The future of bricks-and-mortar retail is strong in spite of the explosive growth we have seen in ecommerce during the Coronavirus pandemic, reports the commercial real estate services firm of Cushman & Wakefield.
The share of retail sales that takes place over the Internet is projected to decline slightly in the near-term following the Covid 19 induced surge, the company says in a recent report on the industry.
Over the long run, the Internet will continue to take a larger share of core sales, the firm admits. “However, the increase in share is forecast to rise more slowly than in the last 10 years. This suggests that demand for retail space will increase over the next several years.”
The company agrees that the Covid 19 recession did significant damage to the retail sector, which was already facing secular headwinds going into it.
In 2020, nearly 15,000 stores closed their doors in the United States, rendering 51.8 million square feet (msf) of shopping center retail space empty. Data analytics firm CoreSight Research predicts another 10,000 stores will close in 2021.
“But all signs indicate that the pandemic is winding down,” C&W points out. “The consensus is that herd immunity will be achieved by September 2021, if not sooner. The ecommerce/retail mix is normalizing as more people are getting immunized and shopping at stores becomes an option again.”
Ecommerce has gained only 7% market share during the past decade, C&W notes. Over the next five years, it forecasts that retail sales will grow at an average annual rate of 3.7% almost identical to the five years that preceded the pandemic.
“Post-pandemic, consumers will be spending more than ever at bricks and mortar stores,” C&W predicts. “Stronger consumer spending will drive retail business expansion and new concepts, creating more jobs and higher demand for retail space.” This growth also will encourage investors to take a serious look at this sector once again, it adds