Our Cross Border Retail Team is in direct contact with our local international offices on a daily basis and have been throughout the pandemic. Here is just a snapshot of what they are seeing across some of the key global retail markets…

North America

USA

• Average daily case count increased to almost 60,000 per day this week, and the Midwest is a focal point

• As of this week, over eight million Americans have contracted Covid-19

• Schools, offices and retail/restaurant are all on a wide spectrum of opening/reopening from state to state and city to city. Generally, most states are allowing people to go to the office. Most schools across the nation are opening with varying degrees of social distancing. Some, however, especially in NY and the West Coast (California), are still by and large on distance/virtual learning from kindergarten through to high school

• Manufacturing across all sectors has returned to normal for the most part

• The airline business, much like hospitality, has been severely affected by decimated tourism and business travel

• Movie theatre distribution is not far behind hospitality’s pain threshold and has experienced a sharp decline in ticket sales with the one bright point being the new film Tenet has garnered over $325m in global sales to date

• Overall retail sales in September were up 1.9% seasonally adjusted from August, and up 5.4% YoY. That was more than triple the 0.6% MoM increase, and almost double the 2.8% YoY increase in August

• Mall traffic is down double-digits to last year and on a rolling 12-month analysis. Although the recovery in mall traffic appears to be happening quicker than anticipated earlier in the Covid-19 cycle

• Two more retail companies went bankrupt in late August and early September, bringing the total bankruptcy count for 2020 to 46. The total number of bankruptcies exceeds the number of filings in any year since 2010

• F&B has also been devastated in the US with a large number closing permanently. Interestingly, best-in-class restaurants have not only bounced back, but because of higher check averages and increased consumer demand/waiting lists have seen YoY growth. Again, California and NY have remained the most restrictive states relative to dining rooms reopening and still prohibit inside dining for the most part

Canada

• Canada is now experiencing a second wave of Covid-19 cases, albeit it is hitting different parts of the country in varying degrees

• All of Ontario Toronto has returned to a modified version of stage 2 as of this week with the following restrictions in place:

• Social gatherings limits are capped at a maximum of 10 people indoors and 25 people outdoors

• Indoor food and drink service in restaurants, bars and other food and drink establishments (e.g. mall food courts) are closed

• Indoor gyms and fitness centres are closed

• Indoor cinemas, performing arts, and spectator areas at racing venues are closed

• No personal care services where face coverings must be removed for the service (e.g. makeup application, beard trimming) are allowed

• Attractions such as galleries, museums, cinemas and performing arts venues will be unable to operate; however, zoos and other outdoor venues will remain open with strict public health measures in place (maximum capacity numbers, etc.). Playgrounds will also be allowed to remain open

• Casinos, amusement parks, water parks and nightclubs are still banned from reopening

• Face masks are now mandatory across Ontario and Quebec and need to be worn in public indoor spaces and on all public transport. Other provinces are now looking to do the same

• Despite the beginning of Canada’s second wave of Covid-19, retail sales were strong during the summer months with the following sectors seeing some major gains:

• Clothing stores, up 142.3%

• Furniture and home furnishings, up 70.9%

• Building and garden supply stores, up 13%

• Cars and car parts, up 53%

• Hobby, book and music stores rose by 64.9%

• The summer sales numbers mean that sales in all those types of stores had surpassed the level they were at before the pandemic hit. Overall, retail sales are not just higher than they were before Covid-19, but they're also now 3.8 per cent higher than where they were a year ago, in June 2019

• Federal Government are now offering new rent assistance for commercial tenants that would see up to 65% of the rent obligation funded through new programs

• Suburban retail is experiencing a stronger comeback than city centres as most large corporations are not bringing their workforces back into offices until at least January 2021 at the very earliest, and there are no business travellers and international tourists fuelling retail sales in downtown areas

• Louis Vuitton opened a 7,000 sq ft store in Yorkdale last week. It reports sales of $1.5m in the first three days

• Starting to see interest pick back up from international retailers looking at expanding into Canada (that don’t have an existing store presence) which is positive

Europe

United Kingdom

• Covid-19 cases have risen sharply again in the UK over the last few weeks

• The government has introduced a three-tiered lockdown system across the country to keep the virus under control and to try and prevent another national lockdown – Tier 1 (medium risk), Tier 2 (high risk) and Tier 3 (very high risk)

