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Post-pandemic Retail

The new, close relationship with customers. These are the strategies that retailers and operators apply to prepare for life after the crisis.

Lockdown, the compulsory wearing of masks, social distancing rules, and the fear of contagion: The socio-economic effects of the Covid-19 crisis have resulted in the transformation of everyday life worldwide. Consumer behavior has been particularly impacted by the pandemic. While hope for the development of a timely vaccination remains, nothing has been made available yet. If the retail real estate industry has learned anything in 2020, it is that the players involved in the retail industry are perfectly capable of dealing with such developments and of thinking in terms of partnerships and ecosystems. It is safe to say that the crisis has taken retail out of its comfort zone. In many cases, it has functioned as a trend accelerator: e-commerce has gained momentum, digital technologies have provided the means by which consumers can be contacted, cashless and contactless payment methods have become commonplace, glocalization and local commerce have experienced an upswing, and so on.


And here you can find further, very interesting articles about post pandemic retail:

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Playing It Safe Both Now and in the Future

What exactly will characterize the “post-pandemic retail world”? First and foremost, safety and hygiene will be paramount. The Mall of Switzerland, located in the canton of Lucerne, is one shopping center in which a carefully designed protection concept has been in place since the beginning of the crisis.

Patric Drobner, COO of LSGI Suisse: “Spacious malls provide customers with enough room to safely and easily move around, thereby enabling them to maintain the required social distance from their conversation partners as well as other fellow citizens at all times.”

The concept is constantly adjusted on the basis of new findings and in accordance with the specifications issued by the Swiss Federal Office of Public Health. Patric Drobner, Chief Operating Officer of LSGI Suisse, which is responsible for asset management, continues: “Thanks to its spacious and modern infrastructure, the Mall of Switzerland has a generous amount of space and features wide passages, which is highly appreciated by customers. The spaciousness provides customers with enough room to safely and easily move around, thereby enabling them to maintain the required social distance from their conversation partners as well as other fellow citizens at all times.”

Guido Pärnits, Director of Ülemiste: “If the center itself can meet the challenges, the problems facing its tenants should not be ignored. Doing so would be detrimental in terms of maintaining a good internal climate as well as from an economic point of view.”

Plenty of space is also available at Ülemiste, the largest shopping center in Estonia. A return to normal retail life seems to be taking place both there and throughout the Baltic country, and people’s fear of COVID-19 is also diminishing, says Guido Pärnits, Director of Ülemiste. “At the majority of Estonian shopping centers, including Ülemiste, the only sign of the recent outbreak of the disease is the hand disinfectant dispensers located at the entrances of the stores, which are actively used by most shoppers. In my opinion, this is a practice that shopping centers should continue to follow even after the epidemic has been defeated worldwide.”

Tomasz Trzósło, CEO of EPP: “Food & Beverage areas will continue to play a very important role in shopping centers once the pandemic is over. At that point, people will no longer work, eat, and entertain themselves exclusively at home.”

Tomasz Trzósło, CEO of EPP, insists on a sense of responsibility. According to him, the company’s goal as an owner and operator of shopping centers is to provide customers with a safe and comfortable shopping experience while giving them access to the full range of products offered at a given location. In his opinion, that will be the most important task and responsibility of the entire retail sector, not only in Poland, in the upcoming months. Hygiene will remain a top priority. “We have to pay more attention to customer safety. Therefore, we will continue to comply with hygienic requirements, and we have developed new ways of ensuring the well-being and comfort of our customers, such as the regular disinfection of areas that are frequently touched and the provision of hand disinfectant. We have also become educators – our centers are equipped with multi-channel communication outlets that remind customers to look out for each other and to respect hygiene regulations,” explains Trzósło.

How will new developments be handled? Marcus Wild, CEO of SES and Member of the ACROSS Advisory Board, answers: “The quality of stay with regard to new projects will require a higher standard of hygiene and fresh air in the future. The mixed use of space has become increasingly important. The connection of attractive outdoor areas has also gained particular significance.”

Marcus Wild, CEO of SES and Member of the ACROSS Advisory Board: “The quality of stay with regard to new projects will require a higher standard of hygiene and fresh air in the future.”

