The “Amazon effect” was basically transforming the market towards a more digital world, and thus putting physical retail on a difficult situation.Inevitably the pandemics cameand gave a new justification to “Retail Apocalypse”. The Coronavirusdictatedour lives during 2020 and is still impacting our day-to-daylivingduring 2021. Most of us believe it will have a permanent impact. We were forced to stay at home for long periods, preventedfrom social interacting with our peers and family, maintain rigorous hygienic rules. This sociallyimpacting virus is now pointed as the cause ofsuch prophesy about retail. It’s the Retail Revival!Now I’m going torevert thestory into what is most certainly going to be the encouraging future for physical retail for those who thought this article was no more than a repetition of the bad news inthe past few months.
Let’sstart with some market facts.When Simon’s Property group stock got annihilated by COVIDpeople almost forgot that this company generated 33 billion USD in dividendsper year. This is only the largest mall owner in the world. In 2020 Simon’s stock price fell 27%, that’sno small correction on a company’s market value, buthaving a look ata more recent period, the last 3 months (November 2020 to February 2021) Simon’s stock price got up 76%. It’s no feebleperformance when for example Zoom, the COVID-19 world champion company, that crushed all expectation during the 2020 stock market recovery, declined 17% in the same exact period. Looking at another worldwide behemoth player in the shopping centers industry space, Unibail RodamcoWestfield, down more than 50% in 2020, also made a significant recovery from November to February 2021, the same period with a 74% stock price increase.In 2020Inditex, the owner of Zara brand, was only down 14% for the year, but up 39% inthe referred November to February period.
Thiswas the period where the recovery for worldwide economy was announced and economic signs and stimulus packages became more positive.With all the people getting vaccinated, Simon, Unibail RodamcoWestfield and Inditexmaybe among the top stories out there for the reopening. Only some of many in the physical retail space...SPG and URW’s mallsare in the best locations. And you know what? People are eager to go shopping!They areeager to goshopping if the place is nice and safe enoughandespeciallyifthey feel they will have fun. They are eager to go shopping because they want to have some shopping fun, out of home. They are feeling the urge to visit some of the most entertaining concepts ever created -the shopping centers, the malls-physical retail... Consumers are thirstyfor the experience, the leisure, the touch, the trying, the taste of lifein real terms not through a video camera or a computer screen.But what about online?Isn’t it supposed to dominate retail from now on.What’s the experience like? Itfulfills a pure material purchase obligation,but the experience that the physical retail can offer does not exist in the e-commerce.
On Valentine’s day I ordered from the best Asian restaurant in town. No frills with the food delivery company? Well, maybe some. The delivery had to be done 15 km away from my home, in my wife’s work, because I live outside the delivery area. Good thing we anticipated the Valentine’s date for a previous day, and she was actually workingand able to get the food. Too bad I don’t live in the city center... Anyway, enthusiastic with “eating out” at home, ordering from the best Asian restaurant in town, I just couldn’tcare to pay a fortune for a “food in a box” lunch. This would be the best Valentine’s I could getat that point, considering all restaurants were closed. The experience was disappointing.Rice tasted like the paperpackaging where it was in. Noodles that were kept for too longin a plastic box,were like a block of cement. The bread was wet and soaked...So the delicious experienceI was dreaming of, just did not happen... I miss restaurantswhereI get my warm, freshly cooked, delicious, no packaged plastic flavor food!!!...In the proper environment setting.