Jan Kubíček says that during the Covid-19 pandemic, retail Czech shopping mall owners benefited from a decade of cooperation and sharing information through the International Council of Shopping Centers (ICSC). The current crisis is presenting quite different challenges, says Kubíček, now Executive Committee Chair of the Czech Council of Shopping Centers.
You were asked to chair the Czech ICSC committee in 2009, but you were reluctant to take on the position. What was holding you back?
The problem on the Czech market was that people didn’t want to share information. Everyone was always worried that if they shared information with someone else, it would be misused. I was always intrigued by the community approach of the ISCS in America which inspired us. And that’s what we did for ten years. We published an index, we organized the ‘Hands on breast’ cancer prevention campaign and we organized a very good conference in 2018. Eventually, we advocated against extending opening hour limits and and even helped write an amendment to the law.
By the time Covid-19 hit, the ICSC had changed its geographical approach. At the time, you told me then you weren’t sure about continuing with the group.
ICSC was moving out of Europe to concentrate on the United States, so we were thinking about setting up an independent entity in the Czech Republic. However, this would have been quite complicated and we weren’t sure if there was real interest in it.
So, you were already halfway out the door.
Exactly. And then Covid hit [and shopping centers were ordered to shut]. Soon, my CEO called me and asked what he could do to help and offered full support. Anotherend of mine called and said he could help to navigate within government. Another three or four people called saying the industry had to defend itself from governmental restrictions. “They’re going to crush us,” they said.
It energized us and from a community perspective, it was one of the best but also most difficult rides I ever took part in. It became clear that as an industry we were rather resourceful. We had friends and contacts in parliament, at the government level, and in the media. Shopping centers are a multi-billion business after all. To build one takes a lot of effort and we only profit from a long-term development of the country and respective region. That’s why we’re so embedded in society, which means we can muster interesting resources when needed.
Then all that information sharing of the past decade really paid off during the pandemic?
I have to say, we capitalized on our ten years of work on the shopping center index. Because for example, we knew that 300 million people visit us each year. Nobody knew that number before. We saw e-commerce growth but at the same time our turnovers were rising 8-9% per year. We had real information from the past and we used that information when the crisis came in order to communicate with the public and government.
We also managed to speak with the prime minister at the right moment. We sent him a letter on a Friday night detailing the situation for shopping centers and the potential for negative consequences. He called back Saturday morning apologizing for having to close us down. We were a bit surprised (positively) that he personally got so involved in everything. I told him he didn’t have to close down the shopping malls. I said we had the security and the people to deal with the risks and that we could be an important part of the solution. He understood this and referred us to the Minister of Industry and the crisis team.
Now, we’re in a new sort of crisis. Won’t high inflation once again test relationships between tenants and shopping centers?
Shopping centers are designed for that. We weren’t designed for Covid but we should be able to handle this inflation. When there’s inflation, everyone raises prices, so we need to reflect inflation by raising rents. But then our tenants also raise their prices. For sure, it can create tensions in the short-term because not everybody can do it at same time and in Covid we learned we could solve things together. However, in the longer-term, it shouldn’t pose a huge issue as market participants will eventually adjust.
But the energy crisis is a completely different animal. Essentially, the energy system was built for the good times, but it definitely doesn’t work in bad times. That’s why the way the price of energy is set has to be amended, mainly subsidizing gas power plants. We’ve been talking to the government along with other associations and we’re happy that some first steps were taken. But the big change will have to come from the EU level.
If it’s not solved, this situation with energy could damage the economy significantly. We’re not just talking about shopping malls here: we’re talking about factories, transportation, hospitals, and infrastructure that cannot bear such high prices of energy. However, I trust the flexibility and creativity of democracies and the free world to figure out a way forward.
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