Physical commerce remains key for brands to reconnect with their consumers
The pandemic has affected sectors of the global economy, although perhaps one of the most affected has been retail in major destination cities.
Struggling with a series of domestic closures and overseas travel bans, many primary retail destination cities struggled to keep the call for 2020 and 2021. Declining footfall, stores closely watching existing store networks, and emerging vacuum rates have forced landlords to reconsider renting. terms in some markets. Meanwhile, places like the UNITED Arab Emirates opened foreign borders and lifted restrictions relatively quickly, with the help of an extensive vaccination program, which helped their key sectors, such as real estate, tourism and retail, begin their recovery quickly.
As countries completely lift restrictions and stores rush to cover lost ground, Savills looks at key emerging trends in the sector as it seeks to return to normal.
Savills knows 4 global trends that will shape the main advertising destination cities in the long term:
#1 The world’s major cities will retain their status
New York, Paris and London have shown that they retain the key building blocks of a successful advertising venue and are expected to recover faster this year than other destination cities, according to Savills’ Retail Attraction Cities ranking, conducted as part of its Global Impacts 2022 studies. program.
Destination cities with a strong domestic market, such as New York, have already shown much higher degrees of resilience over the past 18 months and appear poised to recover faster.
By contrast, cities that rely on stable inbound tourism have experienced steeper declines and are expected to face a longer road to recovery. In Hong Kong, for example, where tourism is a key pillar of the city’s economy, rents fell sharply from the fourth quarter of 2019 to the 3rd quarter of 2021.
#2 Key emerging markets are poised to create opportunities for retailers
By triggering this combined recovery among major destination cities, the pandemic has highlighted many emerging markets that provide exciting opportunities for stores in the coming years. For stores to expand their global presence, there is no shortage of opportunities, especially in the Middle East and China. .
In the Middle East, there are already clear symptoms of demand from retailers, with a shift from purely franchised retail outlets to branded retail outlets in key locations, and a strong emphasis on luxury. In this regard, Dubai is leading the way.
According to Kenny Lam, Associate Director of Middle East Retailers, “In Dubai, many luxury brands are constituted through single-brand retail outlets through local franchises, but with the recent update of government policies, Savills foresees that foreign brands will come directly to recover the entirety of their retail stores. Cairo, Saudi Arabia and Bahrain have relatively prosperous national populations and lately also constitute attractive opportunities for luxury stores in this region.
Meanwhile, in China, along with the expansion of its major cities, there is an opportunity in its Tier 2 and Tier 3 cities.
#3 Retailers that have supported the expansion of the pandemic will drive long-term demand
While several brands have struggled to maintain sales during the pandemic, some sectors have outperformed, namely; athleisure, household items, wellness, F
These sectors have continued to perform well both online and offline over the past 18 months, and will continue to grow through revenue capitalization and store opportunities in the wake of the pandemic.
For them, the time has come to win new sites and expand their physical presence, as hot stages in smart spots could be available at much less expensive rentals than in 2019.
For luxury brands, today’s market dynamics may make it imaginable to relocate existing retail outlets into larger sets into more powerful locations, as well as supply opportunities for new entrants to luxury.
This has happened in the Middle East: 2021 has noticed a very marked construction in the domain of ultra luxury, with those brands accounting for 92% of new store openings.
#4 Stores will go from transactional to experiential
In many ways, the pandemic has accelerated trends in the sector that were already underway in previous years.
The role of the physical store was already evolving before the pandemic, from a transactional area to an experiential area that builds a memorable brand. In a digitized business landscape that has expanded further at the height of the pandemic, physical outlets have been transformed into ambitious destinations. that are halfway between recreation and entertainment.
In the Middle East, where malls are deeply rooted in culture and offer a respite from excessive summers, stores and operators have brought various experiential concepts to attract and remain applicable to their audience. Middle East mall operator Majid Al Futtaim has announced a store concept called “It” at Dubai’s Mall of the Emirates, offering goods and experiences. Among other things, the store will offer lounges, a gym and smart mirrors to view its products and aim for a lifestyle type. Meanwhile, global sports brands Adidas and Nike will also offer experience-based environments at their respective Dubai Mall retail outlets, where consumers can play sports or customize their products.
Savills also observed an attractive opposite trend of brands that historically did not want to operate from a physical location that now occupies stores. They only use them as a component of their brand strategy. For example, streaming giant Netflix is about to open its first physical store in Tokyo.
Covid-19 has created inevitable challenges. But rather than driving significant change in premium grocery shopping areas, it has served more to drive past trends: streamlining the store’s footprint through customer fashion logos, the emergence of experiential logo spaces, and a new focus on key streets and urban centers. that diminish the fundamental role played by physical retail.
Despite the migration to e-commerce in many markets, physical retail remains a key tool for brands and stores when it comes to reconnecting with their consumers, gaining better exposure, and ultimately driving retail sales, especially since closures have limited, physical activity. The appetite for experiential spaces addresses a key need for physical connection with consumers in an online world.
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About Savill:
Savills plc is a global real estate provider indexed on the London Stock Exchange. With a presence in the Middle East for more than 40 years, Savills provides a wide variety of specialized advisory, control and transaction services in the United Arab Emirates, Oman, Bahrain, Egypt. and Saudi Saudita. La experience includes asset control, residential and advertising firms. Matrix valuation of real estate and advertising assets, and investment and progression consulting. Originally founded in the United Kingdom in 1855, Savills has a foreign network of more than six hundred offices and subsidiaries employing other people from the Americas, the United Kingdom, Europe, Asia Pacific, Africa and the Middle East.
For more information about Savills: www. savills. com Media Contact: TOH PR / savills@tohpr. com
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