Adaptability. That one word seems to separate the haves and have-nots in the retail sector. It was certainly true prior to COVID-19 when consumer-press headlines blared the death of retail at the hands of internet shopping. And today it proves the key to the market’s resurrection post-pandemic.
As Marcus & Millichap explains in its recent : 鈥淐ore retail sales jumped 8.2 percent from February to March as stimulus checks hit residents鈥� bank accounts, with every major retail category advancing. Year over year, retail sales jumped 17.9 percent, though many retailers were forced to close during March 2020 as fears of COVID-19 spread across the nation.鈥�
乐竞体育赛事直播 Senior Vice President Mindy Gronbeck, CPM庐, is riding the wave of that resurgence, although the four million square feet of retail assets in her charge showed much less upheaval than market watchers might have expected. In fact, she reports the overall occupancy rate in her retail stores dipped only slightly from the pre-pandemic level of 96 percent her firm, Hawkins Companies, AMO庐, enjoyed.
鈥淲e鈥檙e at 94 percent now,鈥� she says. 鈥淲e didn鈥檛 have any major closings, other than a couple of small tenants that relocated or simply didn鈥檛 renew.鈥�
Not surprisingly, the secret to that success, or at least part of it, can be attributed to an up-close and personal approach to management. For those retailers that failed, frankly, the writing was on the wall long before COVID. 鈥淲e worked with every single tenant we knew could last if we could just get them through this year,鈥� says Gronbeck. 鈥淪o, our occupancy hasn鈥檛 really changed.鈥�
The team listened to the needs of tenants, she says, and worked with them to find relief funding. 鈥淔rom day one after COVID hit, we were working 12-hour days for six weeks, taking calls from tenants,鈥� the Boise, ID-based Gronbeck explains. 鈥淥ur tenants are treated with utmost care, and we don鈥檛 give pat answers. We listened to their needs, reviewed their financials and helped them through.鈥� This despite the number of smaller stores that were left with no choice but to close when they 鈥渓ost all of their workers,鈥� and the big-box retailers who simply issued notices that they weren鈥檛 going to pay their rent.
鈥淢ost of the big boxes, the major retailers, sent all of their people home too,鈥� she recalls. 鈥淪o, there was maybe one person on board to handle all retail locations around the country.鈥� In some cases, it took the Hawkins team weeks to locate the one or two people who were left in charge.
鈥淢ost of our tenants work to business plans based on a certain volume of people coming into their stores, and that just wasn鈥檛 there,鈥� she says. 鈥淏ut, as long as they were talking to us and getting whatever help they could through funding sources, we could work with them. And that鈥檚 one of the reasons we have the occupancy we have.鈥�
Hawkins Companies didn鈥檛 come out totally unscathed, however, Gronbeck expects at least some rent deferrals to be paid back over the next year or two to offset losses.
A question of adaptability
Success in retail became a matter of adaptability long before COVID-19. Gronbeck says it鈥檚 too simplistic to assume the internet was killing brick-and-mortar. As often as not, closures were the result of an inability to adapt to new ways of shopping, or simply bad management. Those that could create an experience and embrace so-called omnichannel strategies lived to fight another day.
That day came with the pandemic, and once more, retailers had to adapt to new consumer habits. 鈥淚 love my Amazon same-day shipping as much as anyone,鈥� she says. 鈥淏ut there are still things I want to touch and feel. As long as retail tenants are willing to change and adapt to the new buying habits of Americans, the right retail will not die. People want to have a shopping experience.鈥�
In simple terms, one point of adaptation last year came in the form of curbside pickup and online or phone orders. Success was also a matter of what the retailer was selling. Entertainment venues and restaurants took serious hits, Gronbeck says. Sporting and outdoor-equipment retailers did well, as did pharmacies and grocery stores. Ditto gym-equipment retailers and home-improvement and office-supply stores.
The 乐竞体育赛事直播 executive committee member remains optimistic, especially now with the increasing frequency of vaccines sweeping the country. Even the beleaguered entertainment venues and eateries are expecting a solid resurgence by the holiday shopping season.
鈥淭oday, many of our retailers have hit their pre-COVID numbers,鈥� she says. 鈥淣ot all, certainly, but those that got on board quickly and adapted are the ones doing better.鈥�
Better, but not perfect. Many retailers still need to get their online orders on track. Often over the past year, though in-store sales slumped, online numbers peaked. 鈥淥ne store was down 30 percent over 2019, but their online sales were up 900 percent,鈥� she reports. 鈥淵ou have to look at the big picture, and we have to figure if those sales are being recorded in the store where the merchandise is picked up. This will be important from a leasing standpoint as we continue to recover.鈥�
If there is a note of caution in Gronbeck鈥檚 outlook, it comes in the issue of minimum wages. With , some retailers, especially restaurants, are having trouble staffing up.
鈥淭hey have to raise wages to get people,鈥� she says, adding that even a kid 鈥渂ussing tables has to get paid $15 an hour. You raise your wages, you have to raise your prices and all of a sudden people start thinking twice before they come into your place.鈥� Given the economic hardships of the past year, raising wages might just be a case of injury on top of injury.
That hot-button issue surprises many of her colleagues when she brings it up. 鈥淭hey think we鈥檙e out of the woods,鈥� she says. 鈥淚鈥檓 incredibly optimistic. But we鈥檙e not out of the woods just yet.鈥�
鈥淎s long as retail tenants are willing to change and adapt to the new buying habits of Americans,鈥� says Gronbeck, 鈥渢he right retail will not die. People want to have a shopping experience.鈥