in city centres, who often only own one single shop.”
Jan De Nys: “Independent shops selling toys and electrical goods, for example, were pushed out of the city centre by the large fashion chains that were on the rise years ago. Those small shops are not coming back. You shouldn’t underestimate how much diversity has disappeared from city centres.”
Nicolas Damman: “Rents for shopping centres and superstores along major roads remain fairly stable. We have recently seen a drop in prices especially in inner-city areas. Everyone felt that the prices were too high and now we are seeing a normal correction. I sincerely hope that this price drop will also bring more opportunities for smaller shops.”
Stijn Thomas: “City councils also play a major role in this. In general, large cities do well and smaller ones are hit harder, but there are exceptions. Look at a city like Mechelen, for example, where the city council is focusing very hard on the city core. You can see that this shopping city still has its raison d'être, although there are certainly a lot of superstores on the outskirts there as well.”
Is that city run like a shopping centre where shopping is – and is set to remain – an experience in itself?
Stijn Thomas: “I would say every city has to have a vision, that’s what it’s all about. It has to know where it wants to position itself, which people it wants to attract, whether or not it is a tourist city... The hospitality industry and mobility certainly play a role in that.”
Are there issues in that view today?
Christophe Leenesonne: “In some cities there is still potential. Real-estate developers go along with what the customer wants. I think it is very important to create a global vision for the entire city. It starts with urban planning. There has to be a plan that everyone has to comply with. A city is a coherent mix of all kinds of factors and therefore there must be one single vision.”
What will the situation be in 5 years’ time and what is the biggest challenge?
Jan De Nys: “Above all, there are still many questions. What will the purchasing power be in five years? The current rise in energy prices is not good for us. The second question is: where will people live and how will they move around? How will e-commerce develop? Will free parcel delivery still be a big thing?”
Nicolas Beaussillon: “Consumer needs are evolving rapidly. In the years ahead, adapting to this will be a major challenge. We need to listen to what customers want. After all, customer is king, to this day.”