• Liverpool, Greater Manchester, Blackpool, Blackburn, and South Yorkshire are all in the highest tier of restrictions. That means people are not allowed to meet socially with anybody who is not part of your household, or support bubble indoors, and cannot meet in private or pub gardens. Pubs and bars must close unless selling food

• Retail in city-centre locations is being hit the hardest, particularly in central London given the lack of office workers and international tourists. Suburban and neighbourhood retail as well as retail parks performing best

• H&M online sales are up 33%. The stores that it has invested in (in terms of modernisation/refits) are up 25%

• NEXT successfully acquired the Victoria Secret UK franchise out of administration. As a result, it is seeking to acquire other well-known distressed brands; particular sectors of interest are Athleisure, Beauty and Homeware.

• Chanel bought the freehold of its Bond Street boutique for c. £310m, which was £70m more than the asking price

• Significant concern from the luxury retail sector over the government's recent decision to scrap duty-free shopping (would be the only European country to do so)

• A wave of CVAs being seen across the UK retail market including New Look, Select, Guess, Ben Sherman, Itsu, Wasabi, Pizza Express

• Current retail requirements include: Amazon Go, Decathlon, H&M Home, Peloton, Dyson, Sky, Aesop, Inditex and Uniqlo (these latter two in a select number of locations)

• Amazon continuing its expansion into convenience food with nationwide requirements for Amazon Go

• Decathlon has seen a sales rise during the lockdown of 14% leading to a demand for more high street stores as opposed to their traditional large out-of-town format

Ireland

• Ireland has seen huge spikes in Covid-19 cases in the last few weeks

• The second nationwide lockdown has just started and will continue for six weeks until 1 December

• The aim is to reduce the virus number to allow for December & Christmas to be as 'normal' as possible. Highest level of restrictions in place:

• Everyone except essential workers must stay at home

• 5km travel limit with no visits to other people’s homes

• All non-essential retail is closed

• Remaining open: Supermarkets, pharmacies, health food shops, homeware. F&B can remain open on a takeaway basis only

• Before this lockdown, city centre and large regional shopping malls were trading at approx 50% footfall and sales. Neighbourhood retail, retail warehouses and outlet malls were trading better than 2019

• Since the summer, landlords and tenants have been slowly agreeing deals for rent rebates and lease regears related to the previous three-month lockdown (March to June). This new lockdown will most likely delay those deals or bring them back to square one

• No direct financial governmental support in place for tenants, other than staff wage subsidies. The government recently released a Code of Conduct for landlords and tenants.

• Vacancy rates rising in city centre & large shopping centres. Prime high street at approx 20% now

• Big closures: Debenhams & Monsoon went into liquidation. Monsoon coming back in to take their own sites on three-year leases. Sports Direct/Frasers looking at a few Debenhams

• Demand is mainly from essential uses such as supermarket, discounters, chemists. Mainstream retailers still active: Primark, JD, Dealz (Poundland), Chemist Warehouse

• Demand for pop-ups on prime high street from retailers such as:

• Canada Goose

• Untuckit

• Peloton

• Active Requirements for Dublin (albeit on flexible leases with turnover rent or low rent):

• Sky

• Dyson

• Decathlon

• Lego

• Anthropologie / Urban Outfitters

• Morphe

• Rituals

• Aesop

France

• A curfew has come into place since last Saturday night for at least four weeks in several French cities/regions that have been most impacted by Covid-19 (including Paris, Lille, Marseille, Lyon, Saint-Étienne, Rouen, Aix, Montpellier, Toulouse, Grenoble). The curfew is from 9pm until 6am

• The biggest impact of the curfew will be on bars and restaurants

• Wearing masks is mandatory in all public spaces even outdoors

• The high street is till impacted (especially luxury retail) with falling footfall and sales

• Shopping centres are still being impacted, but footfall figures are increasing

• Out-of-town retail parks have very good footfall and are performing on a par with or in some cases better than pre-Covid-19

• Current requirements include: Big Mamma, IT, Groupe Bertrand (Burger King, Leon, Au Bureau, etc.), Miniso, Normal, Lidl/Aldi/Supeco, GiFi/B&M/Action, IKEA, TAO, Générale d'Optique, Pimkie

