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Successful premiere of the ACROSS Retail Talks Online

Five points emerged at this event that focused on the problems of lease payments in connection with Covid-19. A large and very prominent expert audience followed this online discussion closely.

On May 27, 2020 at 4pm the ACROSS Retail Talks took place for the third time, putting the Covid-19 crisis front and center in two respects. On the one hand, because the event happened online. On the other the hand, because of its topic that posed questions like “What now? Do we have a solution or are we hiding behind contracts?” to landlords and tenants. After all, the discussion regarding problematic lease payments in connection with the pandemic is in full swing, locally as well as internationally. This is not an individual problem of one contractual partner. Unfortunately, no or not enough solution approaches and ideas exist so far.

Watch a short video summary of the latest ACROSS Retail Talk (approx. 10 min):

Click here for the uncut version of the latest ACROSS Retail Talk.

We decided to hold this Retail Talk in German due to the comparable legal and economic framework conditions in the German-speaking countries. We are currently developing further ACROSS Retail Talks with exciting European topics, which will then be held in English again. We will keep you posted…

ACROSS publisher Reinhard Winiwarter welcomed the large and very prominent expert audience and gave the floor to host Klaus Striebich, Managing Director of RaRE Advise and member of the ACROSS Advisory Board. Another new aspect was that this round of the Retail Talks was held in German due to the similar legal and economic conditions in the German-speaking countries.

Sabine Hoepp (Managing Director of Nanu-Nana), Veit Weiland (Managing Director of Deichmann), Wolfgang Sauerzapf (Member of the Executive Management at Peek & Cloppenburg), Lars Richter (Division Head Asset Management Retail at Union Investment), and Steffen Hofmann (Managing Partner at Mallinvest Europe) were the panel participants. The virtual audience–participation was free of charge, by the way–could ask questions by using the chat function.

The panelists agreed on the following five points:

1. Agreement regarding the necessity of collaboration

The most important point that all panelists agreed on was that they now is not the time to hide behind legal positions. They all see that it is necessary to collaborate. There is a fundamental consensus that one has to reach agreements. An important tool in this context are the guidelines compiled in the Code of Conduct that renowned representatives of the retail and retail real estate industry developed in collaboration with the German Council of Shopping Places (GCSP).

2. Viable solutions take time

Corona took everybody by surprise. The pandemic hit the retail real estate industry–as well as the global economy–unexpectedly. According to Hofmann, the first thing to do was to gain time to become able to act again. However, time was extremely tight for retailers who lost most of their revenue. Richter said that Union Investment actively approached its 15 most important leasing partners, including Deichmann, right at the beginning of the crisis. But still, viable solutions take time. Drawing up an official legal letter alone takes approximately two weeks.

3. Retailers are not all the same

Retailers are affected differently by the crisis. It is hardly surprising that food retailers reported no or close to no losses. In terms of retail formats and investors’ interests, this means that local suppliers and retail parks focusing on local supplies will remain in high demand in the future. According to Hofmann, department stores are about to experience a repositioning wave towards mixed-use, whereas in the mall sector, the sustainable ones will distinguish themselves from the unsustainable ones. Richter also emphasizes that there is a selection process underway.

4. Online retail does not compensate for revenue losses

Like many other retailers, Hoepp was faced with considerable losses from stationary retail, including the entire Easter business. This was a severe blow. Weiland emphasized that the online revenue Deichmann generated during the lockdown is nowhere near the revenues usually achieved by stationary shops. Furthermore, customers had to live with longer deliveries. This curbed demand even more and increased return shipments.

5. No back to normal

Sauerzapf had a stroke of luck in these trying times. As an anchor tenant, Peek & Cloppenburg found most of its lessors to be understanding. He is currently juggling with goods in all directions, at the expense of the company’s margins. Hoepp also said that it will take quite a while before anybody returns to normal, despite the loosened crisis measures. Revenue remains below expectations. Hygiene regulations dampen the customers’ desire to buy. Similarly, Weiland explains that most retailers have a long way ahead of them. Even in Sweden, where a lockdown was avoided, revenues decreased substantially.

Further ACROSS Retail Talks with exciting, European topics are already being planned right now.