CHARLOTTE, N.C. – Some malls in North Carolina will reopen this Friday after being shut down for more than a month. “I think a lot of people have to be convinced that there are safety protocols in place that they can safely go back out,” Wells Fargo Securities senior economist Mark Vitner said. Due to stiff competition from online retail, department stores were already facing a turbulent financial future. That was before the COVID-19 pandemic. Those anchor stores are key not only in keeping crowds coming to malls but also the well-being of neighboring smaller tenants. Mike Kakachyan is like a lot of merchants. He is constantly reminded of how costly this pandemic has been. “There's definitely been a drop in sales, just because we're not open to the public,” Kakachyan said. That goes for both his strip mall location in Harrisburg, North Carolina and his original store inside Charlotte's Northlake Mall. “We're still waiting to hear back on the paycheck protection program,” he added. While maintaining jewelry sales the best he can virtually, he's expanded outside of high-dollar items to make ends meet. “We're doing white latex glove local delivery,” he said. He said he's heard from mall management if the governor's order is lifted May 8, and the state transitions to Phase 1 of reopening, Northlake may reopen May 18. Kakachyan doesn't doubt customers will return. “I'm very optimistic,” he said. “A lot of us are very optimistic because birthdays, anniversaries, all those things are not going to stop.” But Vitner says the rebound won't be that rosy. “Retail was struggling before the corona outbreak, and it was struggling in a pretty significant way,” Vitner said. In particular, department stores have been facing stiff competition from online sales. “Their sales were down on a year-to-year basis, and there were a couple that were close to bankruptcy,” he said. “If an anchor decides to close stores, then a lot of the tenants in that wing have covenants in their leases, typically have covenants in their leases that allow them to walk as well,” Vitner added. “I think we're going to see folks go back to the malls,” he said. The question is, will it be in numbers that will help these retail super centers recover? “They're going to struggle,” Vitner said. “They're going to have to concentrate on their best markets, or the most profitable niches.” “My sense is that we are likely to see a number of store closings over the next few years.” “I think they're going to be optimistic about it as well,” Kakachyan said. “The few people that I have spoke with, a barbershop, they're ready to be back open.” Although it won't be localized to our malls across the state of North Carolina, Vitner says we could see some data on the state of the retail economy in the next week. |
Economist: Some Mall Stores Will Remain Closed After Coronavirus Pandemic
UPDATED 11:30 AM ET May. 06, 2020
PUBLISHED 6:08 PM EDT May 05, 2020