Shock recovers after the November hunch

Shoppers make their way through the Grand Coastal Mall on Black Friday as the coronavirus disease (COVID-19) pandemic continues on November 27, 2020 in Myrtle Beach, South Carolina, USA.

Micah Green | Reuters

Reluctant shoppers found they couldn’t avoid the mall during the vacation.

A data analysis released this week by Placer.ai shows how shopper visits to shopping malls have subsided amid the Covid pandemic. The research firm, which uses cell phone data to track consumer behavior, surveyed pedestrian traffic in more than two dozen “top tier” malls across the country during the year.

Visits to the tracked shopping malls, which Placer.ai refused to name, peaked in February before the pandemic, up 10.7% from 2019. In March – when retail stores and malls closed to slow the spread of Covid – visits fell 59.5%. A year-on-year decline of 95.9% followed in April, marking a low point.

During the summer months, when Americans were feeling a little more comfortable leaving the house, visits to these shopping centers steadily recovered from month to month into the fall. But a revival in Covid cases hit traffic in November, leading some to believe that U.S. malls would be particularly bleak in the final weeks of the year.

A surprise came in December, however, when visits recovered. Some procrastinators had no choice but to hit the mall in the last few days before Christmas for last minute gifts. The upward trend shows that malls still play a role as a convenient shopping option for some consumers.

“The immediate nature of the recovery after Black Friday, the strength in early 2020 and the height in 2020 in exceptionally difficult circumstances confirm the idea that 2021 could be a lot friendlier for malls than many expect,” said Ethan Chernofsky, vice president of marketing at Placer.ai said in the report.

However, this report only analyzed traffic in the top performing malls in the US – likely owned by Simon Property Group or Brookfield Property Partners, which operate some of the most valuable malls in the country. The picture was certainly darker elsewhere.

Two shopping center owners, CBL & Associates and Pennsylvania REIT, filed for Chapter 11 bankruptcy protection in 2020. The latter has since surfaced. But shopping center owners are under pressure again in the New Year as tenants continue to ask for rent relief after the holidays or plan additional store closings.

“It’s a total renters market,” said Tom Mullaney, director of restructuring services at commercial real estate services company JLL. “Landlords are told that you can either drop ‘X’ or I’ll just leave.”

Visits appear to be heavier at outdoor centers, where many Americans have been more comfortable during the pandemic.

In a presentation this week at the annual ICR conference, the Tanger Factory Outlet Centers said that traffic fell back to about 90% of 2019 levels during the fourth fiscal quarter. The Real Estate Investment Trust owns outdoor outlet centers in cities such as Daytona Beach, Florida and Charleston, South Carolina.

Some retailers this week also discussed their plans not to invest in malls due to rapidly changing shopping patterns.

“Not many people out there want to invest in business today [at] Especially in the mall because we’re waiting for this dust to settle, “said Scott Lipesky, CFO of Abercrombie & Fitch, during an ICR presentation.” We will retire this year. We did not get [to 2021] yet … but our real estate investments are likely to decline. “

Jerome Griffith, CEO of Lands’ End, said in a separate presentation that the clothing retailer’s typical expansion plans – opening 10 to 15 stores annually – are being put on hold for the foreseeable future.

“We don’t see any traffic,” said Griffith. “So we’ll see how consumers react to bricks and mortar when things are a little more open. And then, if it makes sense to think again, we’ll do it at this point.”

– CNBC’s Crystal Mercedes contributed to this data visualization.