The omicron variant of COVID-19 has wreaked serious havoc on a retail landscape that appeared to be on the road to recovery just a few months earlier as people got their vaccinations and returned to life outside their homes after being quarantined largely since the spring of 2020.
Now, landlords are faced with either offering breaks to their retail tenants or losing them altogether, with more merchants finding it tough to stay afloat amid increasing case counts — including a record of more than 1 million new positives Monday (Jan. 3), including a lag in test results from the holiday weekend.
Meanwhile, San Francisco landlords are now dealing with increased financial pressure thanks to the debut of what’s known in the city as a vacancy tax. It was approved in March 2020 before the start of the pandemic across the U.S. and hits landlords with a tax for keeping a commercial space vacant for more than 182 days in a given calendar year.
Foot traffic at the Oculus, the transit hub and shopping mall in Lower Manhattan, has dropped in a noticeable way recently, said Diana Grasso, vice president of Westfield World Trade Center, in a report in The New York Times (NYT) Tuesday (Jan. 4).
“You saw the impact almost immediately,” she said.
Grasso filled empty retail spaces in the Oculus this holiday season with minority- and women-owned businesses and could find permanent homes for the merchants elsewhere in the complex.
Not everyone expects to see long-term effects on the retail sector from the omicron variant, in part because more people are vaccinated and in part because the strain appears to be milder than others, including the delta variant.
“Consumer behavior will be less impacted than it was over the summer,” said Michael Baker, a senior retail analyst at D.A. Davidson, a financial services firm, in the NYT report. “I do think there will be a step back, but a smaller step back, a shorter step back.”
PYMNTS research shows that physical foot traffic during Black Friday — one of the heaviest shopping days of the year — was down compared to 2018. Retailers are getting more creative with their spaces in efforts to bring customers out and encourage them to shop in stores with more shop-in-shop concepts.
Read more: How Retail Is Turning Closed Stores Into New Opportunities
Among many other examples, Target has partnerships with Apple, Disney, Ulta Beauty and Levi Strauss & Co. to place stores inside of stores.
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