We’ve seen the impact the coronavirus outbreak has had on retailers — business is way down. That’s especially true at department stores like Macy’s, Neiman Marcus and J.C. Penney. Now a report by Green Street Advisors predicts more than half of department stores located in U.S. malls will close by the end of 2021. And that could have a domino effect.
Malls are typically built around anchor stores that occupy multiple floors and tens of thousands of square feet. All the smaller stores in between that sell clothing or jewelry or hot pretzels rely on those anchors to bring in customers.
“When an anchor goes dark, the specialty stores that occupy the concourse leading to the department store anchor struggle because the traffic is vastly diminished,” said Mark A. Cohen, who directs the retail studies program at Columbia Business School.
Which is why, he said, these smaller stores often have clauses in their leases that allow them to pay lower rent if an anchor store shuts down.
Cohen paints a grim picture of what can happen next.
“Malls that have been suffering from this phenomenon start to invest less in housekeeping and in security,” he said. “Parking lots are not as pristine. The mall becomes less attractive as a destination.”
He expects a lot of malls to close because of this crisis.
But department stores have been struggling for years, and some malls have found creative replacements for them.
Now we may also see malls become “service centers, where anchor stores are replaced with fitness or beauty or restaurants or even medical providers that are more on the service side than on the product side,” said Barbara Stewart, who teaches retailing and consumer sciences at the University of Houston.
The problem is, these kinds of businesses might not be looking to open a new location anytime soon.
COVID-19 Economy FAQs
So what’s up with “Zoom fatigue”?
It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.
How are Americans spending their money these days?
Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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