Before the COVID-19 pandemic hit, the brick and mortar retail industry was already trying to keep up with rapidly changing consumer needs and growing digital competition. Any challenges were amplified once the pandemic took hold and every market had to reckon with its greatest, and newest, upheaval. To better manage these challenges and develop quick and effective solutions, landlords partnered with retail tenants and have since experimented with concepts and innovations that are fast becoming a permanent fixture in the industry’s survival toolbox.
Leverage and Monetize Vacant Space
When most entertainment-driven businesses, like arcades or movie theatres, were forced to shut their doors at the pandemic’s genesis, both the businesses themselves and the shopping centers and plazas they often anchor felt the impact. Cineplex, a Canadian move theatre chain, reported a $178.4 million loss in the first quarter of 2020 alone. Even when shopping centers were able to welcome back customers, the doors of these theatres remained closed, leading to an ongoing loss of any spillover foot traffic.
To mitigate the effects on all tenants, some landlords saw an opportunity to activate their most square footage-heavy spaces. By working with tenants, they can convert these spaces, such as undeveloped land or parking lots, into pop-up movie theatres, food courts, and art installation sites. Cherry Lane Shopping Centre in Penticton, British Columbia, now features the local favorite food truck, Indo Rasa, at the parking lot as an added outdoor dining option to center guests. These new, short-term concepts can boost traffic, re-establish consumer and community engagement, maintain ongoing business operations, and drive sales for all tenants involved.
As a result of physical distancing requirements, landlords and tenants can also introduce new spaces or reimagine untraditional use cases for space, like queue areas. Although these can often be tight areas located outside brick and mortar stores, both landlords and tenants have an opportunity to treat these spots as an extension of physical stores. As engaged and eager-to-shop consumers cluster in these areas, landlords and tenants can activate them from a design and marketing perspective to monetize the space and drive future sales.
Convert Non-Industrial Assets into Fulfillment Centers
A recently released Colliers research report revealed that 83% of retail tenants are reacting to the pandemic by modifying their business in some form and 74% of retailers are exploring new sales channels. To better support these evolving business plans, landlords can work with existing tenants to leverage any neighboring vacant spaces into e-commerce distribution locations. With distribution and fulfillment centers on the rise and a tight industrial market, it works to the advantage of both the landlord and tenant to drive industrial use of non-industrial assets. This strategy would allow tenants to more easily initiate a less investment-heavy transition into an omni-channel business model.
Humanize Contactless Shopping
Above all else, the client experience should remain a priority for both landlords and retailers. There is still a layer of hesitation for consumers considering a return to physical retail and it is important to create and communicate safety measures that reassure guests, but also allow for a seamless shopping experience. Personal shopping services and curb-side delivery are two options that many landlords and tenants can explore when partnering to secure a competitive position in the market. British Columbia’s Lansdowne Centre and Cherry Lane Shopping Centre offer guests a parking lot pick-up program to provide a contactless shopping experience. This option allows shoppers to safely purchase items over the phone and receive their order from an employee of the store, all while sitting in the comfort of their vehicle. A seamless contactless shopping experience can rebuild consumer trust and lead to return traffic.
For unique shopping formats that weren’t suited for e-commerce in the past, like outlet shopping centers, there is also now an opportunity for landlords to bring personal shopping into the digital age by developing mobile apps that rely on tenant support rather than investment-heavy algorithms. These allow guests to shop remotely via online shopping specialists who know the products and the best promotions offered by each tenant, thus delivering that premium experience to each guest, especially those who prefer a more “human” shopping experience. An added advantage to using mobile technology is capturing an already mobile-engaged audience that appreciates and is familiar with this type of tech.
Fulfill Dining and Delivery Demand
In recent years, retail experts have identified food and beverage dining experiences as the new destinations and anchors of enclosed shopping centers, moving away from fashion retail. The pandemic hit the restaurant industry, particularly locations dependent on shopping center foot traffic, decidedly hard. To support these tenants, landlords have quickly mobilized to find solutions.
At Lansdowne Centre, vacant spaces were closely evaluated for expanded seating opportunities and the newly vacant events space adjacent to the food court was selected for its capacity to support diner overflow. Because consumer behavior has naturally shifted during this time to rely on delivery, landlords and tenants who have implemented solutions to address this shift are performing better. Creating connectivity by developing mobile apps or other virtual marketplaces that support one-stop direct ordering from food halls, high-end restaurants, and QSRs allows consumers to support not only a variety of food and beverage tenants, but also other retail tenants featured on these platforms, creating a simulated shopping center environment of sorts.
The expense of quickly launching new technology has driven many to explore alternative options that still support a pick-up and take-home delivery service, which is not expected to waver in demand even once the pandemic reaches its end. Parking lot pick-up programs, like the one at Lansdowne Centre, directly support pick-up orders without requiring tenants to rely on third-party delivery service providers; others have designated parking areas for tenants’ third-party delivery service providers. Despite the consumer behavior shift, many shoppers still prefer a traditional dining experience and many landlords have worked with stand-alone and mall anchor restaurants to expand their dining areas on to parking lots and other vacant outdoor areas. By leveraging these vacant spaces, tenants can recover some of their traffic, while also fulfilling the needs of consumers seeking a touch of normalcy.
Although the pandemic is constantly creating new challenges for retail to face, the industry has proven extremely adaptable in the past. Retail tenants and landlords who rely on one another’s strengths, leveraging existing opportunities and collaborating on innovative projects, will survive this transition and have the right tools to build future success.