Over the past five years, the average monthly growth rate for Internet retailers averaged 1%. In April 2020, however, their sales ballooned past 8%. Clothing store sales plummeted nearly 80% at the same time, leading consultants at CoStar to predict that fewer people will be heading back to shopping centers as the pandemic recedes.
“The likelihood that many consumers will choose to continue shopping online, even after the country is open, is high. And many had not been regular online shoppers before the pandemic began,” read a new report written by Robin Trantham, Alexander Levy, and Kevin Cody.
As J.C. Penney and Neiman Marcus file bankruptcies and Macy’s permanently closes more than 100 stores, the three made the case that COVID-19 is boldly igniting issues that have been troubling the physical retail sector for years.
Though the authors believed retail sales will rebound with malls back open, they worry it will be too little, too late for many storied retailers. The 14 largest department store and apparel brands take up almost 25% of mall space in the United States. The two biggest—Macy’s and J.C. Penney—inhabit more than 12%.
The Penney’s bankruptcy filing, therefore, looms as a sobering moment for mall operators. “While a bankruptcy filing does not always require the company to completely liquidate, it does typically lead to a reduction in the retailer's footprint,” they wrote.
J.C. Penney, Neiman Marcus, J. Crew, Stage Stores are considering wide-ranging store closures and, should they come to pass, malls will bear the brunt of the damage. Nearly two-thirds of these chains’ space—some 75 million sq. ft.—is located within malls.