Response to Online Retailing

As previously mentioned, in many respects, the coronavirus crisis has accelerated the trends that have been announced in recent years – especially the shift towards more e-commerce. The big question now is whether the consumer behavior of the newly acquired online customers will focus more strongly on this sales channel in the long term and, if so, how malls will (co-)benefit or respond.

When asked about this issue, Tomasz Trzósło, CEO of EPP, expresses optimism regarding brick-and-mortar retail: “The fact that online shopping will gather pace as a result of Covid-19 is quite clear. Even though this trend was evident prior to the pandemic, most retailers have actively pushed their online agendas throughout the pandemic; consequently, things are now proceeding much faster. There is and always will be room for brick-and-mortar retail. However, the omnichannel approach, which focuses on delivering a seamless customer experience, whether the person is shopping online via a mobile device or a laptop or whether he or she is in a brick-and-mortar store, will become critical for retail store owners who will have to adapt and integrate it into their business models in the future.”

Yovav Carmi, COO and Member of GTC Management Board: “Shopping exclusively online has taken away all of the fun of the shopping experience. People tend to enjoy going out, spending time with their friends and family, and shopping centers are ideal destinations for such activities. People need to socialize.”

Yovav Carmi, Chief Operating Officer and Member of the GTC Management Board, confirms: “Online shopping was on the rise before the COVID-19 outbreak, and the phenomenon has picked up even more speed as barriers and movement restrictions have effectively forced people, including the older generations, to start shopping online, and they are getting used to it. On the other hand, shopping exclusively online has taken away all of the fun of the shopping experience. People tend to enjoy going out, spending time with their friends and family, and shopping centers are ideal destinations for such activities. People need to socialize.” As a result, GTC discovered that people returned to shopping malls rather quickly following the lockdown. However, the fun aspects of shopping are still difficult to measure as it is no fun to go shopping with a mask on your face. People are simply going to malls to buy what they need, which is reflected in the higher turnover compared to footfall.

Distributed Food Areas

When it comes to the previously mentioned reference to “socializing”, the “Food & Drink” area comes into play. Gastronomy-related areas have grown steadily in recent years, which is a well-known fact. Ultimately, the quality of stay and the length of time spent at malls should increase as a result. Did we bet on the wrong horse in this respect? Marcus Wild, CEO of SES, says: “There are winners and losers in gastronomy, too. Outdoor terraces have definitely seen positive results. In the future, the combination of indoor and outdoor spaces will be a key success factor.”

According to Tomasz Trzósło, CEO of the EPP, food and beverage areas will continue to play a very important role in shopping centers once the pandemic is over. At that point, people will no longer work, eat, and entertain themselves exclusively at home. They will also feel the need to go out and socialize with one another. “We have seen an increasing trend towards shopping centers evolving into shopping, leisure, and food and beverage centers. This trend has been slowed down by the pandemic, but it cannot be stopped for good. Moreover, eating out has become more and more popular as a natural choice for Poles, especially among young people who want to eat out and spend time with their friends in a trendy, modern interior,” says Trzósło.

The bottom line is that food courts and food halls may evolve into a more distributed network of smaller, spread out spaces to allow for social distancing, and app-enabled delivery will add a level of personal service.

Redefining Entertainment

Adjustments have been planned not only in the gastronomy areas but also in the leisure and entertainment areas of the shopping centers. With regard to children, their physical play areas will be transformed into new worlds of experience as a result of the pandemic. As far as adults are concerned, services, particularly in the areas of health, beauty, and wellness, have moved more into the foreground. Yovav Carmi, Chief Operating Officer and member of the GTC Management Board, hopes that motion pictures will soon return to shopping centers: “An important component of the shopping experience is still missing – cinemas, which still have no content to show.” According to him, the fun and entertaining part of shopping has yet to return. As soon as it does, people will begin to feel more comfortable – especially when masks no longer have to be worn inside enclosed spaces.

