Retailing in

Unprecedented Times

COVID-19 Impact
As COVID-19 continues to
spread across the planet and its
impact on the global economy
across many sectors manifests,
Colliers International explores the
Coronavirus’ impact on the
MENA’s retail and development
sector, exploring how retailers
and developers alike can adapt to
ensure resilience in a period of
great uncertainty.
April 2020 | COVID-19 Edition
Retailing in unpresented Times | Colliers International

Whether voluntarily or due to government mandated lock downs, hundreds of

thousands of physical stores across the planet remain closed, drastically impacting
not only brick-and-mortar sales but also reducing retailer’s ability to service online
orders in store. As the virus’ impact manifests across all sectors of the economy,
consumer confidence is likely to be dampened, further impacting sales and increasing
the likelihood that the impacts on comparison retail will be felt for months to come.
While many retail categories are reporting massive reductions in both foot traffic and
sales, impacted by both anxious shoppers avoiding public spaces and government
mandated closures. However; grocery stores continue to remain open providing
consumers with much needed essentials. Many grocery store chains are reporting
sharp increases in sales, although any increases in profit are likely to be somewhat
offset by increases in staffing, sudden changes in supply chains, temporary pay
increases for frontline workers and reduced opening hours. In addition to luxury
comparison retail and full-service restaurants, entertainment and leisure are proving
to be some of the hardest hit retail categories, with cinemas worldwide closures at an
unprecedented rate, both voluntarily and due to government restrictions. While full-
service restaurants have some ability to adapt, e.g. experiment with takeout / delivery
options, dedicated entertainment & leisure facilities remain closed indefinitely due to
their social nature. Colliers International explores the Coronavirus’ impact on the
MENA’s retail and development sector and how retailers and developers alike can
adapt to ensure resilience in a period of great uncertainty.

“Overall, we are seeing retail as one

of the fastest sectors to recover when
the market bounces back to normality “
 Shopping centers continue to close as governments implement varying
degrees of lockdowns in a bid to thwart transmission of the virus.
Countries with nationwide mall closures include the UAE, Saudi Arabia,

April 2020 | COVID-19 Edition

Retailing in unpresented Times | Colliers International
Kuwait and Egypt, dramatically impacting retailer operations which will
have widespread implications, particularly for mall owners / operators
who are likely to see major disruptions in lease payments.

The UAE has decided to close all commercial centres and shopping
malls along with fish, meat and vegetables markets for a period of at
least two weeks. Centres that remain open in other countries continue to
implement screening measures such as thermal scanners, turning away /
redirecting visitors with high temperatures. As consumers are likely to
continue to avoid heavily trafficked spaces, the region’s smaller
community centres are likely to experience higher foot traffic.

Emaar Malls is the first Dubai-based retail developer to announce

its partnership with e-commerce marketplace noon.com launching
The Dubai Mall virtual Mall to increase the Mall’s “offline footfall”.

Al-Futtaim Group has announced a three-month rent-free period for retail

tenants to ease the financial burden of the pandemic. Dubai Holding and
Meraas have also announced relief packages.

Saudi Arabia has ordered the closure of all malls, restaurants, coffee
shops, public parks and gardens as part of the kingdom’s efforts to
combat the coronavirus pandemic. Kuwait has temporarily closed all
shopping malls, arcades, barber shops and salons in a further move to
combat the spread of coronavirus. Retail shops across Qatar were
ordered to close on 18th March, except for essential retail including
supermarkets, pharmacies and clinics. Food and beverage restricted to
take out / delivery only. Governments across Europe and North America
are mandating non-essential retail to temporarily close in efforts to
reduce the spread of the virus.

How could Shopping Center’s Owners Mitigate

Impacts:

Highlight with detailed press releases how your shopping centre is

taking measures to limit the impact of the virus through changes to
opening hours, disinfection protocols and any other changes as
they happen.

