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Several retailers and businesses in the hospitality sector are planning to consolidate their network, as the financial fallout of the coronavirus pandemic continues to push them to the brink, according to a new study.
The CBRE retail flash survey, conducted in June 2020 among 160 retailers and food and beverage (F&B) operators in Bahrain, found that most respondents have experienced loss of sales due to the outbreak, with 94 percent stating this as a key concern.
About 81 percent expressed concern about meeting their financial obligations, while about a third (31 percent) said they intend to consolidate their bricks and mortar store networks this year.
As the crisis continues to deepen, the majority of the businesses (63 percent) admitted that COVID-19 had affected their leasing decisions and put their expansion plans on hold.
The retail and hospitality sectors have been among the worst hit by the health crisis. In recent weeks alone, several retail brands around the world have filed for bankruptcy and may be forced to shut down hundreds of stores after being crippled by the pandemic.
“Retailers are experiencing financial stress from the COVID-19 outbreak… Store network consolidation has also become a focus. All respondents stated COVID-19 has impacted their leasing decision making,” CBRE said in a report.
Businesses to evolve
However, despite their concerns, Bahrain’s retailers and F&B operators still have plans to invest to strengthen their business.
Among those polled, 93 percent said they plan to invest more in online retailing or delivery apps, as consumers shift to online shopping.
The majority of the businesses (75 percent) also said they will increase their use of social commerce. Others have also remained optimistic, with 31 percent saying they either plan to open new stores or are still uncertain. A considerable number (57 percent) of retailers said they may increase or keep their investment in their in-store experience.
According to Heather Longden, CBRE director of advisory and transaction services – Bahrain, physical stores will continue to play a key role in the market, but some things will change, particularly in terms of how tenants or occupiers utilise their space.
“The role of bricks and mortar retail continues to be important; however, global trends indicate the use of these spaces will evolve – focusing on the experiential element,” said Longden.
“In the future, having a variety of sales channels, such as physical, online and mobile (including food delivery app) platforms effectively integrating to improve customers experiences look to be key in retailer strategies,” he added.
Outlook
When asked how the pandemic will impact their sales for the rest of the year, a total of 61 percent of the respondents said they expect their revenues to contract in 2020. The majority are expecting a 10 percent to 30 percent decline in revenues, while nearly 20 percent are still hopeful that there is the potential for positive growth this year compared to last year.
The majority (56 percent) are also expecting that business will take six to 12 months to return to pre-COVID-19 levels.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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