CBRE RESEARCH

ASIA PACIFIC
RETAIL FLASH SURVEY
 ASIA PACIFIC RETAIL FLASH SURVEY | EXECUTIVE SUMMARY

THE BIG PICTURE THE SHIFT ONLINE STORE NETWORK ADJUSTMENT

87% 78% 37%

Identified LOSS OF SALES as Plan to increase investment Intend to CONSOLIDATE BRICK
their major concern. in ONLINE RETAILING / AND MORTAR STORE NETWORKS
DELIVERY APPS. 80% will this year. 22% either plan to open
increase their use of social new stores or are still uncertain.

3M
52% commerce.
Expect to RESUME BUSINESS 95%
within the next three 31% Stated that COVID-19 has
months. Respondents from Say the pandemic led to
IMPACTED THEIR LEASING
Mainland China are more DIGITAL SALES BECOMING
DECISIONS, particularly with
optimistic. THEIR CORE BUSINESS.
regard to store expansion and
evaluation.
61% >70%
6M
Expect it will take six months
of LUXURY AND SPORTS
75%
or more for sales to RETURN Plan to increase or maintain
BRANDS will focus on
TO PRE-COVID-19 LEVELS INVESTMENT IN THEIR IN-
growing online sales.
after business resumes. STORE EXPERIENCE.
Source: Asia Pacific Retail Flash Survey, CBRE Research, May 2020.
ASIA PACIFIC RETAI L FLASH SURVEY © 2020 CBRE, INC. 2
SURVEY PROFILE
 SURVEY PROFILE
• The CBRE Research Asia Pacific Retail Flash Survey was conducted between April 28 to May 21 2020.
• A total of 179 responses were received.

RESPONDENTS BY INDUSTRY (%)

Experience based Product based

30% F&B (e.g. restaurants, 20% Fashion &

Apparel 6% Sporting goods/
Athleisure
confectionary)
Lifestyle (e.g.
10% bookstores;
optical;
6% Health & Beauty
homeware)
13% Other experiential retail (e.g.
entertainment; educational)
7% Grocery 6% Luxury

2% Others

Source: Asia Pacific Retail Flash Survey, CBRE Research, 21 May 2020.
ASIA PACIFIC RETAI L FLASH SURVEY © 2020 CBRE, INC. 4
SURVEY FINDINGS
 RETAILERS ARE EXPERIENCING SIGNIFICANT FINANCIAL STRESS
Respondents identified loss of sales as their top concern. Most major Asia Pacific retail markets recorded contraction in retail
sales during Q1 2020. Among the different sectors, most (77%) F&B retailers said they were finding it challenging to meet their
financial obligations.

W h a t a re y o u r key co n cern s reg a rd in g t h e

Y-o-Y Growth in Retail Sales In
COVID -19 pandemic? [select all that apply]
Selected Markets in Q1 2020

10%
87% Loss of Sales
0%
65% Difficult to meet financial obligations
-10%

Y-o-Y Growth
53% Ensuring Safety
-20%
35% Supply chain disruption
-30%

25% Handling infected cases

-40%

17%
Australia Japan Korea Singapore Mainland Hong Kong
Online delivery disruption China SAR

Source: CEIC, May 2020.

Data as of 21 May 2020, N = 179

Source: CBRE Research, May 2020

ASIA PACIFIC RETAI L FLASH SURVEY © 2020 CBRE, INC. 6

 ONLINE SALES GROWTH AND STORE NETWORK CONSOLIDATION ARE THE KEY FOCUS
About 38% of retailers plan to focus on increasing their online sales capacity over the remainder of 2020. A similar percentage
plan to reduce their physical footprint. However, around 22% of respondents either expect to add more stores or have not yet
made any decisions.
How will COVID -19 impact your company ’s sales network over the rest of the year?

Increase online sales capacity 38%

Fewer stores / Smaller footprint 37%

More stores / Larger footprint 11%

Not sure 11%

No impact 3%

Data as of 21 May 2020, N = 178

Source: CBRE Research, May 2020

ASIA PACIFIC RETAI L FLASH SURVEY © 2020 CBRE, INC. 7

 How will COVID -19 impact your company ’s sales network over the rest of the year?
Breakdown by selected industry

Increase online sales capacity Fewer stores/smaller footprint

More stores/larger footprint Not sure
No impact

0% 20% 40% 60% 80% 100%

Luxury
Luxury

Sporting
Sporting goods/
goods /Athleisure
Athleisure
Focus on
Grocery
Grocery growing
online sales
Lifestyle
Lifestyle

