Many brick-and-mortar stores, shopping centers and malls faced an existential crisis well before the pandemic as they grappled with online competitors, heavy debt loads and shifting consumer preferences. Then, as one industry executive said, they got kidney punched by 2020.
Americans cut back on spending early on. And when they did buy, it was increasingly online from the safety of their homes. Many shoppers still have anxiety about heading to stores, even as overall retail spending in October, including money spent online, was up over last year.
With Black Friday looming, some retailers have reinforced earlier limits on how many shoppers they allow in their stores at one time. Many have unfurled sales promotions weeks earlier than normal, in hopes of spreading out the Christmas rush, keeping shoppers safe and reducing crowded lines.
All while praying the holiday shopping season, more critical than ever, makes up for a battered year that has left many struggling to survive as COVID-19 cases surge again. Unemployment remains high and many would-be consumers are stretched financially.
Retailers, such as Macy's at Lenox Square mall in Atlanta, are encouraging shoppers to comply with pandemic-related safety measures amid the holiday shopping season. MATT KEMPNER / AJC
Nadia Lares, who owns two women’s clothing boutiques with her daughter, is among those hoping for a boost to carry her through the traditionally slow months after the first of the year.
One Nadia’s Boutique is in Buckhead’s Lenox Square, long considered the crown jewel of metro Atlanta malls and a draw for fashionistas. The other is in a McDonough strip shopping center with a Publix. The Lenox store hasn’t replaced business lost during two months of a springtime shutdown, but sales last month topped what they were a year earlier.
The McDonough boutique is struggling more. Customers, many of them local teachers or students, haven’t returned. The shop won’t survive another shutdown, Lares said. “It’s really hard, but people tell me not to give up.”
At Nadia's Boutique in Atlanta's Lenox Square mall, co-owner Nadia Lares has seen sales rebound recently. But business is still tough and another boutique she has in McDonough isn't doing as well as the holiday shopping season unfolds during a pandemic. MATT KEMPNER / AJC
Pain in the the industry has been spreading. Town Center at Cobb mall fell more than 60 days delinquent on $178 million in loans and slipped toward potential foreclosure, according to Trepp, a data company. The 1.3-million-square-foot center is owned by the nation’s biggest mall operator, Simon Property Group, which locally also owns Lenox, Phipps Plaza and the Mall of Georgia. Simon declined to comment.
Two DeKalb County malls, the Mall at Stonecrest and Gallery at South DeKalb, also have wrestled with troubled loans this year, according to Trepp. Representatives of those malls did not respond to requests for comment. And CBL Properties, which owns Arbor Place mall in Douglasville, filed for bankruptcy protection earlier this month. It predicted “business as usual” for customers while it goes through the process.
More shoppers and retailers have slipped away from brick-and-mortar stores this year. More big chains filed for bankruptcy. More stores closed. Mall vacancy rates in the U.S. now top 10%, the highest in at least 20 years, according to Moody’s Analytics.
Locally, store owners are holding out for continued good weather and a bump in holiday sales, said Shaun Weinstock, of Weinstock Realty & Development, which represents retail and office tenants. But he predicts that without another round of government stimulus funding for businesses, many retailers will close in the first few months of next year.
Pumping up business this shopping season requires not only offering deals, but making customers feel safe. Many tell shoppers to wear masks. Some traditional mall retailers might add kiosks in mall common areas for quick in-and-out items, such as gift cards, to reduce the rush of people waiting to get into the main stores, according to CBL. Customers can expect more options to buy online and pick up in stores.
The Macy's Pink Pig ride at Lenox Square mall in Atlanta has been put on hold, one of the many pandemic-related shifts made in the holiday shopping scene this year. MATT KEMPNER / AJC
The changes have left some shoppers unfazed.
Britaya Byrd, a 26-year-old hair stylist from Decatur, listed all the local malls she’s been to lately: Lenox, Stonecrest, Greenbriar, South DeKalb, Cumberland. She wears a mask and isn’t worried about COVID-19 these days as she shops.
“I go as often as I used to,” she said, adding later, “We get bored fast. We like to see new people.”
Still, many are steering clear of in-person shopping altogether.
“Choo Choo” Bob usually has to exercise extra patience at this time of the year, navigating his tiny train with its passengers of kids and parents inside the Mall of Georgia.
But in the midst of a pandemic-suppressed holiday shopping season, there are fewer people to avoid in the Gwinnett County mall, one of the Southeast’s largest. “It’s much easier,” said the 70-year-old retiree, who also goes by the name Bob Banaszak.
The number of riders is down, too. So are his shifts, cut from twice a week to once a week, he said, dousing his hands with sanitizer from a cupholder added to the side of his little red locomotive.
