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
What’s the outlook for vaccine supply?
Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.
How has the pandemic changed scientific research?
Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.
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.”