Will increasing mall traffic hit a speed bump due to the Delta variant?

Discussion
Photo: RetailWire
Aug 03, 2021

Simon Property Group announced that shoppers returned to malls in the second quarter as though it was 2019 and the novel coronavirus pandemic had never happened.

David Simon, CEO of the mall operator, told analysts on the company’s earnings call yesterday that footfall was up around 80 percent from last year and that traffic in some locations was actually higher than it had been during the same period in 2019, CNBC reports.

The mall giant’s 91.8 percent occupancy rate still remains below last year’s 92.9 percent and subsequent store closings tied to retailer bankruptcies. Simon’s occupancy rate two years ago stood at 94.4 percent.

Mr. Simon said his company was digging out of the large hole created by the pandemic but that he was encouraged by a pick up in demand for open space inside its shopping centers.

A potential obstacle facing Simon’s malls is the rapid spread of the Delta variant across many communities. The spread of the variant is particularly pronounced in states where COVID-19 vaccination rates are low.

A CNN report cited a briefing yesterday by Jeff Zients, COVID-19 coordinator for the White House, during which he said that the seven states with the lowest rates of vaccinations accounted for more than 17 percent of new cases in the past week despite only representing 8.5 percent of the national population. He pointed out that one in three cases occurred in Florida and Texas where one governor is threatening to withhold funds from school districts that mandate students wear masks and the other has signed an executive order barring local governments and agencies from imposing mask mandates even in the face of spiking cases.

Mr. Simon said that his company’s malls “would mask up” where it was needed, but cautioned that his company’s properties and others should not be made a scapegoat as cases rise in some places.

He pointed to the spread of the Delta variant in Florida, Yahoo Finance reports, and said there has not been “an uptick in COVID cases for the people that are in the mall, the staff, whether it’s a retail or a management team, period, end of the story. No question about that. So, I personally think that people are just going to deal with Delta. I’m hopeful that people will get vaccinated. We’re not going to mandate vaccines; we’re going to encourage them.”

DISCUSSION QUESTIONS: Will the Delta variant cause changes in shopping behaviors among consumers in places where there has been a pronounced increase in cases? How, if at all, do you see this affecting traffic to enclosed shopping malls?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"I suspect that we will see the return of mask mandates and maybe some restrictions on shopper capacity coming soon based on the current trend of the COVID-19 Delta variant."
"All 50 states are reporting a marked increase in daily vaccination rates, which is encouraging, and may moderate the impact of the Delta variant on shopper behavior."
"I think we will see speed bumps for the next 12-24 months with variants continuing to cause issues."

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32 Comments on "Will increasing mall traffic hit a speed bump due to the Delta variant?"


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Mark Ryski
BrainTrust

The return of mall traffic is encouraging, but the situation with the Delta variant is still unfolding. If vaccination rates continue to climb, and new Delta case counts moderate, then it’s possible that mall traffic will continue to increase as we head into the holiday season. However we’re not out of the woods yet. China just recently imposed it’s most stringent COVID-19 rules since March of 2020, so we must remain vigilant.

David Naumann
BrainTrust

I suspect that we will see the return of mask mandates and maybe some restrictions on shopper capacity coming soon based on the current trend of the COVID-19 Delta variant. A lockdown like we experienced in 2020 is not as likely, as with proper masking and social distancing processes, stores and malls should be able to continue to operate. There may be a dip in shopper traffic, but it shouldn’t be as bad as 2020. Fortunately, retailers and consumers are much more prepared to deal with social distancing.

Neil Saunders
BrainTrust

It would be very interesting to see a detailed segmentation of traffic trends at Simon’s malls. Given they have a mix of properties, I suspect that the outlet centers – what they call Premium Outlets – have driven a lot of the recovery. I have visited quite a few traditional malls in their portfolio and, while there is most certainly a recovery over last year’s precipitous drop in traffic, a lot of those locations remain dispiriting and in need of investment. As with most things mall related, the future is very mixed. Some will thrive and many will die.

Jeff Sward
BrainTrust

So a mall owner says of his properties in Florida that there has NOT been an uptick in COVID-19 cases. Period. End of the story. I’m having a hard time coming up with a printable adjective for that statement.

DeAnn Campbell
BrainTrust

“Printable” being the limiting factor. 🙂

Jeff Sward
BrainTrust

Precisely. I actually have a long and colorful list adjectives.

Ian Leslie
BrainTrust

We’re in for another long fall and winter in terms of brick-and-mortar retail. The drop in traffic that will come will continue to hasten the move to e-commerce and the relative lessening of the retail footprint in this country. There will be a lot of empty space that can be used creatively, perhaps for regional fulfillment centers?

Lee Peterson
BrainTrust

No worries, Ian, neg hits on e-com vs stores (the obvious track) are a badge of courage. Keep up the good work.

David Weinand
BrainTrust

Honestly, the people that are not vaccinated as of now, likely won’t be – and they also likely won’t change their behaviors either. They clearly don’t care how this virus affects others, whether it be retail workers or healthcare workers, so the rest of us will have to change our behaviors. For the vaccinated, some will feel invincible and not worry about masks, and others will be careful and put them back on. Nobody likes masking up but there is a high enough number of breakthrough infections that it is the smart thing to do (especially in states like FL where I live!).

George Anderson
Staff

There have been news reports of increased vaccination rates in states where misinformation is high as is the spread of the Delta variant. One report I read even talked about people disguising themselves to get vaccines so that their anti-vaxxer family and friends would not find out. Reminds me of the old Pogo cartoon. “We have met the enemy and he is us.”

storewanderer
Guest
4 months 1 day ago

Well, given 30-40% of healthcare workers are not vaccinated based on a lot of estimates we are seeing, I think it is a pretty tall statement to say those who are not vaccinated do not care how this virus affects others. Certainly those healthcare workers care. Some who are not vaccinated care how the vaccine may affect themself or others and are not vaccinating for that reason.

