Most years, the St. Patrick’s Day celebrations serve to break up a busy quarter and mark the progression of the year. It might be difficult for people to feel that way this year, it has been a long ‘winter’ for the market. Earlier this week, Tanaiste Leo Varadkar said that retail and other personal services will likely remain closed into May. At this stage, it looks like outdoor activities could be permitted after April 5th, however, this is unlikely to read as positive news for Ireland’s challenged retail sector.
There has been much speculation about how retail landlords and tenants – each with their own financial masters and their own pandemic challenges – can work together to reach resolution. News emerged yesterday that shopping centres owner Hammerson, which owns the Ilac Centre, Dundrum Town Centre and Swords Pavilions, has sought a summary judgment against US retailer, Claire’s Accessories, over rent arrears.
It is difficult to separate the retail trends pre-Covid from the chaos that is resulting from what has been one of the longest lockdown periods for retail in any country since the pandemic. And yet, this is exactly what we must do. Consumers were speaking with their feet (or with their smart devices) prior to the pandemic. There was already a move towards a more ‘experiential’ retail offering in order to attract shoppers to the brick and mortar stores, rather than simply shopping online. Actually, there is quite a lot happening in the retail technology space right now. Also, retail was already starting to experience the shift towards flexible space (similar to the office market), with the phenomenon of online-only retailers taking over retail units on a short-term/temporary or pop-up basis. And all of this was happening prior to the outbreak of Covid-19.
In the UK, The Guardian reported that Gloucestershire University has purchased a former Debenhams store to use as a healthcare tuition facility. The site has been home to a department store for more than 100 years. The redundant shop in Gloucester, which measures 20,000 sq metres over five floors, will be converted into lecture halls and training spaces for nurses and healthcare workers. Part of the ground floor will be allocated as local community cultural and enterprise space. The move is described by the newspaper as “the latest reinvention of a department store building as consumers switch to online shopping”. This particular store closed in December, under the government’s high-street lockdown, and then failed to reopen. The Debenhams brand was recently acquired by online retailer Boohoo, which has no need for high-street outlets. Although it is interesting to note that Boohoo was one of the first online-only fashion retailers to embrace physical pop-up stores.
As the article points out, there is a growing realisation that towns and cities will need to consider new uses for buildings at the heart of their communities as the number of department stores shrinks rapidly. In Ireland, we are seeing this through the closure of bank branches, which typically occupied the most prominent, historical buildings in market towns across the country. Enterprise, co-working and/or innovation hubs are emerging as the most popular use of these spaces right now, which feels like something of a default response. Looking ahead, it will be interesting to watch how local innovation shapes these available spaces.
Lotus Investment Group