Montreal-based shoe retailer Aldo Group Inc. announced Thursday it filed for creditor protection in Quebec, and will seek similar court orders in the US and Switzerland, as the fallout from COVID-19 continues to weigh on Canadian companies. https://www.bnnbloomberg.ca/aldo-files-for-creditor-protection-amid-too-much-pressure-from-covid-19-1.1432986
Reitmans Canada Ltd will seek bankruptcy protection in a Québec court on Tuesday, becoming the latest retailer to face the brunt of the COVID-19 pandemic, which has led to prolonged store closures. https://nationalpost.com/news/canada/canadas-reitmans-to-seek-bankruptcy-protection-as-covid-19-shuts-stores
New York — J.C. Penney Co Inc. filed for bankruptcy protection on Friday with plans to permanently close some stores and also explore a possible sale, making it the latest brick-and-mortar retailer to crumble as prolonged store closures in response to the COVID-19 pandemic drive a final stake through long-troubled businesses. https://business.financialpost.com/pmn/business-pmn/j-c-penney-files-for-bankruptcy-protection-2
On Thursday, all of that came to an abrupt halt when Neiman Marcus became the first major department store group to file for bankruptcy protection during the coronavirus pandemic. It’s a stunning fall that follows the collapse of Barneys New York late last year and comes as shadows gather over chains like Lord & Taylor and J.C. Penney. https://www.nytimes.com/2020/05/07/business/neiman-marcus-bankruptcy.html
These are just a few examples of the grim impact that the pandemic is having on retailers who were already suffering from the impact that online shopping was having on their in-store traffic and sales. In Canada, Reitman and Aldo banners were considered “A” tenants. Many landlords will suffer increased vacancies and eventual, inevitable downward pressure on rents, and a downgrade of asset quality resulting in higher CAP rates and mortgage interest rates. There will be exceptions. Strip mall operators that focus on “essential services” such as food retailers and pharmacies will have do better than enclosed malls or centres that are fashion oriented.
Many shopping mall, main street, and high street store fronts were vacant before COVID-19 and now there will be many more vacancies as the virus-related ten-plus week closures take their toll. Changes to the retail industry that were already in motion will accelerate challenging merchants, landlords, and municipalities to find new formats for bricks and mortar retail that are relevant and unique.
To imagine the future of retail, it is useful to consider emerging trends before COVID-19:
On-line shopping has been stripping sales from retail malls and main streets for several years now and the current health crisis has increased the speed of evolution closer to revolution. The online experience has got to be easy and it has got to be worth it. Some retailers do it very well, typically those that have started out as on-line sellers, but others drive me crazy. Buying on-line from many of the big “bricks and mortar” retailers such as Wal-Mart, Canadian Tire, Home Depot, and many others is like going to purgatory. The Amazon web site drives me crazy so I refuse to use it.
If the conditions are right, people want to be out and to go shopping but they also want an experience they can’t get by browsing on the sofa with their I-Pad. Clients are attracted to stores that offer something different and shopping areas that have a dynamic atmosphere.
And, as always, wash your hands, practice social distancing and wear a face mask when you can’t, hydrate, and exercise!
In Issue 6 dated April 16, ideas for the return to work included a permanent increase in the work-at-home model, staff rotations on a work-at-home / work-at-office rotation; split work weeks; reductions in workplace density; and in the longer term, a shift away from concentrating 1000 plus employees in high-density single locations to less dense configurations in smaller, more accessible buildings. As companies re-open their offices and manufacturing facilities, all of these ideas are being used by employers. Shopify expects to keep most of its employees working at home until at least January and expects many of its existing employees will work at home on a permanent basis.
In Issue 9 dated May 5, I suggested that restaurants and high street retailers needed cities to contribute to their revival by converting huge sections of the city to pedestrian malls and to allow for radical expansion of outdoor dining and retail sales. Since that time, there have been a parade of announcements by cities across North America and Europe announcing measures to close streets to cars to allow for more space to walk, cycle, scoot, shop, and dine. The City of Montreal first announced 327 kilometres of new bike and pedestrian paths and more recently announced an additional 40 kilometres of pedestrian streets. There will also be allowances for expanded terasses when restaurants re-open sometime in June.
Co-working space came to mean the notorious We Work model. When I had been asked to opine on co-working I tried to steer the conversation away from the Adam Neumann / Softbank flimflam growth model. Instead, I suggested that property owners look at usage and users. While I doubted We Work’s ability to survive I […]
Before I fall completely into the trap of opposition politics, I have decided to take a break from never-ending criticism and to start suggesting solutions to the affordable housing conundrum. Do I have a plan? No, more a collection of ideas To start with, I think there are three key issues: Home ownership is not […]
I know! I am going to sound like a grumpy old man. Maybe that is because I am. I have been scratching my head in wonderment at the Taylor Swift phenomena. Is she an Incredible song writer, composer, and performer? I really don’t know! A discussion for another time? But probably not. At my age […]
Don’t build it! At least, Not In My Back Yard ! I acted as an advisor in the sale of a beautifully natural, 14-acre urban waterfront estate. Existing zoning allowed for the development of 30 to 35 single-family homes, which after road dedication would leave very little green space. I did not think that was […]
We were visiting Glasgow (literally that Dear Green Place in Gaelic) to see where my father was born, grew up, and went to University. Fortunately for me, my cousin John from Australia had just visited and had met with historians, Bruce Downie and Norry Wilson. So, we too arranged to meet them in the Govanhill […]
Vienna on top again. This week both Monocle Magazine and The Economist unveiled their quality of life / most liveable city indexes. There are differences in the way each publication sets its index. So it is even more impressive that once again, Vienna tops both lists. I am a bit lazy today so rather than […]