EDITORIAL: Covid-19 will not make us kick the habit
But Covid-19 is building online shopping habits that will stick, and it would be foolish for firms to pay little attention to their e-commerce offering
Across the world, brick-and-mortar retailers have been under pressure in recent years from the rise of online shopping giants such as Amazon, whose onslaught called into question the future of shopping malls.
The government’s vast social distancing strategy during the Covid-19 pandemic has only accelerated the trend in which more and more people choose to buy everything from milk to intricate watches online.
A cursory glance at SA retailers’ profit guidance statements covering the first six months of the year shows a surge in sales over the internet — though trade, industry and competition minister Ebrahim Patel did his best to stifle them at the start of the lockdown period. That seems to have held up pretty well, even after President Cyril Ramaphosa started to reopen the broader economy, lifting restrictions on retail at the beginning of May.
Take Woolworths, for example. One the biggest anchor tenants in SA’s shopping malls chalked up a nearly 90% jump in sales of food via online channels, prompting the Cape Town-based retailer to focus its attention on building its capacity to serve an even greater market. Even luxury goods companies such as Richemont have woken up to the reality that consumers have no qualms about buying a pricey perfume or watch with the click of mouse or a tap on smartphone.
One can bet the Covid-19 pandemic is building online shopping habits that will stick even after we have found a vaccine for the virus, and it would be foolish for companies such as Woolworths to pay little attention to their e-commerce offering on misplaced hopes that consumer behaviour has not been permanently changed.
Still, to think that the Covid-19-induced online shopping boom might herald the end of shopping malls would be greatly exaggerated. It is hard to imagine a critical mass of shoppers shifting their spending online as consumers still value the experience of trying on clothes and grabbing a coffee at a nearby restaurant.
Since the reopening of all retailers, consumers seem unfazed by the prospect of joining long lines of queues to be allowed in stores that operate under strict hygiene and social distancing protocols.
Malls will not disappear because 2020 was bad to them. When the 131,000m² Mall of Africa, the biggest built in a single phase in history, was envisioned a few years ago and opened in 2016, the idea was that it would stand for decades to come. We don’t see any reason that this should not be the case.
Humans are creatures of habit. Humanity has faced extremely stressful global events before including war, economic depression and climatic events. It has come through them and many habits have remained.
That said, the public health crisis has to a large extent permanently changed shoppers behaviour and exposed weaknesses in retailers’ capabilities that should make them redraw their store rollout plans in favour of putting more money into their e-commerce platforms.
Shopping centre tenants — big and small alike — in Zoom meetings have worked out that they simply can’t pick up from where they left off. The post-Covid-19 world brings new realities. First, the public health crisis has morphed into one the biggest economic crises the world has seen, meaning that cash-strapped consumers will be visiting shopping centres less and spending warily.
For companies such as Hyprop and Growthpoint, the two biggest mall owners in SA, it means some tenants will run out of business or struggle to pay rent.
Second, consumers have realised that in-store shopping is optional if one can simply tap smartphones to buy, even in categories previously considered too valuable to pick up online. A recent report by consultancy Bain, whose forecasts are widely watched in the industry, showed more than 10% of luxury spending has moved online.
These trends will shape the industry’s “next normal” and could have profound implications on the property industry, but whatever happens there will still be room for brick-and-mortar supermarkets or a steakhouse in a shopping mall in the post-Covid-19 world
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.