Coronavirus: Shops will need ingenuity and goodwill to recover from pandemic – Martyn McLaughlin

Consumers remain wary of setting foot in stores, and ideas once dismissed as gimmicks may be required to restore their confidence, writes Martyn McLaughlin

Braehead and other shopping centres face a stern challenge with consumers still wary. Picture: SNS

If the scale of the challenge facing Scotland’s shopping centres as a result of Covid-19 was not already obvious, the distinctly subdued nature of their grand reopening served as a sharp reminder of the task in hand.

At Edinburgh’s Waverley Mall, where a range of hand sanitiser stations and social distancing measures have been put in place, along with vending machines to reassure wary shoppers, there was a mere trickle of customers yesterday morning.

Granted, the fact the weather was predictably dreich will have been a factor, but even so, the lacklustre turnout put paid to hopes that pent-up demand would lead to a steady flow of shoppers, at least to begin with.

It is an understatement to say that the weeks and months ahead will pose an extraordinary challenge for the centre and others like it. Coronavirus has brought about a seismic shift in consumer habits, one which may prove to be permanent.

A YouGov survey published last week indicated that seven out of ten people intend to frequent local shops more often in the future. Nearly a third (31 per cent) of those surveyed said they had tended to use shopping centres for most of their non-essential purchases prior to the outbreak. However, nearly half (48 per cent) now say they would be uncomfortable visiting one.

There are a range of factors underpinning this reluctance. Not only are such centres enclosed, with funneled entry and exit points, but they occupy out of town locations, meaning that many shoppers face using public transport in order to get there.

While shopping centres, much like office space, will survive in some shape or form post-pandemic, ensuring they have a long-term future will require ingenuity. That could mean more automation and experimentation, with sweeping changes to how retailers design the layout of their stores.

People will still come in person to shops, but most will only do so if they can get an experience which is unique as well as safe. That means more restaurants and activities, as well as concepts once dismissed as gimmickry, such as the use of augmented reality changing rooms.

It will take considerable time and money to even begin making those kinds of changes, however, and in the meantime, some centres and big name retailers are unlikely to survive. Scotland’s major towns and cities are fortunate in the respect that they have not followed some of their English counterparts in placing all their eggs in one basket by centring their retail strategies almost exclusively around enclosed shopping centres.

In Birmingham, for example, the regeneration of the city centre has been synonymous with the Bullring and Grand Central developments, both very much in keeping with the US-style mega mall blueprint. Since opening in 2003, the Bullring quickly became a major success story, attracting around 39 million visitors a year, with those numbers bolstered after the completion of the Grand Central complex a little under five years ago.

But in the wake of coronavirus, it is inconceivable that footfall will return to anything close to those levels in the short to medium term future. That is not just due to damaged consumer confidence, with shoppers wary to visit enclosed sites; it will be the painful legacy of a retail sector in freefall, particularly as the UK government’s furlough scheme comes to an end, and difficult decisions have to be made.

A sign of what lies ahead came late last week when John Lewis announced it plans to close its flagship store in the Grand Central centre. Its presence there is considerable, spanning 250,000 square feet, and the loss of a key anchor tenant is nothing short of disastrous.

The sudden and unexpected closure may give the owners of other shopping centres food for thought, and make them more amenable to negotiating rent reductions in order to maintain occupancy levels. Even so, many who are already struggling have already played that hand

Intu, the owners of Braehead, fell into administration last month after crunch talks with its lenders were unsuccessful, but not before it had announced it would cut service charge for its tenants by 22 per cent in the second half of 2020.

The firm was already facing challenges before Covid-19, with its Braehead subsidiary posting £991,000 losses in its most recent accounts. Such sums proved mere chicken-feed compared to the Intu group’s wider woes - a retail empire built on high levels of debt recorded a pre-tax loss of £2bn in 2019. It is hardly a strong foundation from which to mitigate the crippling impacts of a pandemic.

The obvious beneficiary in all this is the local high street, a place where people indicated they are more comfortable, and somewhere they are willing to spend more than before. This is undoubtedly a good thing, but the average high street is a forlorn place, populated by bookies, fast food shops, and shuttered units, and seldom are they home to the kind of discounted goods many working families will be looking for at the moment.

They too will have to innovate, repurposing stores and collaborating in order to not only offer people something they can’t get elsewhere, but a sense that they are investing in their local communities. None of these trends are particularly new. Having long suffered at the hands of online retail giants, shops have been forced to think anew about what they sell, and how they sell it, for the past decade.

The post-pandemic economy has lent these issues greater urgency. For many, it will be the final throw of the dice. There is an opportunity to forge not just a different high street, but a different relationship between retailers, those they serve, and the places they are based. Those that prosper will need patience, support, and goodwill.

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