The closure of all establishments and shops that are not considered essential during the state of emergency fully affects the retail market, both on high streets and in shopping centres. According to an international report published by Shoppertrack, in European markets there is a strong inverse relationship between the level of infection of the population and the decrease in footfall.
Consumer expenditure will recover in line with the main economic indicators and their confidence in the system.
But the closure of physical stores does not imply the suspension of the retailers’ business. Large retailers will be able to balance sales volumes thanks to their online platforms. In fact, e-commerce will definitely benefit from the lockdown of the population.
The challenge for retailers will be whether they can provide the products of virtual shopping, as the dependence on China’s industrial production could compromise the stock of certain items in the retail market, as well as parts and other items processed in the manufacturing industry.
In any case, the drop in turnover volume that will occur in the retail sector is already evident. Consumer expenditure will recover in line with the main economic indicators and their confidence in the system. The evolution of the labour market, which could incorporate 4.5 million people in the short and medium term, will also determine society’s purchasing power.
Despite the notable position that e-commerce holds in the retail market (currently it is estimated that 5% of retail sales are made through online channel), most of the activity will continue to be developed in physical stores, which provide experiences impossible in the digital world. Meanwhile, the cultural factor will continue to play a large role in the promotion of commercial activity on high streets and in shopping centres.
The temporary shutdown of physical activity could favour a resizing of the commercial networks of large retailers, as well as the closure of more local shops, which would increase the vacancy rate both on high streets and in shopping centres. Possibilities could present themselves to investors with a more opportunistic profile.