Fashion
Fashion&&Apparel
Apparel

F&B
F&B Focus on
consolidating
Other Experientialretailers
Other experience-based Retail
brick and mortar
Health
Health&&Beauty
Beauty stores
Data as of 21 May 2020, N = 178
Source: CBRE Research, May 2020

ASIA PACIFIC RETAI L FLASH SURVEY © 2020 CBRE, INC. 8

 How will COVID -19 impact your company ’s sales network over the rest of the year?
B rea k d o w n b y m a rket

Increase online sales capacity Fewer stores/smaller footprint

More stores/larger footprint Not sure Online Penetration Rates in Selected
No impact Markets in 2020 (%)
0% 20% 40% 60% 80% 100%

Taiwan Focus on
Taiwan 12%
growing Australia 11%
Pacific
online sales
Hong Kong SAR
Hong Kong SAR 6%
Singapore
Singapore 10%
India
India 5%

Mainland China Focus on

Mainland China 32%
consolidating brick Thailand 6%
Thailand
and mortar stores Source: Euromonitor, May 2020.

Data as of 21 May 2020, N =178

Source: CBRE Research, May 2020

ASIA PACIFIC RETAI L FLASH SURVEY © 2020 CBRE, INC. 9

 DIGITAL SALES ARE BECOMING MORE PROMINENT
More retailers have shifted to digital sales channels to sustain their business during COVID-19. Respondents in the sporting goods
trade are utilising videos and livestreaming to engage with customers, while F&B retailers are partnering with online food
delivery apps to ensure business continuity.

What has been the role of digital sales channels

(e.g. online store, delivery apps) in your business % of respondents viewing online
before and during COVID -19? sales as their core business
(by industry)
Before COVID-19
80% Before COVID-19 During COVID-19
During COVID-19

F&B 6% 38%
40%
29% 31% Sporting
goods/ 0% 55%
11% 9% Athleisure

Part of our business but not Newly introduced to Our core business
the primary source of sales compensate for Source: CBRE Research, May 2020.

disruption to physical stores

Data as of 21 May 2020, N to before COVID-19 = 157 ; N to during COVID-19 = 163

Source: CBRE Research, May 2020
ASIA PACIFIC RETAI L FLASH SURVEY © 2020 CBRE, INC. 10
 DEMAND HAS BEEN DEFERRED BUT SURRENDER CASES REMAIN LIMITED
Significant disruption to trading activity has prompted most retailers to defer expansion plans and postpone new store
openings. Future openings and expansion may be hindered by a more stringent evaluation process.

How have your real estate leasing decisions been impacted? [select all that apply]

65% Expansion/ new openings put on hold

TOP THREE IMPACTS

58% More stringent evaluation process Retailers with headquarters Retailers with headquarters
based in Asia Pacific based outside Asia Pacific

48% Site visits have been delayed/ cancelled

Expansion on hold More stringent evaluation
1 process
65% 69%
36% CAPEX for fit out reduced
More stringent evaluation Expansion on hold
25% Renewals have been delayed 2 process
54% 67%

21% Space surrendered/ leases terminated

Site visits delayed / CAPEX for fit out reduced
3 cancelled
6% Others 50% 43%

Data as of 21 May 2020, N = 179

Source: CBRE Research, May 2020

ASIA PACIFIC RETAI L FLASH SURVEY © 2020 CBRE, INC. 11

 RENTAL REDUCTIONS HAVE BEEN DISCUSSED WIDELY
84% of respondents have engaged in discussions with landlords about rental reductions, with around 77% being offered
such assistance. 50% of product-based retailers have asked landlords to convert lease terms to a gross turnover rent system
and they have also been seeking fit-out subsidies.

Which of the following have you discussed with

landlords? [select all that apply] Have you been offered
Negotiated rental reductions 84% any relief measures by landlords?
Rental holidays (for existing tenants) 58%
Longer rent-free periods (for new leases) 37% 65% YES, but landlords can be
more accommodative
Change to gross turnover rent only 36%
Joint promotional/ sales campaigns 16% 12% YES, and we are satisfied

Fit-out subsidies/ tenant allowance 15% NO, but landlords have

Burn down deposits to pay rents 12% 5% passed on government relief
measures
More pop-up stores 8%
No discussions have taken place 4% 18% NO
Replace cash deposits with other instruments like
insurance/ company indemnity 4%
Data as of 21 May 2020, N to discussed with landlords = 179 ; N to offered any relief measures by landlords = 176
Source: CBRE Research, May 2020
ASIA PACIFIC RETAI L FLASH SURVEY © 2020 CBRE, INC. 12
 LANDLORDS’ RESPONSE TO RELIEF MEASURES VARIES ACROSS THE REGION
Have you been offered any relief measures by landlords?
B rea k d o w n b y select ed m a rket

