Despite the negativity surrounding the retail market during the pandemic retail sales continue to grow. According to the German Trade Association (HDE), total retail sales in Germany during 2020 will increase 1.5% year-on-year13. This has been enabled by the Government support of jobs and a consumer base who have seen their costs reduced as a result of lockdown measures. However, it is clear there are winners and losers. Grocery retailers have seen an unsurprising increase in sales and we have also seen growth in hardware and home electronics. As a rather smaller branch of the retail trade, the bicycle trade is in the black. This is a positive development for the broad acceptance of the planned cycle path projects that are currently being implemented. On the flip side, the fashion sector has seen a significant drop in sales14.
An increase in e-commerce growth is putting pressure retailers and landlords to revitalise their physical retail offering.
Lockdown brings new
e-commerce clients
Traditional bricks and mortar retailers were already under pressure prior to the pandemic, e-commerce, was booming even before the pandemic, and has since gained further importance – a double-digit percentage increase is expected here compared to the previous year. The temporary lockdown in spring also led non-online-savvy consumers to use the internet and analogue shops to expand their range of products on the internet.
Changing inner cities
E-commerce penetration is increasing its stronghold on retail sales, putting pressure on the sector – both retailers and landlords alike - to revitalise their physical retail offering. 2020 saw the closing of the Galeria Karstadt Kaufhof department stores. Most major markets now have a prominent vacant building in the centre of their cities, with some earmarked for redevelopment into an alternative use. It is clear, however, that the conditions are encouraging several players to reconsider their offering. ECE have entered into a strategic partnership with Google15 with an omnichannel platform that creates an enhanced customer experience. Experience is the overall concept to attract clients resulting in a broader mix of uses. Reflecting this demand for experience, there is evidence showing a rising number of food options in inner cities and shopping malls. Looking forward we expect to see an increase in leisure activities and overall hybrid concepts. The decrease in demand by the traditional fashion sector will put downward pressure on rents, although strong retail markets, such as Munich will likely show some resilience.
Source: Click here
Footnotes
11. https://einzelhandel.de/presse/pressekonferenzen/12921-hde-herbstpk-2020 12. https://www.destatis.de/DE/Presse/Pressemitteilungen/2020/05/PD20_192_45212.html 13. https://www.ece.com/de/presse/einzelansicht/kooperation-zwischen-ece-und-google
