Next few months vital for retail
Brick-and-mortar stores’ survival for rest of year at stake
DAYTON, Ohio — National and local retail stores have made needed changes in the past year that have allowed them to stay open during the pandemic. But retail experts say the next few months will be a barometer for how many brick-and-mortar stores can survive the rest of the year if restrictions continue and fewer people shop.
Chains such as Yankee Candle, Bed Bath and Beyond, Christopher Banks, Macy’s and Godiva have announced store closures in the past month, but it has not been the larger tidal wave predicted by retail analysts.
“With the pandemic and as vaccines start to roll out, we might see increases in consumer confidence,” said Riley Dugan, a marketing professor at the University of Dayton.
The National Retail Federation projected that holiday-related sales would increase between 3.6 percent and 5.2 percent, bringing in between $755.3 billion and $766.7 billion from Nov. 1 to Dec. 31. Retail sales saw an 8.3 percent increase, or $789.4 billion, a federation report showed.
“The holiday season was better than anyone had guessed,” said Gordon Gough, CEO of the Ohio Council of Retail Merchants. “I will say that the economy is really unique right now.”
Gough said that with people going out less, they may have had the opportunity to buy more for the holidays. “Maybe you would have went on a trip last fall but you can’t because of COVID, but now you
maybe spent more money on the holidays because you had more money,” he said.
Macy’s, along with L Brand’s Victoria Secret, which experienced a 3 percent decline in sales in 2019, had plans to close some of their stores prior to the pandemic, but COVID-19 expedited the process. Macy’s announced early last year its plans to close 125 stores throughout the country by 2023, with 45 closings in 2021.
Macy’s plans to move away from debilitating shopping malls while opening smaller retail locations.
“Anytime you’re basically saying, ‘We’re going to have a smaller footprint,’ that’s kind of a sign of defeat in many respects,” Dugan said.
On the flip side, Gough said the
situation of companies moving to have a smaller footprint even before the start of the pandemic is simply moving from one house to another.
“I think all retailers were looking at their online versus brickand-mortar footprint and making corrections. Maybe I don’t need as many stores because my online traffic continues to grow. What may have happened in 2020 to some retailers is that accelerated,” he said.
Department stores such as J.C. Penney have served as anchor tenants in shopping malls, but with many shoppers opting for the customer service of boutiques and the convenience of online shopping, the need for physical locations has seemed to dwindle.
As department stores are pushed out, Dugan said, malls should reconsider those stores as anchor tenants.
“I think malls are going to need to start getting more creative . ... You could start thinking about gaming centers, bowling alleys, maybe even microbreweries,” Dugan said.
Having an online presence has been beneficial throughout the pandemic, but it poses a significant threat to physical locations for retailers, especially department stores. Dugan predicts ecommerce will continue to grow but will depend largely on the condition of the economy.
The NRF reported online and nonstore sales were up 23.9 percent during the holiday season.