For U.S. consumers, Thanksgiving isn't just about enjoying a meal with family and friends while basking in gratitude; it's about hitting the stores and scoring the latest deals as the Christmas shopping season begins. While Black Friday has long been a major shopping day, in recent years, stores have increasingly started opening on Thanksgiving in an attempt to draw in bargain-hungry consumers with money to spend.
But this year, some of the country's largest mall locations and outlet shopping centers will not be open for Thanksgiving. Mall owner Simon Property Group (NYSE: SPG) has announced its retail locations will remain shuttered on Thanksgiving Day. David Simon, CEO of Simon Property, said the decision was made in order to allow company employees to spend the holiday with loved ones.
To some degree, this move isn't surprising. There's been a lot of pressure on retail establishments to close for Thanksgiving and encourage not just employees but the general public to take a break from consumerism and instead focus on what the holiday is meant to be about: giving thanks.
On the other hand, given that 2020 has pretty much been the year of distressed retailers, with numerous well-known names filing for bankruptcy in the course of the COVID-19 pandemic, it's a bit surprising Simon Property Group would decide to keep its mall locations and premium outlet centers closed during one of the biggest shopping days of the year.
Will a bold move by Simon Property Group hurt real estate investors?
Mall traffic has been sluggish all year thanks to the ongoing pandemic, and Simon's malls are no exception. By making the decision to close on Thanksgiving Day, Simon Property could end up digging retail investors into an unsettlingly deep hole.
There's already the worry that shopping malls won't survive the COVID-19 pandemic and that store closures will continue to increase as retail locations struggle for foot traffic. With Simon Property keeping its malls closed on a major shopping day, more consumers will no doubt seek to spend their money online, thereby contributing to a trend that already has investors worried about the long-term viability of retail locations and malls.
Then again, to some degree, Simon Property Group may have had no choice but to make that call. For one thing, the company certainly doesn't want bad press, and given the "close for Thanksgiving" movement, its decision holds water. Secondly, thanks to the COVID-19 pandemic, the idea of opening malls on Thanksgiving is a precarious prospect to begin with, given the way crowds tend to flock to stores in search of the best deals of the year.
In fact, while Simon Property Group is currently planning to have its malls open on Black Friday, the company may need to rethink that decision from a public safety perspective. Of course, real estate investors will clearly want Simon's malls to invite customers in that day, but consumers may instead opt to take their business online rather than assume the risks associated with battling crowds during a pandemic. And let's not forget that even outside of COVID-19, in-store shopping on Black Friday can be a nightmare.
The bottom line
Simon's decision to close for Thanksgiving probably wasn't an easy one. But the largest shopping mall operator in the country may be acting out of an abundance of caution, and that's something retail investors have to appreciate. In fact, if COVID-19 outbreaks start getting linked to malls, further closures could spell disaster for anyone invested in the retail space. So erring on the side of public safety and goodwill may have been a smart move during these very turbulent times.