TOUGH ROAD AHEAD FOR REOPENING RETAILERS
After suffering significant financial hits, many also must regain consumer trust, replace staff lost during closures
Simon Property Group, the nation’s largest mall owner, is planning to reopen 49 malls — including Houston’s Galleria, Houston Premium Outlets and Katy Mills — starting Friday, a sign that retailers are ready to restart operations as cases of COVID-19 start to taper.
Indianapolis-based company plans to enact measures to encourage shoppers to maintain social distancing, including placing signs, making announcements and spacing out food court seats and urinals as well as keeping play areas, water fountains and stroller rentals closed, according to an internal memo sent to mall tenants and obtained by CNBC and The New York Times.
Simon did not respond to a request for comment regarding the internal memo, and earlier Tuesday referred media inquiries to their mall websites, which say properties are still temporarily closed except for essential stores and curbside pickup operations.
Malls and retailers are allowed to reopen Friday after Gov. Greg Abbott announced plans Monday to restart the state economy, approving all retailers to reopen May 1 provided they limit occupancy to 25 percent of shopper ca
pacity to maintain social distancing. Malls and so-called “nonessential” retailers have been temporarily closed since mid-March to slow the spread of the new coronavirus.
Although Simon is planning to reopen malls, other mall owners on Tuesday said they were still evaluating their options. Brookfield Properties, the New Yorkbased owner of five suburban Houston malls, did not give a time frame for reopening its Baybrook, Deerbrook, First Colony, Willowbrook and The Woodlands malls.
“While closely monitoring the new direction from Gov. Abbott, we are diligently working on plans to safely reopen our shopping centers,” Brookfield spokeswoman Rachel Wille said in an email. “As always, the well-being of our guests, tenants and employees is our highest priority, and we will reopen our centers when we are ready to do so.”
MetroNational, owner of Memorial City Mall, said through a spokeswoman that it had not yet determined its exact plans for reopening and did not elaborate.
Open, but empty
Malls and nonessential retailers, which were forced to temporarily close for more than a month under local and state stayat-home orders, face a daunting task as they look to reopen. Consumers reeling from the virus and its economic fallout are still risk-averse and seem to not be ready to return to pre-coronavirus levels of activity, according to several polls.
A little over a third of Americans — 38 percent — said they are ready for retail stores to reopen May 1, according to a survey of 1,000 U.S. consumers conducted earlier this month by Datassential, a research group that primarily works with restaurants.
“Retail is all about consumer confidence,” said Venky Shankar, research director at Texas A&M University’s Center for Retailing Studies. “Retailers need to put an extra effort to gain shoppers confidence back. This will be the new normal.”
That means retailers will have to provide hand sanitizer, Plexiglass sneeze guards and social distancing markers at checkout, as well as limit the number of shoppers inside stores. Some malls and retailers will also have to consider conducting temperature checks on and turning away employees and shoppers who have a fever, Shankar said.
Implementing these changes — not to mention calling back furloughed workers, restarting distribution centers and reopening stores — will take time, Shankar said. Many retail workers who were furloughed or laid off a month ago have been snatched up by essential grocers and bigbox retailers such as Amazon and Walmart, which have each hired 150,000 workers to meet the surge in demand for food and home supplies during the pandemic. “Many retail employees have moved on, so retailers will need to hire new staff and retrain them,” Shankar said.
Still, malls and retailers — already struggling to draw consumers increasingly shopping online — are feeling financial pressure to reopen. Debt-addled department stores and retailers must continue to pay rent and debt taken on by their private equity owners even if they don’t have any foot traffic and sales.
Since the last week of March, foot traffic to U.S. malls and retailers has been down by more than 97 percent compared with a year ago, according to Cowen and Co., a New York equity research firm.
Retail sales nationally plunged 8.7 percent in March, the biggest one-month drop on record, according to the latest report from the U.S. Commerce Department. Apparel and accessories sales were down 50.5 percent, department store sales fell 19.7 percent and electronics sales dove 15.1 percent month over month.
“Retailers would rather sell something than nothing,” Shankar said.
Retailers are reopening gradually under the guidance of state and local officials.
Nine Houston-area malls on Friday began facilitating curbside pickup for retail tenants. Shoppers at Baybrook, Deerbrook, First Colony, The Galleria, Houston Premium Outlets, Katy Mills, Memorial City, Willowbrook and The Woodlands malls can purchase products from participating retailers via phone or online, drive to a designated pickup location at the mall and have a store employee drop goods off in the back seats or trunks of their vehicles. At Memorial City Mall, customers can also pick up their purchases from an automated package locker.
Few customers on Friday utilized the curbside pickup service, and Shankar expected few shoppers would venture into malls on Friday. It’s likely younger shoppers, who tend to be more risk-taking, will go shopping at malls while older shoppers, who have been disproportionately impacted by the coronavirus, will still stay home, Shankar said.
Independent retailers, who are smaller and more nimble than sprawling malls and national retail chains, said Tuesday that they are cautiously looking forward to reopening Friday.
Lisa Acosta Buss, the owner of Branche, a women’s apparel boutique in Oak Forest, said she will allow only six people at a time inside her 1,000-squarefoot store to maintain the recommended six feet of separation, and will require employees to wear face masks and gloves.
Buss and business partner Emily Moore have been selling apparel and accessories out of their homes over the past month, allowing for porch pickup and dropoff. But sales are still down 75 percent during what is their busiest time of year, which includes the Rodeo, Easter and Mother’s Day.
“I have mixed emotions,” Buss said. “I’m relieved because we can get back into the grind, but I worry that the worst is yet to come and I’m concerned how many people will come out. Maybe they won’t. I’m hopeful, but we just don’t know.”