1. What comes after legacy mid-market retail
J.Crew, Neiman Marcus, JCPenney. In May, the whispered demise of some of America’s most storied retailers abruptly became a reality with a final push from Covid-19.
With the coronavirus pandemic ravaging US apparel and accessories retail sales (in April revenues fell 88 per cent according to the US Census Bureau) and traditional bricks-and-mortar retail already struggling with too many stores, heavy debt loads and little digital presence, the future of the middle market is likely to be radically different.
While luxury stores like Barneys and cheaper fashion chains like Forever 21 have struggled, the mid-market sector has seen a particularly strong decline. According to Deloitte, between 2012 and 2017, revenue at US premium retailers and at price-based retailers increased 81 per cent and 37 per cent respectively. In the same period, mid-market retailers saw a mere two per cent increase. Specialised direct-to-consumer brands, in the same price range but more aligned with consumer tastes, have eroded the relevance of traditional mid-market retailers among customers, says Dana Telsey, CEO of Telsey Advisory Group. Other mid-market retailers have resorted to excessive discounting, undermining their image and value.
So what will the future look like? Read on
2. JLL: Global Market Perspective May 2020
Hear our experts’ perspectives on current market dynamics and the impact of the COVID-19 pandemic on global real estate. Sean Coghlan, James Cook, Roddy Allan, Marie Puybaraud and Jeremy Kelly answer some of our clients’ most frequently asked questions covering: global investment markets, the impact of the pandemic on retail, lessons from China as the country is starting to reopen, corporate re-entry strategies and the longer-term trends relating to urbanization, sustainability and technology.
Lockdowns take toll, but signs of opening emerge
The COVID-19 pandemic is having a huge impact on the way people live and work and uncertainty is now becoming part of the ‘new normal’. The flow-through effects to the real estate market are undeniable and the full impact is yet to be reflected in quarterly performance data. The retail and hospitality sectors were the most immediately hit with lockdowns and travel restrictions curtailing demand. Global office leasing activity was 23% down on Q1 2019, while demand for logistics space was also lower despite a spike in short-term requirements linked to the immediate impact of the pandemic. Businesses are now starting to prepare for market re-entry, and the safety and wellbeing of employees is a key focus. Read on
During these times of uncertainty, it can become hard to project ourselves into the future. Not knowing what tomorrow holds can feel daunting at times. Of course, as a business owner, you always face a level of uncertainty and risk. All of this has now been amplified, as people across the globe share a common level of uncertainty from a health and economic perspective.
For entrepreneurs and small business owners, it can be easy to get lost in too much focus on the business and not enough focus on the health and wellness of the people behind it. But it’s all intimately tied together.
As part of an informal consortium of female founders, we’ve been inspired to not only quickly evolve our own business to the current state of the world, but we have also evolved the way we treat ourselves and our employees during these intense times. Read on
4. How technology is safeguarding health and livelihoods in Asia
In Asia, deepening technological capabilities and innovations—most notably digital and mobile technologies—enabled early responses to the COVID-19 crisis. Six broad categories of measures to safeguard both health and livelihoods helped guide governments and businesses in the region (exhibit). They could also help countries in and beyond Asia as they seek to contain the current and future pandemics. In a globalized world fighting a virus that does not respect borders, exchanging best practices and experiences appears to be vitally important in combating this common enemy.
The COVID-19 pandemic is constantly evolving, and at the time of writing the data do not allow us to draw firm conclusions about the most effective way to fight it. Although we focus on technology in this article, we acknowledge that it is not the only solution but one of a range of measures to combat this global humanitarian challenge.
We also note that the use of technology in the unique circumstances of the COVID-19 pandemic does have risks such as data breaches and a deepening of the current digital divide. Further, countries differ markedly from each other economically and socially, so solutions that seem successful in some may not in others. Businesses and policy makers need to understand these risks and differences, and be proactive in managing them to ensure that technologies deliver positive impact across the community. Read on
5. European startups applaud Commission plan to rethink stock options
Startups have welcomed proposals from the European Commission aimed at cutting red tape and shrinking cross-border barriers for small businesses as part of a new EU industrial strategy plan with a twin focus on digital and green transitions unveiled today.
Among the package of measures being proposed by the European Union’s executive body are for Member States to sign up to a “Startup Nations Standard” — which would aim to promote best practices to support startups and scale-ups, such as one-stop shops, favourable employee stock-options arrangements and visa processing to reduce cross-border friction for entrepreneurs starting and growing businesses in the bloc.
In recent years, European startups have organized to campaign for reforms to rules around stock options –with 30 CEOs from homegrown startups, including TransferWise, GetYourGuide, Revolut, Delivery Hero, TypeForm and Supercell (to name a few) signing an open letter to policymakers two years ago calling for legislators to fix what they dubbed “the patchy, inconsistent and often punitive rules that govern employee ownership.”
The effort appears to have made a dent in the EU policymaking universe. Both regulatory and practical barriers are now in the Commission’s sights, with it proposing a joint task force to work on sanding down business bumps.
It also today reiterated a perennial warning against Member States “goldplating” pan-EU rules by adding their own conditions on top. Read on
6. NEXT BILLION DOLLAR STARTUPS
For the sixth year in a row, Forbes has teamed up with TrueBridge Capital Partners to search the country for the 25 fastest-growing venture-backed startups most likely to reach a $1 billion valuation. TrueBridge asked 300 venture capital firms to nominate the companies they thought were most likely to become unicorns, while Forbes reached out directly to more than 100 startups. Then came the deeper look, as we analyzed finances for roughly 140 of them and interviewed founders.
This list represents the 25, in alphabetical order, that we think have the best shot of reaching the billion-dollar mark.
7. A once-in-a-lifetime opportunity
Alexander Graham Bell’s words of wisdom “when one door closes, another opens” are well known, but less famous is that he went on to add “but we often look so long and so regretfully upon the closed door that we do not see the one that has opened for us”.
Much has been said about the problems facing our high streets – the most recent being Covid-19 and whether it is the last ‘nail in the coffin’ of physical retail.
Perhaps it is time to stop looking at the closed door of failed shopping centres and falling retail property values and consider the opportunities that might lie behind the doors that are opening.
The renewal and repurposing of our town centres requires innovative thinking and a new approach from all the major stakeholders. The door that has opened is that of the need for more residential property. The opportunity to create a variety of housing – whether it be BTR, PRS, later living or student housing in the centre of our towns and cities – is an appealing prospect.
There is little danger of oversupply on a national level, and residential can be the key to development, creating thriving, sustainable places.
As mixed-use schemes become more integrated, it will be fascinating to see how the market evolves to create the new diversified assets investors are seeking. Businesses that best understand this integration will be the ones that flourish.
It is undisputed that we have too much retail space in our town centres. New offices and residential space can replace a lot of this, but retail, leisure and hospitality are still vital to create a sense of place at the heart of the community.
Not all retailers are failing and many, such as Apple, Lululemon, JD Sports, L’Oréal and Next, to name but a few, have adapted and created new concepts.
There are also hundreds of new independents opening every year that will be the lifeblood of our towns and cities, giving them individuality and reflecting their communities. Read on
At your service, hope you have enjoyed this weekly observations. Have a great day!
Team Sociëteit Vastgoed/ Real Estate Society
ps. the photo was taken at Provada 2019.