Retailing has its “black swan” event in 2020, propelled by the Covid-19 pandemic but also by fundamental changes in consumer preferences and behavior. The coronavirus quite literally pushed retail off the cliff, but online shopping and so many technological innovations placed the retail industry in that position.
A black swan is a rare, unforeseen, and unpredictable event that is well beyond expectations for a situation, and has severe consequences. In hindsight, black swan events can sometimes seem to have been obvious.
The massive transformation of retailing is a story of the collision of two industries, of the traditions and steady evolution of “bricks and mortar” retail with the revolutionary innovations brought by the Internet and online shopping.
The collision can be personalized, as visionaries such as Jeff Bezos (Amazon) and Reed Hastings and Marc Randolph (Netflix), faced off against the titans of the real estate-based shopping center industry. The battle was already raging in the years before 2020, but this year propelled by Covid-19’s effect has wrought retailer bankruptcies and mall bankruptcies.
This black swan was a familiar story but at a gigantic scale, a battle between the old traditional guard and the brash new tech titans.
Major shopping centers now look to repurposing and redevelopment, and adaptive re-use. Mall real estate is now looking at all-new “highest and best use” considerations. Fortunately, many malls are well located within their regions, with excellent visibility and access. Many are suited for adaptation as mixed-use destinations, with new multi-family, health care, and hospitality anchors. In other instances, while not synergistic with gathering place destinations, there is a future in dark grocery stores, ghost kitchens, data centers, and logistics facilities. For investors, at least there is a future.
And as retailers work through their Chapter 11 reorganizations, some emerge with less debt, leaner overhead, and fewer more productive stores. Other retailers call it quits with their intellectual properties stripped and sold through 3rd-party auctions, for re-use in online shopping branding.
This is marketplace efficiency at work, the same as experienced by other industries when the Internet and tech industry came calling.
For Historical Context
The year 2020 will be remembered by so many families, for their personal tragedies of economic loss, virus fears, and the passing of loved ones. As an industry, it is the “black swan” event in the long history retailers and shopping centers.
For more information about the context of 2020 and for retailing having its “black swan” event, click below: