Malls and brick and mortar retail businesses, in general, are facing their biggest challenges in decades.
2020 has seen the famous American department store chain JC Penney file for bankruptcy. US business magazine Business Insider estimated that in 2019 alone almost 10,000 department stores in the United States closed permanently.
Here in T&T, MovieTowne which comprises a cineplex and shopping centre will be permanently closing its Chaguanas branch. Malls are struggling as they experience low customer turnout and continue to lose tenants daily. It raises the question of the future of malls and traditional shopping after the COVID-19 pandemic is over.
So will the days of brick and mortar retail and entertainment really be over soon?
One of the kiosk in Trincity Mall which was closed due to COVID-19.
COURTESY DAVE SURAJDEEN
Uncertainty about the future
Derek Chin, owner of MovieTowne is uncertain about the future and survival of large entertainment centres like the ones that he has built throughout T&T and in Guyana.
In October, he announced that the MovieTowne branch at Prize Plaza in Chaguanas will be permanently closed and attributed this to the landlord and the slow business caused by COVID-19 restrictions.
In an interview with the Sunday Guardian, Chin admitted that even before the COVID-19 pandemic began cinemas around the world were beginning to see a decline in sales because people were beginning to move to online streaming in their homes.
“Technology, online shopping, Amazon are what has caused all the problems with the department stores. Look at what happened to JC Penney. Look at many stores here. They used to be the place to go and COVID-19 just put a nail in the coffin. People are afraid to go out and spend money.”
He said it was difficult to predict what will eventually happen in his industry.
“Certainly there was a question of whether cinemas could survive. We don’t know. You can’t say if COVID-19 will be solved with a vaccine, nobody knows. We don’t know what will happen in November or December. We can’t talk about upgrading or investing as everything has been put on a hold.”
One bright side to the challenges facing this industry, he said, is that people are naturally social beings who like to meet and socialise.
He also appealed to landlords to assist businesses like his by being lenient.
Several stores closed at Trincity Mall
Meanwhile, at Trincity Mall, several stores have been closed over the past few months and those who remain are concerned about their survival, and in particular how they will fare for this Christmas season.
Tenants who did not want to be named, attributed this to a failure by Trincity's management to work with them on how to improve the mall.
"The foot traffic of the mall has been reduced drastically. Tenants are pessimistic about the future of the mall and if the business could ever be revived to pre-COVID-19 business," a tenant added.
The Sunday Guardian reached out to Sandie St Hilaire, manager, Trincity Mall who said she could not give a comment on how Trincity Mall is doing at this time.
Despite a reduction in foot traffic in malls around the world, Gulf City's management said it continues to implement practices to keep the mall in a strong position for the upcoming Christmas season and beyond. The management is anticipating an increase in business due to closed borders and people shopping for Christmas.
“We anticipate an increase due to the closed borders and Christmas shopping. Gulf City is safe, clean and spacious enough to shop comfortably," a statement from the mall stated.
The management said it has developed a hand-holding technique with its tenants and assisted them by slashing rental rates.
The HP store which was closed due to COVID-19.
COURTESY DAVE SURAJDEEN
“Although our current business environment may seem standstill, Gulf City Mall has developed a ‘hand-holding’ technique when it comes to our rental. From March 2020 to date, all tenants were offered discounted rental rates, since we understood the economic strain the COVID-19 pandemic placed on the business sector.”
Gulf City’s management added that many of their stores have reinvented themselves, finding innovative ways to organise their stores, interact with customers, collect payments and deliver products. Some have invested in their own websites, WhatsApp chats, grab and go and delivery services.
“Micles, J&K Signature Styles and Starbucks, just to name a few, have been able to feed the consumer’s desire for the social experience and will likely become the new anchor to bring visitors to the mall. We have designated three areas for curbside pickup only and partnered with Bringting.com, a local e-Commerce and delivery service.”
The management said they have invested in hand sanitizing units at every entrance and their multi-storey carpark. Effective signage have been placed throughout the mall enforcing the law of wearing a mask, as well as highlighting its importance to curb the virus. The mall is also routinely sanitized.
'Adapt to survive'
Alex Siu Chong, CEO of Excellent Stores said although there are challenges, business owners must adapt to the new environment.
Excellent Stores is described on its website as the country's largest department store operating five branches.
“Many traditional retailers, internationally and locally, have a significant amount of capital invested in bricks and mortar locations, and those who have not been able to adjust their business model, business process and business culture to the changing consumer behaviour by embracing technological engagement and fulfillment changes miss out on this growing stream of revenue that is cannibalising traditional retail foot traffic sales at an exponential rate,” Siu Chong stated.
He believes that technological changes and the COVID-19 pandemic do not necessarily mean the “ultimate death” of malls and retail spaces.
“Consumers are humans and there still is a desire to go out, socialise, browse and engage in some form of interaction. Combined with the fact that there is still a large demographic of the population, locally and internationally, that prefer to touch and feel, the challenge is to find the balance between the two–online and in-store. This is evidenced by a growing number of pop-up Amazon stores across the United States.”
Appeal for landlords to be considerate
Businessman Joe Pires, owner of Island Bar Chill and Grill Restaurant in South Park told the Sunday Guardian that he is not happy with the way that he was treated by the management of South Park Mall.
His restaurant which employs 25 workers was closed three weeks ago as they were unable to successfully negotiate with the landlord.
“I can confirm on record that even though we were in discussions about renewing our lease at South Park and negotiating back rent due, we were suddenly informed three weeks ago that our tenancy had been cancelled. We confirm that we have vacated the location and 25 employees have now been placed on the breadline.”
Pires said he will try his best to move some staff to his north operations but due to COVID-19 and his restaurants not being able to open this will be challenging.
“We are indeed disappointed that the landlord acted so abruptly without consideration of how their decision would affect all connected to our restaurant and our ongoing discussions.”
He called on landlords to take into consideration the tough times that businesses operate in.
Anthony Rahael, Group CEO, Rahael Holdings which owns SouthPark mall, said he has been very reasonable with all his tenants without commenting on any specific relationship.
“We have been extremely helpful to all our tenants. We have worked with them. I have letters and e-mails from most of them thanking me for helping them within this difficult time.”
He also said they have seen an “absolute decline” in foot traffic at SouthPark mall over the last few months. However, he said they have fared better than their counterparts as they are a “strip mall” which means the mall is not enclosed and they are in a better position to combat the COVID-19 pandemic.
He explained how they have been able to survive this turbulent period.
“We have gone to our lenders through a deferral of interest payments and a small reduction of interest rates. In the last eight months, we did not have to pay any interest as they were deferred. Hopefully, the Government will give us good news and the economy is opened up more.”
He remains optimistic about the survival of malls as he said T&T and Caribbean culture is very open and people love to socialise.
“Malls will always be relevant but you must reinvent yourself. In SouthPark mall, we have many restaurants and entertainment, cinemas. So instead of strictly clothing, we have reinvented ourselves.”
The T&T Government implemented online taxes which came into effect in October 2016 to discourage consumers from shopping online.
Finance Minister Colm Imbert in the 2016 budget statement said: “The popularity of online purchases has increased significantly over the past few years. Reducing the demand for these items helps to save on foreign exchange and to assist local industry. There are 31 courier companies registered and bonded in Trinidad and Tobago and is estimated that the value of packages cleared by these courier companies exceeds $1 billion a year .”
The seven per cent tax was imposed on the courier companies bringing in goods via air freight only.
In 2018 he disclosed that citizens racked up US $1.2 billion in credit card transactions. He added that compared to previous years, credit card transactions were far less.