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Trade : Analysts: Malls closed over coronavirus lose 20 mln euro daily
The stores at shopping malls in Romania closed due to the coronavirus outbreak are losing up to 20 million euro ($22 million) per day from the lack of sales, real estate consulting company Cushman & Wakefield Echinox said on Friday.
"The decision of the authorities to temporarily suspend the purchase of goods considered non-essential from the shopping centers affects more than 9,000 stores and each day when they are closed equals between 15 and 20 million euro lost from unearned income," Cushman & Wakefield Echinox said in a press release.
The military ordinance issued in the context of the Covid-19 pandemic makes an exception for suspending sales at stores that mainly sell food, electronic, pharmaceutical and pet shop products, as well as cleaning and optical services.
The modern retail stock comprising shopping malls, retail parks and commercial galleries in Romania sums up about 3.9 million sq m, of which 23% is represented by supermarkets and hypermarkets, the main category of stores that remain open, according to Cushman & Wakefield Echinox data.
The estimated unearned income takes into account an average level of sales in a normal activity time frame for a shopping center, at around 2,000 euro/ sq m per year, the consultancy explained
In the international social and financial context, for each day of non-operating stores, the big retailers and the fashion houses with tradition have started to seriously get involved in the fight against the spread of virus, in order to reopen their stores sooner. The largest retail groups, such as LVMH or L’Oreal, have started the production of disinfectants, while H&M or Inditex reoriented towards the production of medical equipment for protection. As this happens, at the moment the fashion and beauty retailers have huge stocks of unsold products, Cushman & Wakefield Echinox analysis reveals.
"“Unlike the well-known companies, such as LVMH, L’Oreal, H&M or Inditex, many other international and local retailers will struggle to survive in this unprecedented context. The global interconnection has never felt so real, from the emotional state of mind, up to the economic and financial concerns," Cushman & Wakefield Echinox retail agency partner Bogdan Marcu said.
"The solution we see relies on a dialogue between all the players of the industry, banks, retailers, owners of commercial spaces and shopping centers and the state institutions. Retail has an essential role in today’s modern social space and will have an important role in the revival of economy, which is why it needs sustained support during this period."
On the other hand, depending on how it will succeed in managing the large volume of current demands, the online commerce could become a long-term winning segment, by preserving a significant share of the retail market gained throughout this period. While online commerce for luxury (or non-essential) products has dropped dramatically over the past month, retailers operating food and home products that were already ready for online operations have gained the momentum, the analysis reads.
"Apart from the food, pharmaceutical, maintenance and pet shop products, online commerce is currently the only option for consumers. Thus, depending on how long the social distancing will last, it is possible that the habit of ordering from the home comfort to change the way people purchase products in the future, especially food or other common products," Bogdan Marcu added.
Cushman & Wakefield Echinox offers services to investors, developers, owners and tenants in all segments of the real estate market.