Bricks-and-mortar retail has life in it yet

Shoppers queue outside Primark in Norwich as England takes another step back towards normality with

Shoppers queue outside Primark in Norwich as England takes another step back towards normality with the further easing of lockdown restrictions. Picture date: Monday April 12, 2021. - Credit: PA

Guy Gowing, managing partner at Arnolds Keys, argues that recent queues as lockdown restrictions eased demonstrate that bricks-and-mortar retail is far from finished. 

Real estate agent in suit headshot

Managing partner at Arnolds Keys Guy Gowing - Credit: Arnolds Keys

‘It’s the end of the high street as we know it.’ ‘People are not going to turn back from shopping online’. ‘Retail has changed forever.’ 

These are just some of the confident predictions made by commentators in light of the Covid pandemic. Unfortunately for them, no one seems to have told the consumers.

After five brutal months of closure, non-essential retail opened on April 12 – and, judging by the enthusiastic welcome it received from shoppers, reports of the death of the high street appear somewhat exaggerated.

It was obvious outside Primark in Norwich early – very early – that first Monday morning. Shoppers queued from 3am and the clamour for in-person shopping hasn’t let up since. So much so that Primark has announced that it will return £121 million that it received in furlough payments, confident that it will soon make up the profits lost during the extended closure.

Primark is famous for not having an online offering. This is something that many experts regard as the death knell for any retailer. Again, no one has told the customers.

Shoppers’ behaviour has changed during the pandemic, and some of that change will stick. But the past fortnight proves that the British love affair with shopping – real, in-store shopping – has not diminished.

Successful bricks-and-mortar retailers are those offering value and shopping experiences that are either unavailable online or cannot be matched by internet retailers. Destination shopping is now the name of the game, and that will alter the type of property that will be attractive to the investor.

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This is good news for investors in retail property, but that isn’t to say that the choices investors face will not be affected by what has happened over the past 12 months – because the world has changed in many ways.

Above all, it is crucial to look at the reletting potential of any retail property – and not just buy based on the existing covenant. Landlords of chain retailers in particular have been through a series of CVAs and/or bankruptcies, leaving them in some cases with sizeable and difficult units to let.

Perhaps the most attractive type of retail property is now something that will be accessible and affordable for the kind of niche, independent retail businesses filling the gaps left by well-known brands.

The high street is changing, but as long as there is an appetite for shopping as we have seen in the last couple of weeks, retail is very much alive. This means there is good value in high street retail investment property, as long as the fundamentals are right.

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