The Pandemic’s Lasting Impact on Retail Real Estate

By Ulf Smedberg

It is too early to tell what lasting impact Covid-19 will have on how people choose to visit and spend time at shopping centers in the future. However, despite the uncertainty, some signs and trends have emerged that we know our industry will need to adjust to.

In order to help us adapt our business and support our customers, partners, and communities, we conducted a survey in November. In all, 5,200 visitors across 20 of our shopping centers in different markets participated in the survey, and we are confident that the results will help us understand how Ingka Centres’ visitors’ shopping behaviors and interaction with our centers have changed as a result of Covid-19. The survey looked at online shopping trends and how spending has shifted in different categories since the onset of the pandemic. It also identified the core reasons why people visit our shopping centers today and what will drive them to visit post-pandemic.

The findings have shed new light on what we can expect to see in terms of customer journeys, behavior, and demand, and will be valuable with regard to how we adapt, innovate, and continue to transform our business for the future. Reassuringly, the research also confirmed – as we have predicted – that Covid-19 has simply accelerated many of the trends our industry was already adjusting to. Those of us who have long aligned our business towards those trends should take comfort from that and may even benefit from changed consumer behavior in the world of the so-called “new normal”.

For example, the pandemic has, unsurprisingly, led to an increase in online shopping as people have been forced to stay at home – and that is likely to be a lasting trend. Our customers say they are more likely to shop online in the future, with every second customer in Russia, China, and Sweden confirming the same. However, with that comes opportunity. In 2020, we launched Livat Online at our Chinese shopping centers. It is a new online community that brings visitors and partners together for shopping, lifestyle, and conversation. It is helping us and our partners get closer to visitors by leveraging data to deliver personalized experiences and build stronger connections to drive traffic to both online and offline stores.

Ingka Centres wants to connect visitors and our partners via both digital as well as physical experiences. Entertainment and education are two leisure-focused categories in which the shift toward online usage is predicted to grow. That, however, also creates opportunities for forward thinking operators of physical space. Physical and digital experiences will be mixed. More immersive digital events will occur that will require increasingly sophisticated equipment. Consider online gaming, where physical space plays an increasingly important role as people may not have the equipment to play at home, or simply want to gather with others to play.

Our survey results found those most affected by lockdowns are actually more eager to return and socialize. Around half of our customers in China and Russia, and slightly fewer in Poland said they planned to visit shopping centers more frequently in the future. Citing reasons such as parent-child entertainment, restaurants, cinemas, and concerts, in addition to shopping, for example. Nearly half of our customers also plan to visit shopping centers in the future for different reasons, with spending general “leisure time” serving as the main reason to visit – over “shopping”. In China, the top reason our customers visit our Meeting Places is to have a meal, while in Sweden, half said they come for a fun day out. That is further evidence that our industry’s ability to create truly mixed-use destinations that go far beyond shopping is the key to a successful future.

As we look forward, we must also consider safety. It is at the top of consumer minds – like never before – and Covid-19 has rightly drawn more attention to hygiene standards of all kinds at shopping centers. As our Meeting Places fully re-open, they will have to operate in a different way to before. A focus on cleanliness and safety will continue – that is essential for maintaining the trust our visitors and partners have placed in us. In our survey, many of our visitors told us that they would like to continue to see features that minimize the spread of infections, such as touch-free shopping, and that will be at the forefront of our minds as we upgrade our centers and embark on new projects. People’s desire to stay safe has also led to them shopping and spending their leisure time closer to home. That is something that has also accelerated trends we were seeing pre-Covid, such as an increased demand for convenience. That is why we are creating smaller format IKEA-anchored Meeting Places in urban locations that will be situated in the heart of their communities. Our goal is to create community destinations in which people can spend time with their friends and family, and have better everyday lives by having easy access to wellbeing, a sustainable lifestyle, and, of course, a feeling of safety.

Although there are many positives to take away from our survey, there are, of course, challenges our industry will need to overcome as we emerge from Covid-19. For the foreseeable future, people will have less money in their pockets and will likely cut back on things such as leisure, restaurants, and fashion. However, if there is anything good that has come out of all of this, it is that it has reminded all of us about what is important – family, friends, community, and free time. Humans are social creatures: We are at our best when we are together. We will continue to develop our destinations for the masses.