Italy

• Italy is now experiencing a second wave of Covid-19 cases

• The office situation is one week working from home, one week working from the office (to reduce the total number of people in the office at any one time)

• To avoid the risk of a potential second national lockdown, the government has asked people to smart work wherever possible and put a midnight curfew in place

• Retail and restaurants remain open but are being monitored very closely

• The biggest cities in Italy are suffering given reduced office workers and lack of tourism. High Street stores in these cities rely heavily on workers and tourists; therefore, some tenants are still negotiating rental reductions and extensions of rent-free periods to get them through this period

• Restaurants and cinemas have reopened and are slowly picking back up

• On the shopping centre side, consumer spend improved during August and September and recovered slight, but sadly now the situation has taken a turn for the worst again and plunging back down

• Shopping centre footfall has improved month by month (with September showing a -17,7% compared to 2019)

• Retailer turnovers have been quite good, with high conversion rates as consumers are shopping with purpose. October started in line, but has reduced greatly in the last couple of weeks

Spain

• To contain rising Covid-19 numbers, eight regions in Spain are currently in partial confinement (directly affecting 7.5m people). People can enter or exit the affected areas only on work, school or medical grounds

• Bars and restaurants must operate at 50% of their interior capacity and close by 11pm (last serving at 10pm). Cataluña has taken further measures and closed all bars and restaurants, allowing takeaway service only

• Public and private gatherings are limited to six people

• All shops are open with the strictest of hygiene standards in place

• Tourism has been washed away, and the Spanish city centres are empty. Proximity retail performing better than tourist-driven city centres

• Demand is weak – very few retailers expanding. Probably the most active retailers are international who don't have any/limited high street presence in Madrid/Barcelona to date and require prime locations at more attractive prices than pre-Covid-19. They are slow to finalise deals in the anticipation that rental prices will fall further

• Supply: prime areas demonstrating a slight rise in vacancy levels but not for the best sections of the streets. Definite rise in vacancy across secondary streets

• Strongest performers: supermarkets, DIY, homeware, sportswear

Germany

• Germany has seen a period of sustained recovery over the last two to three months with increased retail footfall and rising sales turnovers however this has recently changed

• Increasing number of Covid-19 infections with fears of a second lockdown – local lockdown already in place in Garmisch

• Higher restrictions for retailers with limited numbers of people having access to retail stores

• Masks are mandatory inside shops as well as when walking in public

• Restaurants and leisure facilities have a curfew in place of 11pm and must be closed between the hours of 11pm and 6am

• Shopping centres are being more impacted than high street locations

• Smaller cities are performing better than the larger cities due to the lack of tourism

• Retail rents are increasingly under pressure

• ECE are building a multichannel platform enabling in cooperation with Google which will enable customers to check availability of product ranges in local retailers and name brand manufacturers

• Amazon is very active in the market

Switzerland

• Retail in Switzerland is doing well compared to other European countries, and future sale growth post-Covid-19 is anticipated

• So far, there have not been any major adjustments regarding bankruptcies etc. on the market. However, this would change massively in the event of another lockdown

• Mask-wearing compulsory in all retail stores, shopping malls, restaurants, bars, clubs (alcohol consumption is only allowed when sat down at a table), in all public buildings including offices, libraries, train stations, airports, etc. as well as indoor sports facilities

• Current requirements we are seeing across Europe include:

• Dyson

• H&M Home

• Lululemon

• Fabletics

• Peloton

• Polestar

• LEGO

• LIDL

• Xiaomi

• Miniso

• Samsung (for their new smaller format store)

• SKY

• Lacoste, The Kooples and GANT (Maus Frères Group)

• Saint Laurent – looking at Spain and Portugal and recently opened in Frankfurt

• Kering – Spain

• Moncler – Spain

• Big Mamma

Asia

China

• 600 million people travelled domestically within China during the ‘Golden Week’ eight-day national holiday (1–8 October). Daily sales during this period were 4.9% higher than the same time last year, and estimated revenues would be c. US$68.6 billion as per the government’s projection

• There have been no local or imported Covid-19 cases reported for several months

• High streets and shopping malls are packed, and footfall is rising. There were 15-minute queues to get into the car parks of some of the most popular malls during Golden Week at the beginning of October (like IPM Mall)