Larger shopping centres should adopt screening measures to

prevent suspected infected customers from entering.

Smaller centres should work to ensure that less sophisticated

retail tenants work towards taking online orders with temporary
measures including email / phone orders.

Increase social media presence and online exposure across

various platforms.

Retailers likely to seek assistance with rental payments - consider

short term rent breaks (that could be paid back over six – twelve-
month period).
April 2020 | COVID-19 Edition
Retailing in unpresented Times | Colliers International

In many markets across the planet consumers continue to hoard non-perishable supplies in fear that
quarantine will be mandated, and supply-chains will seize up, in turn forcing grocery chains to
implement limits on essential items. Thought to initially originate with Australian grocery chain
Woolworths, dozens of supermarket chains are now offering an “elderly hour” enabling vulnerable
customers to shop freshly stocked shelves for the first hour of opening. Online grocery retailers in
the UK, one of the world’s most sophisticated markets, are struggling to keep up with demand, with
virtual queues appearing that entails customers waiting before placing orders. Across many
countries' supermarket chains are entering into recruitment drives with tens of thousands of
temporary roles to keep up with demand.

How could Grocery Retail Operators Mitigate Impacts:

Larger sophisticated retailers should increase their online operations and work to streamline supply chains to keep up with
the anticipated high demand from online shoppers.

Grocery chains should publish press releases and post notices at entrances as to how they are working towards mitigating
impacts of COVID-19 through shortened business hours due to staffing, increased hygiene practices (such as disinfecting
stores frequently), contemplate restricting store capacity (e.g. how many customers permitted at once) and consider
introducing early morning senior only / disabled shopping hours to enable at risk sectors of society a chance to peruse
freshly stocked shelves.

Introduce rationing for essential items such as toilet paper, hand sanitizer, soap and food staples such as rice and pasta to
prevent hoarding and enable more consumers to access essential items.

Many grocery retailers are developing conspicuous striking initiatives that simultaneously assist shoppers and generate
publicity – examples of this include a Danish grocer charging customers regular price for the firsthand sanitizer and the
secondhand sanitizer at a cost of around USD 100 to discourage hoarding. A UK supermarket offers consumers pre-packed
food parcels that will contain an assortment of random, in stock, food essentials.

Grocery retail sales are likely to continue to surge as the outbreak continues, which will bring challenges pertaining
particularly to staffing. With layoffs possible from other retail sectors specifically F&B / entertainment / leisure, staffing
departments at grocery stores should work closely with retailers to help gain skilled customer service personnel.

Retail outlets across the UAE have installed placards and floor signs to educate customers on how to practice social
distancing.
Across the U.S. some of the most resilient retailers have refined their omnichannel
strategies by strengthening the role of brick-and-mortar stores to play an important role in
exchanging / returning online orders. Many of these retailers such as Apple, Gap,

April 2020 | COVID-19 Edition

Nordstrom and Nike have announced temporary nationwide closures of stores, not only

Retailing in unpresented Times | Colliers International

lowering ability to generate in-store sales but also losing the ability to service online
patrons. Luxury retail is expected to be particularly heavily hit as anxious consumers
tighten wallets and a key source of spending, international tourists, are denied visas /
entry. Major retailers across the region and the globe are temporarily shutting brick and
mortar operations with other retailers opting to operate reduced opening hours to allow for
enhanced cleaning (and staffing). Apple will be temporarily closing all stores outside of
Greater China until further notice. Nike, Urban Outfitters and Abercrombie & Fitch have
announced that they are closing many or all their retail stores around the globe until
further notice in response to the current situation.

How could Comparison Retail Operators Mitigate Impacts:

Strengthen omni-channel platforms and utilize the uncertain period to develop enhanced
relationship between online sales and brick-and-mortar stores.

Provide temporary discounts on online platforms to drive sales.

Offer additional incentives such as removing / reducing free shipping minimum purchases.