Glocalization and Sustainability

Local food production, local restaurants and stores, as well as other local production activities have benefited the most from the new consciousness. Support for small and local businesses will continue after the pandemic. Of course, the often-strained concept of sustainability plays an important role in this context. Similarly, Gerald Grüll, Head of Retail at Immofinanz, reports: “The issue of sustainability and the origins of products will play decisive roles, because an increasing number of consumers have begun to pay attention to regional origins. This has also been exacerbated by the shortage of some products that originate from Asia during this period of the coronavirus.”

Thomas Kuhlmann, Chairman of the Board of Hahn AG, strikes a similar note: “One important observation that we have made is the fact that the coronavirus crisis has increased the awareness of sustainability even more significantly. Consumption, as such, is increasingly being questioned. For us, this is an opportunity to focus even more intensively on sustainability aspects, specifically environmental protection, in project developments as well as in revitalization projects.”

Thomas Kuhlmann, CEO of Hahn AG: “Thanks to the combination of conveniently accessible, car-oriented locations, comparatively low rental and ancillary rental costs, and the possibility of one-stop shopping, retail parks are very much in line with the latest trends.”

Hahn AG, which specializes in retail parks, has already begun to play the local proximity argument card in its favor. Due to their focus on everyday consumer goods and non-food discount, retail parks are well positioned. The food retail sector will retain its role as anchor tenant. Thanks to the combination of conveniently accessible, car-oriented locations, comparatively low rental and ancillary rental costs, and the possibility of one-stop shopping, retail parks are very much in line with the latest trends. Thomas Kuhlmann, CEO of Hahn AG, says: “We have no intention of deviating from this trend in the future. We also expect the length of time spent at the properties to increase once the pandemic has been overcome. Accordingly, the quality of stay and the shopping experience are also important factors with regard to retail parks, which we intend to take more into account by means of sophisticated architecture and a corresponding tenant mix.” Hahn AG also sees additional potential in flexible, mixed-use properties as they offer broad diversification, and their basic concept allows for constant change and adaptation to requirements. The coronavirus crisis has shown how quickly and dynamically the market can change. Mixed-use properties allow for swift counteraction.

A New Way of Working with Tenants

The current crisis has put the interaction between the parties involved in shopping centers to the test. Even prior to the outbreak of the pandemic, numerous retailers, particularly those in the fashion sector, faced various difficulties. Guido Pärnits, Director of Ülemiste in Tallinn, is proud of the fact that his shopping center has maintained a strong position throughout the years, which has allowed it to endure these difficult times and even offer assistance to its tenants. Specifically, tenants have been able to enjoy rental discounts during the crisis, and they were completely exempt from the obligation to pay rent when the center was closed, even though there was no legal obligation for this service to be provided. The director of Ülemiste claims that the crisis has done well to teach a good lesson to the management teams of the shopping centers that initially found themselves in a tough position – tenant problems are also landlord problems, and that is why more and more centers have begun to meet their tenants halfway during this period. “If the center itself can meet the challenges, the problems facing its tenants should not be ignored. Doing so would be detrimental in terms of maintaining a good internal climate as well as from an economic point of view, since changing and moving tenants that operate on premises covering hundreds of square meters would result in high costs for the center as well,” he noted, even speculating that landlords should be prepared to pay tenants to prevent them from permanently closing their doors in the event of a prolonged crisis. “If you are certain that the tenant is viable and will be able to continue operations after the crisis, this should be considered. A good tenant is worth keeping,” adds Pärnits.

Nevertheless, the placemaking and retail real estate industries will likely continue to be preoccupied with the current crisis for the next few months. Thomas Kuhlmann of Hahn AG says: “It is still too early to draw any definitive conclusions. However, some preliminary findings have emerged. On an economic level, the lessons learned are similar to those that were learned during the financial crisis: Solid financing and a conservative investment policy are the best methods of surviving short to long-term market disruptions. Crises tend to occur without prior notice, which is why it is important to take appropriate precautions in order to ensure sufficient time to adjust to changing market conditions.” Anyone who is capable of doing so in a timely manner is fortunate. One thing, however, is certain: The confidence level within the industry is and will continue to be high. Hope remains for better times to come – as expressed by Marcus Wild of SES: “I believe that COVID-19 will come to an end. All of our customers will be hungry for adventure, shopping experiences, and entertainment.”

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