• The government rose the cinema capacity from 50–75% in mid-Sept. During Golden Week, gross revenue for box office hit $580 million, with nearly 100 million tickets, making it the second-highest box office during the National Day holiday in Chinese film history

• The two main restrictions that remain are no international travel outside of China (other than Macau if people take a test on entry/exit) and that people have to wear masks on the subway in all cities in China

• People in China are hoping that the situation will further improve before Chinese New Year next February, when the likes of Thailand and Singapore (which are now a lot more stable) might open up

• China has not experienced a second wave (apart from in Beijing) – Japan, Korea and Hong Kong, therefore, have all been much more impacted retail market-wise

• Luxury retail spend continues to rise, particularly on the back of people not being able to travel

• Luxury and Athleisure have been the two least affected sectors during and post-lockdown, with a number of luxury brands and domestic Chinese sports brands expressing an interest in further expansion

• Current requirements include:

• On Running

• Canada Goose

• Moose Knuckles

• Maison Margiela

• Lululemon

• Patagonia

• Arc’teryx

• ARKET

• ECCO

• POP MART

• IKEA

• Samsung (for their smaller format, they’re taking advantage of the Huawei situation)

• Five Guys

• Blue Bottle

• Arabica Coffee

Hong Kong

• In Hong Kong, rents have fallen dramatically but have now levelled off

• Retailers are starting to look at spaces and accept 'new normal' conditions

• Covid-19 cases are relatively few, but their biggest issue is the lack of international tourists coming into the city. The market will improve once tourists start to visit again, however, it's uncertain how many will return and how quickly when the borders do reopen

• Consumer spending dropped to HK$25.6 billion (US$3.2 billion) in August, contributing to sales for the first eight months of the year, falling 30% YoY

• Seeing growth in supermarkets and grocery stores because people now choose to dine in within the CBD area after work as opposed to dining out in restaurants

• The team is mostly working with F&B brands now. Team has done 40 F&B deals since the beginning of this year, and most of them are in the suburban areas

• Decathlon opened an 8,000 sq ft store last week

• Sales of cosmetics are down 50%, luxury down 70%, Zara IFC store is still 40–50% down

• Retail performance in residential and suburban areas is much better

• Gyms, cinemas and nightclubs are allowed to reopen now with social distancing. For example, nightclubs cannot exceed 50% of normal capacity, and the cinema’s capacity is 75%

• Blue Bottle is going to take a unit at IFC – this is going to be their second store in Hong Kong.

Macau

• Uniqlo Macau flagship store opened last week (15,000 sq ft) and the performance is better than expected. Deal done by Savills HK Retail

• No new cases of Covid-19 in recent months – total cases stands at 46

• Average hotel occupancy rates are 20%

• Macau relies heavily on the gaming industry (70% of the total GDP). The casino malls have only recovered by 20–30%

• China has started to resume tourist visas and access to Macau since 23 September. However, Macau's tourist arrivals still plunged by 87.4% from a year ago during the first four days of the Golden Week holiday. It’s mainly because 1) the visa application process takes seven days, and, 2) all self-service visa kiosks remain suspended, leaving the government's visa-processing capacity severely constrained

Singapore

• With the continued safe distancing measures in place, retailers and F&B operators are seeing mixed sales performance. The lack of tourist spending has been compensated for by increased local spending in some F&B establishments while many others chose to close down even before the economy was partially reopened

• Cinemas continue to see very slow ticket sales as safe distancing remains strict, while nightspots continue to remain closed until the government decides otherwise

• Established KTV chains close for good while entertainment centres continue to see losses

• The 40,000 sq ft SuperPark at Suntec City has closed down, following the footsteps of KidZania and indoor playground Cool De Sac

• Leasing activity has picked up as landlords actively search for new tenants to replace non-performing ones or to fill vacancies urgently. Most of our leasing is focused on F&B, services and enrichment, with a few entertainment players looking for space in anticipation of the government easing restrictions in the future

• Retail remains very weak, and we expect to see more retail spaces being replaced by services

Australia

• The State of Victoria started its lockdown on 2 August, and it finished on 20 October

• Melbourne's CBD has been on lockdown since 2 August. Melburnians cannot travel up to 25km from their homes

• Rest of the countries are relatively free, and people can travel within the state

