Soon non-essential stores in the Benelux will be allowed to fully open their doors again, but how big are their chances of survival? Will it be a battlefield or a resilient recovery? Locatus calculated the risks and assessed the impact of the coronavirus pandemic.
Risk profiles
Each year, retail property expert Locatus calculates the likelihood of over 140,000 stores in the Netherlands and over 120,000 stores in Belgium surviving the year ahead. The researchers calculated the Retail Risk Index (RRI) based on evolutions in retail properties over the past ten years, supplemented by the expected impact of Covid-19. The RRI is expressed on a scale from 50 (very low-risk profile) to 150 (very high-risk profile). A retail outlet with an RRI over 120 falls into the category of a high-risk profile, which indicates the probability of closing in the upcoming year is high.
It is not a matter of guesswork: in the group of high-risk stores, 60 per cent of the stores did indeed close down within three years. In the group of low-risk stores, it was less than 10 per cent.
Belgium – the Netherlands
In the Netherlands, 18 per cent of all stores are currently in the danger zone. In Belgium, the percentage is slightly higher at 20 per cent. However, this does not mean that all these retail outlets will disappear: every year, an average of 10 per cent of retailers stop trading, but new entrepreneurs are also joining, so the number of occupied retail premises ‘only’ decreases by 0.5 to 1 per cent. Nevertheless, if fewer new retailers venture into the market in 2021, it is conceivable that there will suddenly be 5 per cent fewer occupied retail properties. In some shopping areas, that percentage could rise to more than 10 per cent – with harmful consequences for the experience and the viability.
Limburg runs the highest risk
In recent decades, urban areas have performed better, and provincial areas have scored worse on the Retail Risk Index. Lagging behind are the Dutch provinces of Limburg, Drenthe, Groningen and Zeeland and the Belgian provinces of Limburg, Hainaut, Liège and Luxembourg. The ageing population and depopulation are the most prominent causes.
That could change: since the pandemic, the need to live close to work is decreasing. In time, this may strengthen shopping areas in the provinces, but the trend is still very recent and is not reflected in the figures for the time being.
Provinces with the highest risk profile (RRI > 120)
| Belgium | the Netherlands |
| 1. Limburg 26,2% | 1. Limburg 29,3% |
| 2. Luxemburg 25,6% | 2. Drenthe 23,6% |
| 3. Hainaut 25,4% | 3. Groningen 23,0% |
Opportunities for smaller shopping areas
Until recently, large city centres were the main attraction for shoppers. Now, a turnaround seems to be taking place: people are shopping locally and online more often due to Covid-19. The Retail Risk Index expects the larger shopping areas to come under increasing pressure in 2021. Smaller shopping areas that provide daily essentials are expected to be only marginally affected by Covid-19 or might even benefit.
Supermarket wins, fashion loses
Not every retail sector is equally at risk, and we see the same trends in both the Netherlands and Belgium. In the leading group, we find the essential segments and the segments that (still) hardly experience any competition online – think of supermarkets, food retailers, opticians, pharmacies, garden centres, kitchen and bathroom specialists, sleep shops, hairdressers and beauty salons.
Retailers who face comparative shopping, are concentrated in the major shopping areas, rely on commuters or tourists, or face competition from online providers are threatened: fashion, hospitality, sports shops, home decoration and gift items.
The number of stores that are forced to close will inevitably be higher than ever, Locatus believes. Retailers that do survive often have a distinctive proposition, such as Action, which is growing rapidly against the current. Personal loyalty and high customer satisfaction are also indicators of success. A strong combination of offline and online is a winner. Innovative services are a segment with growth potential: think of fitness centres, beauty salons and escape rooms.
