• In the latest CBRE survey of retailers, 90.9% of respondents said that they had requested a rent reduction from landlords at existing stores as a result of the fall in turnover.
     
  • Retailers who had made requests for rent reductions were then asked the size and length of the reduction (Figure 10). In terms of monthly rent, the most frequent reply was 'a 20- less than 30% reduction for three months'. However, retailers who judged that it would take longer for sales to recover have requested extended rent reductions.
     
  • When asked whether the pandemic had changed their plans for opening new stores, 21.8% of respondents replied that they 'have surrendered, or intend to surrender, the lease on' at least one existing store. Reasons given included that they had closed stores that were intended to cater to inbound demand, or had decided to close stores that were only managing to break-even and whose performance was unlikely to improve any further.
     
  • Respondents were asked about their store opening strategy once the pandemic has been brought under control. The most frequent reply was 'refrain from opening new stores for the next year' (34.2%). Reasons given for 'refraining from opening new stores' included the closure of unprofitable stores; concentrating on reorganising and integrating store networks.
     
  • CBRE has observed that many retailers operating stores in the main retail areas believe that their store opening strategies in the coming years will change compared to before the pandemic. The change can be categorized into the following three factors: The first is enhanced integration of brick-and-mortar stores and e-commerce platforms; the second factor is the need for retailers to open stores of a size best suited to their purpose and opening new stores at the opportune time; and the third factor is a shift in the perception of the most attractive and desirable areas for stores (some retailers are beginning to focus on establishing stores in residential areas). However, on the third factor, it is worth noting that retailers for whom maintaining an upscale brand image is crucial, such as luxury brands, still intend to retain a presence in the most prominent locations in the main retail areas.
     
  • Based on the above three factors, CBRE expects new store demand in main retail areas to be driven by sectors and formats such as showroom-type stores, pop-up stores and luxury retailers - all of which will feature locations for consumers to experience products and brands. Showroom-type stores aim to satisfy consumers' desire to experience the actual product while enhancing online sales. Pop-up stores are limited to a specific time and place with consumers seeking exclusivity. Luxury brands continue to create stores that exemplify and articulate their brand; focusing on defined locations/areas for opening new brick-and-mortar stores.