The future of retail post-COVID-19
VANCOUVER -- You may have already noticed some of the changes on Robson Street; Stores that didn't reopen after pandemic restrictions were lifted, or read about the ongoing financial challenges of big chains like Victoria's Secret and J. Crew.
Now, experts say the pandemic has pushed the fast-forward button on the issues already facing the retail market, and your shopping experience could look very different, very soon.
"We were already seeing the retail industry struggling before this whole COVID-19 situation where stores closed," says Craig Patterson, editor-in-chief of Retail Insider.
"In January of this year, I'd mapped out over 1,000 individual store locations in Canada that were set to be closed or abandoned. And then we saw COVID-19 come along and (in) some cases, given the challenging financial positions that they were in, COVID-19 wiped out a few brands almost immediately. We're going to see at least one semi-big bankruptcy a week now in Canada with retailers. This is going to be a challenging time."
The list of stores that have already closed or filed for creditor or bankruptcy protection is growing. Lole, Frank and Oak, David's Tea, Aldo, Reitmans, Microsoft, Miniso, Lucky Brand, The Gap, Victoria's Secret, Starbucks – all are closing stores, restructuring or disappearing from main streets and malls.
While Vancouver's Pacific Centre is already undergoing extensive renovations to make way for the rumoured new Apple flagship location, Marty Weintraub with Deloitte says there are more drastic changes coming to malls, spurred on by the pandemic.
"We already saw a decline of about 20 (to) 22 per cent year-over-year between 2019 and 2018 in foot traffic into malls," the national retail leader for Deloitte in Canada told CTV News Vancouver. "We looked at February just before the shutdown, that again dropped to 42 per cent."
He says malls in the country were already looking at ways to digitize and streamline consumer experience before the pandemic hit, and now, with only half of Canadians even comfortable going to a physical store, they're going to have to innovate to get customers back.
"We're going to start to see malls integrate with residential and commercial and shopping, and a whole different range of experiences for consumers," Weintraub says. "The role of the store will no longer just be about coming in to buy stuff, but it's going to be about experiences."
Because of the pandemic, he says stores will need to do more to make customers comfortable shopping. And that may mean accommodating customers who aren't even there.
"We're seeing a lot of augmented reality or virtual reality technology start to get experimented with where, for example, I can use my smartphone and I can sync up with the sales associate at my favourite store or brand and have him or her literally virtually walk around the store showing me product," Weintraub says.
"If you'd asked me six months ago, I would have said (that would take) probably a couple years. Right now, we're thinking in the next 12 to 18 months. We're going to start to see these changes come in swiftly and quickly."
And Patterson says some companies are going to be reconsidering whether they need a physical store at all.
"People think that all retailers are getting rich. There are a lot of expenses to being a retailer, especially if a retailer has a storefront. It's no secret that retail rents can be quite high," he says. "If you have a physical store, there's the cost of staffing, the cost of buying merchandise if it's a seasonal business, like a fashion retailer. Now, there's going to be more (costs) with COVID-19, but ultimately, at the end of the day, margins can be quite slim or non-existent if a retailer is struggling."
Deloitte Canada recently released a report on the future of malls in the country. It says consumers will soon see a shift toward more food options, a bid to bring more people in.
"Food is the new fashion," Weintraub quips. "I think there will be also the notion of higher-end food choices as opposed to just healthy (options), but also potentially a bit more experiential, maybe featuring local community homegrown chefs that are young and up-and-coming."
And meanwhile, many malls are trying to figure out just what to do with the real estate that's suddenly opened up, without any prospective tenants. Some have even welcomed co-working and flexible work spaces.
But what the retail landscape on Robson or at the mall will ultimately look like is dependent, like so much else, on the outcome of the pandemic.
"We're going to start to see some incremental changes, probably (in) the next year or two and (that's) depending what happens with a vaccine," Weintraub says. "I think that's when some of the larger, more structural changes will happen."