RETURN TO RETAIL QUEUES DEMONSTRATE THAT BRICKS AND MORTAR RETAIL IS FAR FROM FINISHED
Published 11 May 2021
‘It’s the end of the High Street as we know it’; ‘People are not going to turn back from shopping online’; ‘Retail has changed forever’ – these are just some of the confident predictions made by commentators in the light of the COVID-19 pandemic.
Unfortunately for them, no-one seems to have told the consumers. After a brutal five months of closure, non-essential retail was back last week, and judging by the enthusiastic welcome it received from shoppers, reports of the death of the High Street appear to be somewhat exaggerated.
You only needed to be outside Primark in Norwich city centre early – very early – on that first Monday morning. Shoppers were queueing from 3am, and that clamour for the in-person shopping experience hasn’t let up since. So much so that Primark has announced that it is to return the £121 million it has received in furlough payments to the government, confident that it will soon make up the profits lost during the extended closure.
Primark, of course, is famous for not having an online offer. This is something that many experts regard as the death knell for any retailer. Again, no-one has told its customers.
Clearly the crowds flocking back to our city centres post-lockdown reflect a general relief that it is safe to come out again. Certainly shoppers’ behaviour has changed during the pandemic, and some of that change will stick. But what the past fortnight has shown is that the British love affair with shopping – real, in-store shopping – has not diminished.
This is good news for investors in retail property, but that isn’t to say that the choices investors will face will not be affected by what has happened over the past 12 months – because of course the world has changed in many ways.
Commodity online shopping has indeed grown, and those bricks and mortar retailers which are succeeding are those which can offer a shopping experience which is not available online, value through its shops which can’t be matched by internet retailers, or both. Destination shopping is now the name of the game, and that will alter the type of property which will be attractive to the investor.
Above all, it is crucial to look at the reletting potential of any retail property, and not just buy based on the existing covenant. Landlords of chain retailers in particular have been through a series of CVAs and/or bankruptcies, leaving them in some cases with sizeable and difficult to let units.
Perhaps the most attractive type of retail property is now something which will be accessible and affordable for the kind of niche, independent retail businesses which are filling the gaps left by the well-known bigger High Street names.
The High Street is certainly changing, but as long as there is such an appetite for shopping as we have seen in the last couple of weeks, retail is a long way from being dead, and there is good value being demonstrated in high street retail investment property, as long as the fundamentals are right.
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