Yes, and we are satisfied with these measures Yes, but landlords can be more accommodative
No, but landlords have passed on government relief measures No

Hong Kong SAR 100%

Mainland China 9% 91%

Singapore 5% 86% 10%

Pacific 25% 50% 8% 17%

Taiwan 17% 50% 4% 29%

Thailand 20% 48% 32%

India 12% 48% 14% 26%

Data as of 21 May 2020, N = 176

Source: CBRE Research, May 2020

ASIA PACIFIC RETAI L FLASH SURVEY © 2020 CBRE, INC. 13

 BUSINESS RESUMPTION NEARS BUT FULL RECOVERY NOT EXPECTED UNTIL 2021
Most Asia Pacific markets began to loosen lockdown and social distancing measures from mid-April, with most non-
essential retailing expected to re-open in the coming months. Two-thirds of respondents expect that it will take at least six
months after business resumption for sales to return to pre-pandemic levels.
H o w lo n g d o y o u est im a t e it w ill t a ke t o resu m e b u sin ess f ro m n o w / f o r sa les t o ret u rn t o
levels before the outbreak of COVID -19?
Resume business Return to levels before the outbreak of COVID-19

50%

40%

30%

20%

10%

0%
Within 1 month 1 to 3 months 3 to 6 months 6 to 12 months More than 12 months
Data as of 21 May 2020, N = 179
Source: CBRE Research, May 2020
ASIA PACIFIC RETAI L FLASH SURVEY © 2020 CBRE, INC. 14
 GROCERY AND HEALTH-RELATED TRADES TO RECOVER FIRST
While the regional luxury market is expected to remain challenging, some major global luxury brands have seen a gradual
recovery in sales in Mainland China since mid-March.

% of respondents expecting sales to return to pre -pandemic levels within next six months
- by industry

Most optimistic

9% 9% 36% 40% 46% 50% 55% 58%

Luxury Sporting Goods/ Fashion & Other Experiential F&B Lifestyle Health & Beauty Grocery
Athleisure Apparel Retail
Data as of 21 May 2020, N = 179
Source: CBRE Research, May 2020.
ASIA PACIFIC RETAI L FLASH SURVEY © 2020 CBRE, INC. 15
 THE LONG-TERM DIGITAL SHIFT
The pace of digital transformation in the retail sector is expected to accelerate, with social commerce set to take on a more
prominent role. While consolidation of brick and mortar sales networks is inevitable, 75% of respondents still plan to increase or
maintain investment in their in-store experience.

To w h a t e x t e n t d o y o u e x p e c t t h e r e t o b e a s h i f t i n y o u r b u s i n e s s s t r a t e g y a f t e r t h e
COVID -19 outbreak?
Increase No change Decrease
100% 3% 3%
6% 5% 11%
17% 17% 26%
80%
52%
52%
63%
60% 55%
42%

40% 80% 78%

38%
20% 43%
34% 34% 33%
10%
0%
Use of social Investment in Diversification Utilising cloud Supply chain Investment in in-store Demand for brick
commerce online retailing/ between markets to kitchens diversification experience and mortar retail
delivery apps mitigate over- space
concentration risk
Data as of 21 May 2020, N = 179
Source: CBRE Research, May 2020.
ASIA PACIFIC RETAI L FLASH SURVEY © 2020 CBRE, INC. 16
 FOR MORE INFORMATION ABOUT THIS REGIONAL REPORT, PLEASE CONTACT

Henry Chin, Ph.D. Ada Choi, CFA Liz Hung Sabrina Lam
Head of Research, APAC/EMEA Head of Occupier Research, APAC Retail & Logistics Specialist, Analyst, APAC
Head of Research, Greater China Asia Pacific
henry.chin@cbre.com.hk ada.choi@cbre.com.hk liz.hung@cbre.com.hk sabrina.lam@cbre.com

Advisory & Transaction Services (A&T)

Manish Kashyap Vivek Kaul Graeme Wakefield
Head of A&T, APAC Head of A&T – Retail Head of A&T - Retail
Asia Pacific
manish.kashyap@cbre.com.sg vivek.kaul@cbre.com graeme.wakefield@cbre.com.au

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This report was prepared by the CBRE Asia Pacific Research Team, which forms part of CBRE Research—a network of preeminent researchers who collaborate to provide real estate market research and econometric
forecasting to real estate.

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