Social Distancing Shaping the Future of New Stores in Non-mall Locations

Social Distancing Shaping the Future of New Stores in Non-mall Locations

Retailers seem to be the ones inevitably suffering from the ever-changing measures to contain the outbreak which started in early 2020.

CBRE, a leading international property consultant, reports that social distancing protocols like temporary closures of shopping malls, shortened hours of operation during curfew to other restrictions especially for food retailers with reduced operating capacity, are shaping the future of new stores in non-mall locations.

Ms. Jariya Thumtrongkitkul, Head of Retail, Advisory & Transaction Services, CBRE Thailand, commented that, “Retailers are looking for several potential expansion options to grow their brands which is not just attaching their branches to major shopping malls to draw in more customers. F&B retailers are now considering reformatting stores outside shopping malls like takeaway kiosks, popup stores in transit stations, food trucks, temporary standalones or drop-off stores in rest area or gas stations.

Places not classified as bricks-and-mortar stores and those that usually come in non-traditional retail formats like strip malls and marketplaces are now becoming more and more popular among active retailers as relocating stores into non-mall sites can help to reduce restrictions that were imposed in response to COVID-19 such as unpredictable closures of shopping malls. We have learnt that no one knows if the situation will get worse nor how long it will last.

“Non-mall locations can be one of key locations by retailers in the future, mainly for smaller store concepts, as brands that opt for these types of locations can add a product mix to reflect local needs within a particular market. These formats can be more flexible on shorter-term lease contracts enable retailers to adapt and manage their financial liquidity more effectively and, at the same time, allow them to have flexibility in launching a new footprint with fewer restrictions and rules,” added Ms. Jariya.

For some time, gas station operators have sought to grow their non-fuel revenue by creating larger community hubs within their stations. An increasing number of restaurants and cafes looking to open compact shopfronts outside malls as well as cloud kitchens and food trucks have expanded into this format. In addition, IT shops, financial services and logistics providers expanding drop-off and pick-up points have been looking for roadside commercial properties including gas stations for rent during the pandemic.

According to Mr. Rathawat Kuvijitrsuwan, Head of Research & Consulting at CBRE Thailand, commercial retail locations in Bangkok are available in many different forms and each one has their own advantages and disadvantages. For standard retail formats like enclosed malls, community malls, and department stores, they come with the higher expectation that retailers will gain heavy foot traffic leading to constant revenue that justify the higher rents, less flexible lease terms, and – above all – more strict rules and regulations from mall management.

While choosing non-mall locations, retailers may face challenges in maintaining sales due to having less foot traffic, the lack of well-managed facilities in the long term, and limited local zoning that could restrict some retail activities. Challenges also include the right types of retailers and merchandises suitable for each non-mall locations. However, they still gain benefits from lower rents, convenient parking, fewer regulations, fewer brand competitors, and better visibility from the street as non-mall projects are usually accessible from major roads.

“While the shopping norm is being tested by social distancing and the consumers’ paradigm shifts, retailers are doing what they can to make their stores easily accessible from anywhere. However, retail landlords must also adapt to changing consumer shopping patterns to make sure their well-established malls are safe places for shopping as, sooner or later, customers will return to the malls as usual in the post-COVID-19 era”, Mr. Rathawat concluded.

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