Those who are vaccinated and behave as if “invincible” are in just as dangerous of a position as those who are not vaccinated. Given the vaccinated are spreading Delta variant and have the same viral load as those who are unvaccinated per the CDC per that outbreak in MA, clearly when you have an invincible individual who is sick, in a store, and coughing/sneezing without covering their nose/mouth, you have a dangerous situation from a virus spread perspective.

Everyone needs to be careful and mindful of distancing, hygiene, and cleanliness. Vaccine or not.

Oliver Guy
BrainTrust

This will be interesting to watch. Connecting cases back to a mall could be difficult. However we have to remember that these tend to be large spaces that are well ventilated with high ceilings. But this does not change the fact that malls need to become multi-purpose locations where orders are fulfilled along with exploration and actual transactional shopping.

Dave Wendland
BrainTrust

For those that may have thought COVID-19 was behind us and we were “back to normal,” the latest variant (and uncertainty) is causing shoppers to reconsider their choices. That said, I still believe shopping malls can survive this setback as they reinforce safety measures and remind shoppers that they are open for business. Shopper behavior has not completed its evolution — and retailers (and mall operators) must also continue to evolve.

Lee Peterson
BrainTrust

Simon is a PR guy. We all know that foot traffic has been reverse hockey-sticking in malls for 15+ years now with e-commerce headed in the reverse direction. See also: number of malls closing or closed. Yes, people visited malls this past month because they couldn’t before, but don’t fool yourself — the physical retail footprint is going to be much smaller in the future and the march to that end is not even close to finished. To quote Bezos, “if you’re leaning away from the future, the future will win every time.”

DeAnn Campbell
BrainTrust

We’re a lot more knowledgeable now than in March of last year which has given vaccinated shoppers the confidence to navigate public spaces. We’re also a lot more acclimatized to masks, at least most are, and have seen the proof over the past year of the effectiveness of masking. With this knowledge and experience consumers are making more informed and purposeful visits to stores — less aimless browsing and more targeted viewing of products before purchasing online. This proves out the immense need of shopping centers to adopt the omnichannel model and become a multi-channel marketplace in their own right.

Kathleen Fischer
BrainTrust

I think we will see speed bumps for the next 12-24 months with variants continuing to cause issues. Mask mandates and social distancing will likely increase again, especially in areas with higher transmission rates and as we saw during the first and second waves, enclosed shopping malls will be less attractive.

Rich Kizer
BrainTrust

I don’t think anyone was surprised at the uptick in traffic as we stepped out from the COVID-19 pandemic. It was like, “school’s out.” My fear is if the Delta variant continues, I do believe we will see fewer footsteps in our stores. So retailers, keep that social media commerce mentality handy!

Dick Seesel
BrainTrust

Comparisons to 2020 will continue to be very favorable, but comparisons to the second half of 2019 will be more revealing. The strong recent spending trends might slacken during Back to School, although many of those sales will move to omnichannel as long as schools are able to reopen safely.

As to mall traffic — not to be confused with outlet centers, power centers and other “mass merchant” locations — that’s just as much an open question as it was two years ago, given the continuing weakness of the “mall anchor” and apparel tenant business even before the pandemic.

Joel Rubinson
BrainTrust

Some issues, yes. DiBlasio, just this morning, is making it mandatory that NYC indoor diners and gym users show proof of vaccination. The numbers in Florida are horrendous. The only hope is that this moves through fast because the R naught is so high. Regardless, it is also true that government policy trails the triggering event, so I think there will be restrictions from government and self-imposed.

Richard J. George, Ph.D.
BrainTrust

Too soon to predict. The next 30 days of dealing with the Delta variant will provide clarity on what to expect in the future, not only with malls, but all U.S. businesses and consumers. If there is no slowdown in the Delta variant expect significant impact on enclosed shopping malls.

Mohamed Amer
BrainTrust

It’s not going to be much of a speed bump. Whether masked or not, shoppers have a strong desire and a need to return to a normal state of affairs. Most people who wanted the vaccine have been jabbed; the rest are unlikely to do so. That said, to read Mr. Simon’s framing that somehow the Delta virus uptick in Florida has bypassed his company’s malls is highly troubling, if not irresponsible. Even if he offers a caveat by limiting his sample to the mall and retailer-associated staff, their numbers are dwarfed by those of the shoppers.

Jeff Hall
BrainTrust

All 50 states are reporting a marked increase in daily vaccination rates, which is encouraging, and may moderate the impact of the Delta variant on shopper behavior. Given the pent up demand created by extended lockdowns, now that consumers are enjoying a sense of freedom and mobility, it’s not likely we’ll see meaningful pullback on foot traffic, even for enclosed malls. Mall operators should be more concerned with the accelerating long-term shift in shopper behavior to enclosed mall alternatives.

Evan Snively
BrainTrust

Areas with lower vaccination rates and higher surges are going to be the ones with the least disruption. At this stage, 1.5 years after the initial outbreak, you know who is going to change their behavior and who isn’t. Areas with higher vaccination rates (and therefore a population which is more cautious) will see some decrease in foot-traffic, but probably not as significantly until the spike in cases get much worse (which hopefully does not happen).

Georganne Bender
BrainTrust

I think every business will hit speed bumps due to the Delta variant. Retailers who amped up their e-commerce efforts and deeply embraced selling via social media didn’t walk away when the pandemic was “over.” They will continue on, business as unusual. But I have not seen much effort from the malls themselves to encourage shopping, either in-store or online, the way individual retailers did. Let’s see what they do this time around because malls need to do more to connect with consumers.