• Retail has recovered 85% in suburban areas

• The government is giving small businesses 70% rent relief and 50% rent relief for non-small businesses

• All retail in the CBD area has been suffering heavy losses due to the lockdown

• H&M is not doing well and has closed some stores. Uniqlo’s performance is better than other fast fashion brands

• Luxury retail only down 20% because domestic purchasing is increasing

• The office occupancy rate is only 50%

• Online retail growing fast, currently accounting for 40% of total retail sales

Taiwan

• All businesses are going back to regular operation without any restrictions

• The forecast for the 2020 retail sales will be down 10–15%

• People must wear masks on public transport

• No international tourists, but domestic travel is very popular

• Lululemon will open a new retail store in Taipei 101 and renew its lease with the Shin Kong Mitsukoshi department store in the Xinyi district. They also are looking for the best locations in Taipei and Taizhong

• Uniqlo is stable in Taiwan. It renewed a new 10-year lease with the landlord and has a renovation plan for the Taipei flagship store next year

• H&M is not doing well in the market. It closed a few locations and opened a new one in Zhongxiao East Road

• RIMOWA (franchise) opened a new flagship store in the Xinyi District

Korea

• Two-week quarantine is required for international travellers

• The level of social distancing required has been downgraded to level one, which means retail can operate during normal business hours

• People must wear masks on public transport

• Foot Locker has been active for expansion in Korea. It has signed five stores and expects to open in 2021

• Brands are still being conservative because of repetitive pandemics being seen internationally as well as in Korea

• CGV Theatre, the biggest movie theatre in Korea, is struggling to pay rent and operate

• Total sales of shopping malls have recovered 60%, but the fashion sector has only recovered by 40%

• Online sales growth being seen across the board

• Uniqlo is closing stores in Korea. Its flagship store in Myeong-dong will be closed for good next year

• For the F&B sector, sales have almost recovered

• Small F&B concepts (c. 50 sq m sites) are looking to expand e.g. cafés and take-out stores, but the larger concepts are limiting future openings at this stage

Thailand

• Hai di Lao signed LOI. Full deposit paid. Finalising on the lease agreement. Will hand over the premises to HDL on 22 October

• Active retailers include VOL Group, JD Sports, Lululemon, and % Arabica

Vietnam

• Traditional retail has been affected as the pandemic fallout, occupancy remains high (94%) on the surface. There are many struggles to remain relevant in the e-commerce rapid growth

• The well-managed second wave and good occupancy increased landlord confidence. Meanwhile, retailers are refraining from new openings, which leads to further delays of opening of new retail projects

• International brands are delaying entries, and curtailed expansions are further affecting developer horizons

• Asia Development Bank (ADB) report has the 1.8% GDP YoY growth in Vietnam leading South East Asia recovery. The positive economic outlook, strong domestic consumption, and effects from free trade agreements (FTAs), especially the latest EVFTA will all underpin retail in Vietnam. Vietnamese and EU retailer collaborations are expected to support more successful entries and expansion

India

• Strict enforcement of lockdown will continue in containment zones until 31 October. The positive sign is that there is a declining trend in detection of new infections; the growth of Covid-19 cases has dropped below 1% per day. At its height, the growth rate was 7% per day in May 2020, but since then there has been a steady decline

• Since the virus spread is moving from urban to rural, hence containment zones will be demarcated by the district authorities at micro level

• No international air travel except as permitted by Ministry of Home Affairs. India already has air bubble arrangements with 13 countries

• Metro services had resumed in a graded manner across the country from September, except Maharashtra. Metro services in Mumbai will resume from 19 October

• Multiplexes/cinemas/theatres will operate up with up to 50% of their seating capacity, from 15 October, except in states like Maharashtra, Tamil Nadu, Kerala, Chhattisgarh. In closed spaces, a maximum of 50% of the hall capacity will be allowed, with a ceiling of 200 people

• Entertainment parks to reopen from 15 October with up to 50% capacity

• Swimming pools used for training of sportspersons to reopen from 15 October

• Most states have allowed reopening of bars since October. Restaurants and cafés have been open from early July in Delhi, and from early October in Mumbai

For a more information please contact Laura Salisbury Jones.

Learn more about our Prime Global Retail Team (PGRT).