It's no secret that retailers have been dropping like flies in the wake of the coronavirus pandemic, but you'd think niche stores would perhaps have a bit more staying power than their run-of-the-mill counterparts. But unfortunately, a well-known and much beloved luxury brand is now calling things a wrap.
Godiva, the famed chocolatier that's destroyed many a diet through the years, has announced that it will be shutting down all 128 of its North America stores. That's a blow not just to customers who relish the experience of sampling Godiva's tasty treats, but also to the mall operators that have long relied on Godiva to take up residence and keep paying rent.
Malls can't afford another hit
Malls have lost a number of tenants in the course of the pandemic already, and with department stores like Macy's (NYSE: M) making plans to go off-mall in the near term, saying goodbye to Godiva is no easy thing to do.
Granted, Godiva stores have been smaller in nature, and so replacing Godiva is not the same feat as finding new anchor tenants in the wake of shuttered department stores. But at this point, losing just about any retailer is a hardship for malls, and the fear right now is that Godiva is only a small piece of a rapidly exploding trend.
In fact, the loss of Godiva is especially harsh given its unique product offering. While there's been no shortage of apparel stores at malls in recent history, chocolatiers are a less ubiquitous breed.
Adding to malls' injury is the fact that just a couple of years back, the future was looking bright for Godiva. In 2019, Godiva introduced its first U.S. cafe and announced plans to open more than 400 locations across the country. But those plans never came to be.
The good news for high-end chocolate fans is that Godiva isn't shuttering operations completely. Its products will still be available for online purchasing. Also, a number of warehouse clubs and retail partners, like Macy's, carry Godiva, so customers can still scoop up some sweet items in stores. But for the vast selection they're used to, they'll need to take their business online.
Malls, however, won't benefit from that arrangement in the slightest, and if they continue losing tenants, they're going to be in trouble. Many mall real estate investment trusts (REITs) have already taken a hit during the pandemic, and now they'll need to brace for even more closures as the retail apocalypse takes its toll. In fact, it's estimated that 10,000 stores will close on a permanent basis in the course of 2021, according to Coresight Research, and while those closures will be counterbalanced by 4,000 new openings, those will largely stem from dollar- store chains and discounted grocery stores -- businesses that don't tend to set up shop in mall environments.
All told, it's a precarious and scary period for mall REIT investors -- and a good time for them to drown their sorrows over a box of chocolatey goodness to soften the blow.