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Vanessa Davey has been speaking with EG discussing Covid-19's impact on the retail sector, and how retail parks could combat these complications.

May 14, 2020

The Covid-19 pandemic has impacted every industry, but retail arguably more so than others. Online sales as a proportion of all retail reached a record high of 22.3% in the UK in march, but due to lockdown measures, high streets and shopping centres have paid a hefty price. With uncertainty around how long social distancing measures will be in place, retail parks could play a significant role in the retail sector's road to recovery.

While not immune to the impact of Covid-19, the specification of retail parks offers a far greater affordability, flexibility and adaptability for a retailer compared to shopping centres and high streets, especially in the midst of current social distancing measures.

With a reduction in the use of public transport, retail parks providing access to free, open-air car parking have become increasingly preferential to consumers. Units are often larger, making one-way aisles easier to facilitate. At a scheme under our management in Paisley, Glasgow, B&Q has recently reopened and queues of up to 400m have been accommodated safely in the car park to meet social distancing guidance something not achievable with other less flexible assets.

Retail parks are also often anchored by supermarkets, petrol stations and hardware stores – occupiers that have typically continued trading and have been more resilient during current lockdown measures. While temporary closures will have caused a drop in football and revenue, the presence of durable anchors should result in a return to normal much faster than shopping centres and high street assets.

With the lack of certainty around how long social distancing measures will be in place, technology will continue to play a crucial role in retail in the longer term.

Consumers have been forced to adopt online shopping and many of them are likely to continue to. But this does not mean we will abandon physical stores altogether. On the contrary, technology is merely helping us adapt to the evolving climate and will deepen the need for retailers to combine online and in-store shopping. Cue click-and-collect services – something retail parks are already well-placed to handle, and which we foresee becoming increasingly relevant.

At a time when consumers are concerned about exposure to a potentially life-threatening virus, the click-and-collect model will make the shopping journey more convenient and safer, with consumers knowing they can browse online, make a purchase from their own home, but then collect the item whenever most convenient for them, instead of paying for postage or waiting for their delivery to arrive.

Retailers are already considering how to refine their click-and-collect services ensuring the collecting system is carefully designed to make customers feel safe, with the likes of Curry’s intending to offer a drive-thru click-and-collect service in its car parks.

Through these tumultuous times, suitable storage and distribution space to facilitate online demand is at a premium for retailers. Therefore, enhancing their logistics and storage systems to accommodate a wide range of products will be crucial to a retailer’s success in the future.

Retail parks can facilitate this with high eaves, enabling the installation of a mezzanine providing an additional non-rentalised storage option. Owing to their convenient and accessible location, retail parks can essentially function as last-mile distribution hubs, something Argos has already implemented.

As with any sector, retail parks will not be immune to the impacts of Covid-19 and some assets will inevitably become redundant, simply accelerating a pre-existing trend. There is no straightforward solution to reinvigorate the retail sector and retailers need to start flexing their approach to come through in this state of flux.

Understanding the current risks imposed by lockdown and showing an appetite to adapt to new customer habits will ensure retail parks, managed carefully by expert landlords, prove resilient well into the future.