Not All Retailers Are Made Equal During the Pandemic

The retail market is among the most impacted by the pandemic—but even within the industry, not all retailers have been impacted the same. Restaurants, enclosed malls and open-air shopping centers are all handling the pandemic differently. The differences range from government-implemented restrictions to consumer comfort.

“Many jurisdictions still restrict and limit the operation of enclosed malls, by significantly limiting and/or prohibiting in-store shopping,” Scott Grossfeld, a partner at Cox, Castle & Nicholson, tells GlobeSt.com. “The same rules do not tend to apply to open-air shopping centers. In open-air centers in many jurisdictions, retailers are currently generally permitted to operate with in-store shopping, although subject to some conditions aimed at limiting congestion and high customer traffic within the store.”

Open-air shopping centers are more uniquely positioned to adapt to the shopping needs. “Many open-air shopping centers, especially those, which are entertainment or lifestyle centers, contain park-like grounds and are open and inviting,” says Grossfeld. “Landlords have noticed that as restrictions loosen, people who were holed-up due to the pandemic are beginning to venture from their homes and have been finding enjoyment in spending time at community-oriented shopping centers to relax.  This also often results in the added benefit of associated shopping.”

Owners of enclosed malls on the other hand have a challenge driving consumer traffic while adhering to safety rules. “Landlords and retailers of enclosed projects attempt to mitigate these restrictions by providing curbside and other forms of pick-up services, where customers can order products over the internet or phone and have them delivered to cars in the project parking lot or at home,” says Grossfeld. “Although such options provide retailers with some element of economic relief, they unfortunately are not the same (or as good) as providing in-store shopping.”

Restaurants are among the retailers to see strong restrictions, but have also been able to adapt. “In many jurisdictions, restaurants are still prohibited from serving customers within their premises,” says Grossfeld. “Their only option is to serve customers in exterior locations such as patio areas, sidewalk locations, common areas or other temporary exterior locations within the center or using take-out or pick-up service.  The landlords of many open-air centers have been creative and flexible with tenants in allowing them to use many exterior portions of shopping centers not previously used for outside dining, in an effort to help these retailers save their businesses.”

While owners of enclosed malls have fewer options to serve customers, they are also trying to find solutions to continue to generate revenue. “Enclosed mall landlords are also attempting to provide workarounds in order to enable restaurant tenants to provide more than just take-out and delivery service,” says Grossfeld. “Some landlords have designated portions of mall exterior parking areas and structured parking garages for exterior seating areas for their restaurant tenants.  Although this enables restaurant tenants to generate more business by offering on-site meal service, the general consensus has been that it is much less attractive and less desirable than the outdoor seating areas offered in open-air shopping centers, which are usually located in well-manicured common areas, as compared to sterile parking areas and garages.”