The last stretch of road has been long and rough for the world of retail real estate. Once one of the most profitable property types out there, the sector can’t seem to catch a break. First e- commerce slashed retail foot traffic. In response retailers and property owners invested in the retail experience, hands on activities and recreational offerings that online sellers wouldn’t be able to replicate. Then a deadly virus spread around the world putting a temporary moratorium on shared spaces and public gatherings. Due to this, we’ve now seen bankruptcies and closures at retail names large and small.
Fast forward to the end of 2020. While we all want to turn the page on a painful year, the reality is that even with several vaccines now approved for use and being deployed in various countries, COVID-19 has cast a shadow that will inevitably spill onto the pages of the 2021 history books as well. Producing and deploying such a large amount of vaccine is very time consuming. Plus, many people are concerned as to the vaccine’s safety or oppose it on political or religious grounds. We are approaching the finish line but the last few steps of a marathon are always the hardest.
In order to make up for what could be almost two years of losses, retail owners need to be ready to respond to a gradual return to normalcy step by step over the coming months. First, this means being on top of the COVID-19 best practices. Mask use should not stop any time soon, for one thing, since the vaccines don’t promise perfect protection and many people will be unable or unwilling to get the vaccine in the first place.
Even beyond the safety aspect, there will be some adaptations that persist well into the future by virtue of their usefulness. The best example of this is omnichannel retailing, which encompasses order fulfillment solutions like delivery and “Buy Online, Pickup In Store.” As we discuss in our updated research report on retail risk and opportunity amidst the outbreak, these are efficient approaches to retailing allow more shoppers to take advantage of smaller stores and can consequently reduce overhead expenses for the retailers. Landlords should work to ensure that their spaces are properly outfitted to enable these solutions, from establishing parking lot space dedicated to order fulfillment, to considering constructing climate controlled outbuildings for order runners.
On the other hand, there are some other responses and adaptations that may not need to stick around for too long. Thermal cameras to check temperatures and plexiglass dividers might not be around for too long once we reach widespread vaccine distribution. And, critically, event programming and social gatherings may return to a semblance of normalcy as vaccination rates rise.
A big part of the return to normal operations, experiential retail and all, will be finding some way to ascertain whether or not people received the vaccine. In the Steven Soderbergh film Contagion, a movie which has been noted for its similarities to the COVID-19 crisis, people received uniquely identifying bracelets upon getting vaccinated. But a better, harder to spoof real-life solution might be phone apps that confirm vaccination status, similar to how some transit passes operate in the present day. Stores could scan their patrons’ apps in order to determine vaccination status before letting them access certain events or even the store itself.
This approach is not without its challenges, though. There will certainly be privacy concerns and accusations of discrimination. And of course, not everyone has a smartphone, either. Landlords and retail operators alike will need to work together carefully to clearly elucidate their access policies as we return to more activities and gatherings in our public and shared spaces in order to head off discrimination complaints before they have a chance to manifest.
Beyond the technical challenges of the great retail reopening, there are logistical ones as well. In our report we discuss how proactive landlords will have to be with hiring policies for roles like security, cleaning services, and groundskeeping, since these types of crucial employees may not come into work if they or members of their households get positive COVID-19 tests. Continuing to manage these scenarios will still be a fact of life, even while the vaccine is rolling out.
Make no mistake, the arrival of the vaccines is an amazing thing, and something we should all be thankful and excited for. But while store owners and landlords would love to start planning their biggest-ever sales and welcome back to the mall events, the reality is that we are far from out of the woods yet. For all of our sakes, our collective excitement to get back to the lives we knew must be tempered with a continued pragmatism in order to keep the most vulnerable amongst us safe now that we are so close to being free from the tyranny of this virus.