With both Italian and French luxury consumption and manufacturing hubs crippled by the
outbreak, there could be potential for local / regional luxury producers less impacted to
bolster production.

Enhance customer relations by increased social media presence, such as frequent

releases to keep consumers informed on how your brand is responding to COVID-19.
April 2020 | COVID-19 Edition
Retailing in unpresented Times | Colliers International

Governments across Europe and North America continue to order restaurants,

particularly full-service ones, to close temporarily. Full-service F&B outlets are
anticipated to be the hardest hit sectors of the retail industry. While full-service
restaurants are facing strong restrictions, quick service / takeout remain operational;
many online operators such as UberEats are offering temporary free delivery during the
outbreak. Across both China, Europe and the U.S, no contact delivery (e.g. couriers
leaving food at delivery addresses without encountering recipients) is increasing in
popularity. Health experts continue to assure that COVID-19 does not spread via food
consumption, however; many restaurants across the U.S. are introducing tamper proof
packaging to help reassure customers.

How could F&B Operators Mitigate Impacts:

Popular restaurants should continue to stay active on social media during this time to build
relationships with consumers; depending on interaction with consumers full-service restaurants
could experiment with creating To-Go Menus to enable sales continuing during periods where
dining areas remain closed.

In markets where restaurants continue to remain open, ensure that social distancing steps resulting
in a lower density of diners.

For quick service / take-away restaurants ensure that lines of communication remain open with
customers and push heavily on social media presence to alert customers both new and old that you
remain open for business - if sales begin to slow consider implementing discounts.

For those who do not yet offer home delivery, consider partnering with one/various delivery
platforms in the market.
 April 2020 | COVID-19 Edition
Retailing in unpresented Times | Colliers International
Across the MENA region cinemas have been ordered to close, mirroring closures
across Europe, Asia and North America. Fitness and leisure centres worldwide have
begun to close temporarily, with major names in the North American market closing
including Soul Cycle, Barry’s Bootcamp and upscale fitness centre chain Equinox.
Prior to closing, fitness chains worldwide had been drastically reducing capacity in
group classes to increase social distancing between members.

from the same

time last year and

How could Entertainment & Leisure Operators Mitigate Impacts:

Sophisticated fitness centre chains have begun to launch fitness platforms and apps such
as Variis from industry pioneer Equinox, enabling consumers to work out from home for
USD 40 per month.

Soul Cycle, a subsidiary of the Equinox brand, also unveiled a workout bike designed to
compete with industry leader Peloton. Buyers of the USD 2,500 bike will also need to
subscribe to the Variis app and will be able to access exclusive live-streamed Soul Cycle
Classes throughout the day.

China, who has been reporting a dramatic reduction in growth in new COVID-19 cases, has
recently unveiled plans to reopen closed cinemas. Cinemas are operating on reduced
capacity to ensure social distancing.
April 2020 | COVID-19 Edition
Retailing in unpresented Times | Colliers International

Colliers International is working with developers and retailers to create

innovative strategies that simultaneously address market uncertainty and
continue to progress with planned & upcoming development.

Comparison retail is anticipated to see a heavy hit in store visitor

numbers and subsequently sales. Colliers International is working with
retailers on a case-by-case basis to provide tailored guidance and
assistance during this difficult period.

Retail advice on temporary tenant relief

packages

Retail advice for your business post

COVID-19

Landlord / Tenant mediation

Analysis of retail portfolio & the financial

implications of temporary tenant relief
packages

Estimation of impact of COVID-19 on your

sales volumes and values and calculating
rent

Lease administration services

Cost-saving advice, implementation

assistance & advise on operational
expenditure
FOR MORE INFORMATION

Ricardo Bergsma Pedro Santos

Director Associate Director
Retail Advisory Services Retail Advisory Services
Middle East and North Africa Middle East and North Africa
ricardo.bergsma@colliers.com pedro.santos@colliers.com