Retailers in Asia appear confident of a resurgence in sales next year as the impact of Covid-19 wanes – and many are eyeing an expansion of physical store networks, especially in China and India.
Real-estate company CBRE surveyed more than 150 retailers across multiple categories and found 65 per cent of them want to expand their physical store network, more than 90 per cent in China and India.
Ada Choi, CBRE’s head of occupier research & head of data intelligence and management, APAC, said this bodes well for landlords suggesting prime locations in city centre shopping malls and high streets will remain keenly sought-after, “as retailers pursue a flight to quality against the backdrop of stabilising rents and scarcity of available space in these locations”.
However, the research suggests that domestic demand will be behind the retail resurgence, perhaps questioning the potential impact on cities more dependent on tourist traffic.
“The retail leasing market continues to favour tenants, retailers that act quickly can renegotiate and secure better locations or rental rates. At the same time, they can also incorporate more flexibility and protection into new leases,” she said.
Currently, just 10 per cent of the retailers surveyed reported that sales volumes were back to pre-pandemic levels, but nearly 75 per cent are optimistic about a “moderate or significant” turnaround next year.
A standout finding from the survey was how online retailing stands to shape the role of the physical store in future, given the significant consumer shift towards online shopping during the pandemic.
Retailers expect brick-and-mortar stores will play a greater role in last-mile delivery networks in future in tandem with a growing adoption of e-commerce. About 70 per cent see click-and-collect services becoming a regular offering with more online orders fulfilled and delivered from physical stores.
Vivek Kaul, CBRE’s head of retail, advisory & transaction services, Asia, said that to cater to changing consumption patterns from omnichannel retail, landlords should consider partnering with tenants or on-demand delivery apps to offer in-mall pick up of purchases at service counters or on-demand delivery from shopping centres.