Online business a lifeline for retail amidst COVID-19 disruptions
While COVID-19 dealt a blow to the retail market in the first quarter, e-commerce, online shopping, and delivery services emerged as clear beneficiaries.
Vo Thi Phuong Mai, associate director and head of retail services at CBRE Vietnam claims COVID-19 has negatively impacted offline traffic but at the same time created many opportunities for growth for small- and medium-sized models such as convenience stores, pharmacies, and especially e-commerce.
“E-commerce is the bright spot and is emerging as a lifeline helping physical stores during the outbreak. The omni-channel capability will be more resilient and may even outperform other channels,” Mai said.
|The slowdown in retail has accelerated e-commerce and online shopping which play an important role in sustaining many stores during the outbreak|
In Vietnam, among the big names in the field of e-commerce, Tiki has grown at the fastest pace and has reached a record of 4,000 orders per minute, while SpeedL and Saigon Co.op have also reported exponential growth in online sales. Grab has also activated a new platform called "GrabMart" to serve customers' shopping needs while staying at home.
In the Asia-Pacific market, omni-channel and online retail performed well during the outbreak, from consumer products and cosmetics to luxury goods such as cars, or services such as sightseeing, museums, real estate tours offered online.
In the long term, the growth of e-commerce will be a solid foundation for any future development in the retail market.
Vo Thi Khanh Trang, head of research at the Ho Chi Minh City branch of Savills Vietnam, also agreed that COVID-19 has accelerated the switch to online shopping.
“Online shopping will have a negative impact on brick-and-mortal stores in shopping centres as well as in shophouses. Some impacts may be longer-term, accelerating technology-driven changes in the ways we live, work, and shop, while other effects are likely to be only temporary. Rents will vary based on market conditions. Hence, developers and landlords will need to consider short-term support for tenants,” Trang said.
In the first months of 2020, together with the impact of Decree No.100/2019/ ND-CP setting huge fines for drink driving from January 2020, COVID-19 has added to the hit to the F&B industry.
A recent survey by Savills Research found that the revenue of some restaurants dropped by 50 per cent in February compared to previous months.
The COVID-19 outbreak is a turning point forcing F&B owners to set new business directions and landlords to consider adjusting rental rates. Recently, many restaurant tenants, after looking through their financial statements, have decided to terminate when their lease contracts expired, while some who want to keep good locations have either closed temporarily or negotiated a reduction in rent with landlords.
At leased shophouses, many landlords have also begun to support tenants in rent, with some exempting a month of rent for restaurants or giving 30-50 per cent rent reductions for the next couple of months for convenience stores.
According to the General Statistics Office of Vietnam, sales in F&B, hotel services, and tourism services decreased by 9.6 per cent in the first quarter of 2020 and by 27.8 per cent on-year, respectively. VIR
Technology firms in the past have had to spend big money to attract users to online transactions, but because of the pandemic, e-commerce has taken off.
Because of the pandemic, people have hesitated to go to crowded places and have increasingly bought many items online.