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.
How are Americans feeling about their finances?
Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.
Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.
Are people still waiting for unemployment payments?
Yes. There is no way to know exactly how many people have been waiting for months and are still not getting unemployment, because states do not have a good system in place for tracking that kind of data, according to Andrew Stettner of The Century Foundation. But by his own calculations, only about 60% of people who have applied for benefits are currently receiving them. That means there are millions still waiting. Read more here on what they are doing about it.
What’s going to happen to retailers, especially with the holiday shopping season approaching?
A report out Tuesday from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August. And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.
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