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Impact of Covid-19 on Traditional businesses
The impact of the coronavirus pandemic and the lockdown it triggered is clearly visible in traditional markets. But there is still no clarity on the deeper impact that it is having across businesses and industrial sectors. Shopping malls also come under tremendous pressure as a result of the COVID-19 virus. As landlords, making sure that their tenants stay afloat has a direct impact on the bottom line, lesser tenants mean less rent revenue collected. This is especially true if a major component of rent is a percentage of sales generated by the tenant at their store in the mall. However, getting consumers through the door and maintaining the usual footfall traffic at the malls is difficult during this time.
Retailers have shown the way to cushion the losses in their stores is to move their business online. Shopping Malls can do the same, allowing regular customers to continue shopping at their favourite stores in the malls but as a shopping mall online marketplace.
Online marketplaces are not new and they have seen tremendous growth globally.
Except for the initial weeks where consumers wiped out supermarkets of toilet paper, instant noodles, and rice, most are avoiding crowded areas and delaying non-essential purchases and travel across Asia and now globally.
Besides a slowdown in business travel, tourism has also been greatly impacted. According to the Singapore Tourism Board (STB), tourist arrivals are expected to drop by 25 to 30 per cent this year due to the COVID-19 virus.
This would indeed have a negative impact towards retail sales, especially for a country that is highly dependent on tourist dollars. Under pressure to reduce rent by retailers, shopping mall owners such as Capital and will be offering rental relief of 20-30 per cent at the end of March 2020 for affected tenants mainly in the downtown shopping belt.