Are the online boom and the coronavirus pandemic making our high streets deserted? Business journalist and economist Daniel Schönwitz comments that gloom across the board is by no means a foregone conclusion. What changes are in the offing – and what architects can hope for. They were impressive symbols of the German economic miracle: in department stores such as Karstadt or Kaufhof, people in the fifties and sixties indulged […]
Are the online boom and the coronavirus pandemic making our high streets deserted? Business journalist and economist Daniel Schönwitz comments that gloom across the board is by no means a foregone conclusion. What changes are in the offing – and what architects can hope for.
They were impressive symbols of the German economic miracle: in department stores such as Karstadt or Kaufhof, people indulged in consumption with great fervor in the fifties and sixties. But those golden days are long gone: online retail has taken a heavy toll on the top dogs in city centers. And now comes the coronavirus crisis.
The department store group Galeria Karstadt Kaufhof has therefore already applied for “protective shield proceedings” and up to 80 of its 172 stores are to close. Department store operators are also struggling elsewhere in the face of falling customer footfall. In the USA, the share prices of shopping mall managers such as the Simon Property Group have collapsed.
This development will profoundly change the face of pedestrian zones and shopping streets. In all industrialized countries, vacancies of unprecedented proportions are looming – after all, property owners are likely to find it difficult to find new tenants in many cases. We will “no longer recognize our city centres next year”, warns a representative of the real estate industry.
In my opinion, however, it is too early to say farewell to our city centers; gloom across the board is by no means a foregone conclusion. After all, every end is also a new beginning that holds the promise of something new and better.
And let’s be honest: more variety would be good for many shopping streets. Surprises have become rare, especially in the top locations. Visitors usually encounter the usual suspects there – department stores, fashion chains or perfumery chains.
This is hardly surprising given the rapid rise in rents, which only a few companies can afford. In addition, customer footfall is falling and with it the chance of commercially successful store concepts. The coronavirus pandemic will therefore drive more retailers away – but at the same time attract new entrepreneurs who are less dependent on high customer numbers.
As a result, new flagship stores are likely to be created by brand owners from various sectors, who are not primarily concerned with sales, but above all with the brand: a presence in prime locations is not intended to generate short-term income, but to strengthen long-term profitability. Investments are therefore financed from the marketing budget.
I could therefore imagine that in future, car manufacturers, IT companies or garden tool manufacturers will be increasingly attracted to city centers to present themselves there. To put it bluntly: Shopping streets will become 3D advertising spaces, especially in prime locations.
“More vibrant urban culture”
US sociologist Saskia Sassen even believes it is possible that “a much livelier urban culture” will emerge as a result of retail chain bankruptcies – “with lots of tiny stores” that are more crisis-resistant thanks to low costs. Many small ones could therefore replace one large tenant.
Let’s wait and see. But there is another trend that speaks for more variety: frequency-oriented retailers who want to stay despite the online boom and coronavirus pandemic need to improve. Despite everything, the aim is to attract as many customers as possible and increase sales per visitor.
Many store operators are already working hard on concepts to turn shopping into an experience – including a feel-good atmosphere and surprises. In future, customers will therefore be able to try out products or take advantage of additional offers more and more often. Many stores will become more diverse and colorful.
Even the traditional department stores of Galeria Karstadt Kaufhof? Yes, at least if Arndt Geiwitz has his way: the reorganizer has set the goal of making a profit again within two years after closing unprofitable locations. The money will then be used to modernize the remaining locations “for several hundred million euros”.
Architects can therefore look forward to lucrative contracts. However, it remains to be seen whether the buildings will be able to return to the glory days of the economic miracle.
Read Daniel Schönwitz’s latest column here: The new longing for proximity
Daniel Schönwitz is a business journalist, columnist and media trainer. The economist lives with his family in Düsseldorf. Follow him on Twitter.