"Choo Choo" Bob, also known as Bob Banaszak, has been having an easier time this holiday season driving a train ride for kids at the Mall of Georgia in Gwinnett County. Compared to the Christmas rush in previous years, there are few shoppers he has to navigate around during the pandemic. MATT KEMPNER / AJC
Foot traffic at nine metro Atlanta malls was off anywhere from 37% (Cumberland Mall) to 65% (Phipps) in the first two weeks in November from a year ago, according to Cuebiq, an analytics firm that uses anonymous information pulled from 15 million mobile devices. October was similar.
A survey by Deloitte found that 51% of U.S. consumers were anxious about shopping in stores during the holiday season due to COVID-19. The survey was conducted in September, before a new surge in COVID-19 cases and deaths nationally.
Sheri Hardbeck was very uncomfortable on a recent Saturday at the Mall of Georgia. Too many people weren’t wearing masks or had them below their noses and mouths, said the 54-year-old school teacher, who was with her 81-year-old mother.
“We are in and out as fast as possible,” said Hardbeck. They visited only to return and exchange earlier purchases. And they have a game plan in mind to limit their risk: Buy as much as they can online and finish gift shopping before Thanksgiving to avoid the biggest crowds.
Mask wearing has become far more common than it was when many metro Atlanta malls first reopened early in May. But some shoppers still go without. Of the first 100 shoppers spotted at the Mall of Georgia recently, a reporter counted 82 wearing masks over at least their mouths. At Lenox Square it was 90 out of 100. At Perimeter, 87.
A 51-year-old woman from Suwanee recently made her first trip into an enclosed mall since January. She wore a mask and slipped on sunglasses if unmasked people came close. “I felt like, ‘Stick to my plan: Stay away from the food court, and stay away from anyone with their mouth uncovered,’” she said at the Mall of Georgia.
Rather than buying gifts this holiday season, she said she’s donating money to nonprofits. Her shirt said “Thankful Grateful Blessed.”
Some retailers have done far better than merely surviving. Home Depot, the largest public company in Georgia by sales, has seen its revenue and profits soar this year as consumers focused on improving their homes.
James Smith owns men's clothing boutique, Nacirema, which has shops at Perimeter Mall in Dunwoody and Greenbriar Mall in Atlanta. He said he's been surprised by increased sales during the pandemic. MATT KEMPNER / AJC
James Smith, who owns two men’s streetwear clothing stores, reopened his Greenbriar location in May and shoppers flooded in. “It surprised the hell out of me,” said the owner of Nacirema (American spelled backwards).
“Believe it or not, this has been my best year,” he said.
But at Bettino Leather, which has had a store in the Mall of Georgia for more than a decade, the pandemic has bit deeply into sales that had already slipped in recent years amid online competition.
Manager Anita Singh said revenues are down 50% to 60%. Luxury items are a tougher sell during a pandemic, she said, especially when the wares include duffle bags and briefcases when many people are no longer traveling or going into offices.
On a recent Saturday afternoon, few people entered the store. Usually, on weekends at this time of year, there would be three or four staffers working, two cash registers running and a line of customers waiting to check out, she said. Instead, it was just her, one register on, no line and no one buying.
The pandemic likely has accelerated trends in how and where Americans shop, real estate executives say. They expect that weakened retailers and shopping center owners and their lenders will be more likely to back out of properties at extra-low prices. Several local malls are for sale. And last week, U.S. mall giant Simon Property renegotiated its February deal to buy high-end mall developer Taubman Centers, paying $800 million less.
In metro Atlanta, many shopping centers might have to reinvent themselves to stick around.
Jesse Shannon, chief investment officer at Branch Properties, said the local shopping center owner and developer is building more retail space but focusing on what it considers a growing option: grocery-anchored shopping centers.
Ponce City Market, the intown dining and shopping destination, this month unveiled plans for a major expansion that includes some more stores but also a new office building and 400 residential units.
When it comes to malls, “I think all of them are going to be sharply different in 24 months,” said Eric Weatherholtz, senior managing director of retail services for real estate firm JLL in the Atlanta region.
FEWER SHOPPERS AT MALLS THIS HOLIDAY SEASON?
Here’s how much foot traffic declined in some metro Atlanta malls in the first two weeks of November compared with the same period a year ago, according to Cuebiq, an analytics firm that uses anonymous information pulled from 15 million mobile devices.
Cumberland Mall: -37%
Gallery at South DeKalb: -39%
Gwinnett Place mall: -43%
Sugarloaf Mills: -43%
Town Center at Cobb: -45%
Perimeter Mall: -45%
North Point Mall: -50%
Lenox Square: -54%
Phipps Plaza: -65%