As states across the country begin the process of reopening their respective economies, retailers are coming to terms with the financial and social impacts of COVID-19 on sales and consumer shopping habits.
Retail Sales Slowdown
The month of April saw an estimated $150 billion loss in retail sales. Those businesses and retailers deemed “essential” during the pandemic—think supermarkets, pharmacies and big-box stores like Target and Walmart—fared better than their non-essential counterparts. The relative success of essential retailers throughout the COVID-19 pandemic has helped offset struggling retail sectors. Movie theaters, health and fitness retailers, childcare centers, enclosed shopping malls and casual dining restaurants have all suffered during this extended national lockdown period.
Case Study: Best Buy
In the midst of the COVID-19 pandemic, the electronics and home appliance retailer Best Buy has shifted to something of a hybrid retail model. When the retailer voluntarily closed all of its stores on March 22, Best Buy pivoted to a curbside pick-up model that complemented its home delivery services. Best Buy’s curbside business model led to triple digit gains in its e-commerce channel. In late May, company executives reported that Best Buy was able to retain at least 81 percent of its sales volume and saw a staggering 155 percent increase in its online sales.
With states easing stay-a-home restrictions, the number of businesses that are now open to the public has started to increase. Best Buy has chosen to reopen select stores for appointment-only shopping, and stores that remain shuttered still offer curbside pick-up of online orders. Store remodeling plans of at least $800 million have been put on hold. Instead, Best Buy plans to spend at least $650 million on investments in technology and automation.
The Future of the Retail Experience
Best Buy’s successful hybrid retail model could be a blueprint that retailers can use in a post-pandemic world. COVID-19 has caused a majority of shoppers to adopt new behaviors, from utilizing e-commerce to buy non-essential items to limiting grocery store visits to once per week. Common practices during the pandemic like social distancing, limited in-store customer capacity and adjusted store hours are likely to be adopted by retailers for the foreseeable future.
In fact, the way retailers do business may never be the same again. Brick-and-mortar store layouts will inevitably change to accommodate new safety protocols. Fewer customers shopping in-store could lead to a shrinking retail workforce. Landlords and property management companies will undoubtedly seek new approaches to filling in vacant spaces in smaller shopping centers. Brands that have shown increased awareness of product and consumer safety during the pandemic are likely to gain more loyal customers. All of these and more will contribute to the ever-changing retail landscape, both in the United States and across the globe.
How can Ground + Space help?
Ground + Space is a leading commercial real estate firm that specializes in single-tenant and retail NNN investments. We have several listings available featuring retailers that are in a prime position to succeed in a post-pandemic economy. We are committed to providing up-to-date information and best-in-class services to clients during the COVID-19 pandemic and beyond. The market changes daily, so please contact one of our brokers for specialized guidance during this time.
How can I stay informed?
The Centers for Disease Control and Prevention (CDC) offers daily updates and other information about COVID-19 symptoms and testing in the United States. Johns Hopkins University (JHU) has created a resource to help inform the public and advance comprehensive understanding of the novel coronavirus and its effects backed by experts in global public health, infectious disease and emergency preparedness. Additionally, the World Health Organization (WHO) continues to track the number and location of confirmed cases of the virus across the globe.