Checking in on the consumer economy, one number stood out in the latest retail sales numbers: Department store sales were up by 9.7% in September.
That sounds pretty good, until you consider just how hard they’ve fallen in the pandemic, and that they’re still down 7.3% from a year ago.
And — just to put a pin in it — their killer competitor, e-commerce is up 32% this year according to eMarketer as consumers shun brick-and-mortar stores and do their buying by clicking.
There’s been a wave of store chain bankruptcies — J.C. Penney, Lord & Taylor and J. Crew, to name a few. So malls are losing anchor tenants and specialty retailers, and food courts and multiplexes are going dark.
“Commercial real estate — specifically retail mall real estate — is in a crisis,” said Camilla Yanushevsky, senior equity research analyst at CFRA Research.
She said consumers are strapped for cash and afraid to shop in stores, sales are way down, so “we’ve seen a number of retailers not pay rent.”
Which makes it harder for mall owners to pay their mortgages.
Some struggling malls are trying to reinvent themselves with medical offices, apartments, schools and Amazon fulfillment centers.
Yanushevsky said mall landlords can get $20 a square foot for a department store. They can only charge half or less for a fulfillment center.
“If it can’t be repurposed, it’s likely to eventually die,” said Mark Cohen at Columbia Business School. That leaves an enormous empty shell that could take years to redevelop.
COVID-19 Economy FAQs
Pfizer said early data show its coronavirus vaccine is effective. So what’s next?
In the last few months, Pfizer and its partner BioNTech have shared other details of the process including trial blueprints, the breakdown of the subjects and ethnicities and whether they’re taking money from the government. They’re being especially transparent in order to try to temper public skepticism about this vaccine process. The next big test, said Jennifer Miller at the Yale School of Medicine, comes when drug companies release their data, “so that other scientists who the public trust can go in, replicate findings, and communicate them to the public. And hopefully build appropriate trust in a vaccine.”
How is President-elect Joe Biden planning to address the COVID-19 pandemic and the economic turmoil it’s created?
On Nov. 9, President-Elect Joe Biden announced three co-chairs of his new COVID-19 task force. But what kind of effect might this task force have during this transition time, before Biden takes office? “The transition team can do a lot to amplify and reinforce the messages of scientists and public health experts,” said Dr. Kelly Moore, associate director for the Immunization Action Coalition. Moore said Biden’s COVID task force can also “start talking to state leaders and other experts about exactly what they need to equip them to roll out the vaccines effectively.”
What does slower retail sales growth in October mean for the economy?
It is a truism that we repeat time and again at Marketplace: As goes the U.S. consumer, so goes the U.S. economy. And recently, we’ve been seeing plenty of signs of weakness in the consumer economy. Retail sales were up three-tenths of a percent in October, but the gain was weaker than expected and much weaker than September’s. John Leer, an economist at Morning Consult, said a lack of new fiscal stimulus from Congress is dampening consumers’ appetite to spend. So is the pandemic.
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