Post-Pandemic Recovery Changes Retail Landscape

America’s malls and shopping centers were poised to open this week after stay-at-home orders across the country prohibited the majority of retail stores from opening its doors since March.

However, the pandemic has shifted how consumers purchase household items and groceries. Fears of catching the virus, social distancing measures mandated by states, and availability of online delivery may permanently change the kind of retail space that businesses occupy. Whether a retail company will survive,  be ita grocery chain or clothing company, may depend largely on how they navigate the new landscape and transition to different commerce channels, such as online shopping.

Grocers that have online ordering and grocery delivery, such as Wal-Mart and Albertsons, are looking to automate their ordering system with robotic fulfillment facilities. Former shopping malls are now  converted to become fulfillment centers for Amazon. For retailers, some are negotiating with landlords for rent relief, as the pandemic has threatened retailers after a period of stores struggling to keep up in an increasingly e-commerce society.

BTIG analyst Michael Gorman said in an interview to S&P Global Market Intelligence  that he thinks landlords who  “develop cutting edge micro-fulfillment centers in their properties” could be more profitable after the pandemic, as shoppers shift their spending habits to online orders and delivery. Stores that already have multiple ways for shoppers to buy their products, whether online, via pick up, or delivery, will survive the pandemic better than typical brick-and-mortar stores without an e-commerce presence.

And indoor shopping malls may have more vacancies as retail giants declare bankruptcy. Companies without a previously established online presence suffer the most, while companies such as H&M, which posted its first quarterly loss in decades, still had online sales rise 32%, according to Reuters. Retail companies that have permanently closed stores in 2020 include JCPenney, Tuesday Morning and Pier 1, with the pandemic being the nail in the coffin for those retail giants.

Businesses such as Instacart, which provides a grocery delivery service to the consumer, has seen a 150% increase in its workforce since March. While some shoppers will still prefer the in-person experience of choosing their own produce, online grocery sales grew more than 24 percent to $6.6 billion in May, according to a Mercatus Grocery Shopping Survey.

For the shoppers who still prefer to do make their own purchases themselves, the federal guidelines that were in place during the pandemic may become a fixture in some stores. Outdoor shopping centers that house grocery stores are going to be more in demand as experts say transmission outdoors may be lower, whereas shopping malls may experience higher vacancies.