CBRE report highlights Covid-19 impact on Asian retail
The coronavirus outbreak has significantly disrupted retail consumption in the Asia Pacific region, according to findings in a new CBRE report.
The study, Asia Pacific Retail Trends, focused on data for this year’s first financial quarter and analysed how the retail, hospitality and tourism sectors in the region have been impacted by Covid-19, with malls and shops throughout the territory compelled to cease operations during the pandemic.
The report showed a steep decline in consumer confidence, with indications of an economic recession likely on its way following the outbreak, with a decline in retail sales expected to be more significant than that seen during the global financial crisis (GFC).
Mainland Chinese retail sales contracted by 20.5 per cent year on year during the first two months of this year, although in March this contracted to 15.8 per cent, during which time retail operations gradually began to return to normal.
Several global retailers reported a strong recovery in sales in China since reopening in mid-March, although restaurants are taking longer to rally with some social-distancing regulations still in effect. The impact on the rest of the region is likely to be reflected in figures for the next financial quarter, said the CBRE report.
The report also found that airport retail, duty-free and similar tourist-related trades are in difficulty due to a major downturn in tourism and travel in general due to restrictions on movement. Leasing for retail premises has also suffered, with retailers seeking relief from landlords across the region, such as rent holidays and discounts. In some markets, landlords are turning to live streaming and online stores to offset a drop in footfall at retail centres.
Online retail in the region surged – particularly in fresh food categories – with purchasers staying at home to observe social distancing. Last-mile capacity constraints have compelled many retailers to leverage their physical networks – a trend that should serve to speed up the integration of retail and logistics.
The CBRE report said that, overall, Asia Pacific’s rental outlook for this year was revised downward in a decline that is expected to fall deeper than that during the GFC.