MGR eCommerce Edge Weekly | October 9, 2020
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What is American Going to Do With all the Empty Retail Stores?
Bankruptcies and foreclosures are becoming the norm for American retailers in 2020, those who are still surviving are now seen as the oddities. Major retailers like JC Penney, Neiman Marcus, Pier 1, and many others continue to shut down stores across the country, and there is no clear plan as to how anyone is going to take their place.
A stimulus may help some retailers, but the hole that’s been gashed through the industry is far too big to patch. Stimulus and loans may work to bridge the gap, but at some point retailers need their customers back, and in full force, not limited capacity.
The temporarily imposed residential eviction ban hasn’t helped retailers either. The ban puts pressure on the banks, and often the same banks who provide loans to homeowners, are the same ones who loan to retailers. Since these banks have lost their ability to remove non-paying tenants on the residential side, it leaves them with little flexibility to help (aka take on more risk) on the commercial side.
Retailers are not innocent in this situation. In an effort to continuously drive growth America has become ‘over-retailed’ in the past two decades. The US has more retail square footage per capita than any other country in the modern world. It was inevitable that retailers who were going to one day be squeezed, COVID just accelerated the timeline faster than anyone could have expected.
The longer term question is what happens to American cities and suburbs when half or more of commercial real estate is vacant. What will take it’s place, and how will that shape the greater American landscape for years to come?