If the pandemic were a Dr. Seuss character, it would be the Grinch for sure. The holiday shopping season would normally be a prosperous time for retailers. But with social distancing measures in place, the absence of a key person at the local mall might cause even further decline in foot traffic: Santa.
In other holiday seasons, Santa Claus and his elves were looked upon as the saving grace for malls. Parents would bring the kids for the requisite photo on Santa's lap and then stay to do some holiday shopping. But this year, posing with Santa is literally the opposite of what we must do to keep each other safe during a pandemic. So struggling malls are having to come up with alternative holiday experiences to entice shoppers.
Holiday sales make up an average of 19% of total sales for stores, though this number is higher for certain retailers. The National Retail Federation (NRF) reports holiday sales reached $729.1 billion in total during 2009-2019. Last year, sales increased by 4% from the previous year. But according to CBRE Retail Research, that growth is expected to be under 2% this year -- and that's only if there is no surge in the virus that would cause stores to close. ShopperTrak's forecast is also gloomy: Retailers will likely see a 22% to 25% decrease in in-store shoppers during the six-week holiday shopping period.
The NRF reports 96% of retailers expect their online sales to increase this season as shoppers find themselves stuck at home -- good news for retail in general, but not for struggling malls.
How malls are trying to steal Christmas back from the pandemic
The good news for shoppers with young children -- and those of us young at heart -- is that Santa will likely still be making appearances at many malls. But it will not be in the traditional way of years past. This year, mall owners are introducing touchless and virtual Santa experiences to adhere to social distancing guidelines.
Barring a true miracle on 34th Street, Macy's (NYSE: M) is bucking its 159-year-strong tradition of in-person visits with Santa at its flagship store by rolling out a virtual "Santaland at Home." Yes, you read that correctly -- Macy's relationship with Santa dates back to 1861.
The online experience will allow kids to "see" Santa and his elves at the North Pole and play interactive games. They can "meet" Santa through an interactive video, where they can give him their wish list and then take a selfie. If a Santa selfie sounds like a less-than-festive experience, there's hope: Santa is still slated to bring up the rear of the famous Macy's Thanksgiving Day Parade.
PREIT, the Pennsylvania Real Estate Investment Trust (NYSE: PEI) struggled early on in the pandemic and has filed for Chapter 11 bankruptcy as part of a planned restructure. In an attempt to muster some Christmas cheer this shopping season, PREIT announced Santa will indeed be making an appearance at malls in the Philadelphia area. However, he will be sitting behind a plexiglass shield for protection; youngsters can stand on the other side to have their photo taken. Parents can make reservations for these photo sessions, as well as opt for a 5-minute Zoom (NASDAQ: ZM) session where kids can get some quality time with Santa before he heads back to the North Pole.
Keeping customers -- and Santa -- safe
Similar stories are happening at malls across the country. It doesn't help matters that Santa Claus is a gentleman of a certain age and body type -- and that, unfortunately, puts him in the high-risk category for contracting COVID.
Easton Town Center in Columbus, Ohio, is an open-air mall. While that ventilation gives it an edge over other enclosed malls, organizers are keeping things virtual this season.
Says Jennifer Peterson, chief executive of Easton Town Center: "We want to keep Santa safe. We would never want to be on the naughty list." Safety precautions include video visits with Santa -- parents provide details about their child that Santa can use to personalize the experience.
Peterson says that in a normal season, 10,000 people would come to visit Santa. When Easton Town Center has its tree lighting ceremony, however, they would have between 6,000 and 10,000 people visit that day alone.
Says Peterson: "As good corporate citizens of this country and this community, we're not going to try to drive those kinds of crowds, have long lines, or have any kind of unsafe gathering opportunities. What we're going to do instead is kind of spread the love throughout the entire holiday season." That means cueing a twinkling display of more than 2 million lights, rolling in igloo-shaped structures for outdoor dining, and setting up the stands selling roasted chestnuts that will perfume the air while shoppers browse.
In addition to providing a stellar alternative holiday experience, Easton Town Center will be continuing a number of its pandemic-inspired initiatives to keep shoppers happy during and past the holidays. In addition to curbside pickup -- "I think will continue maybe forever," Peterson says -- the mall will also offer same-day delivery for area shoppers.
Stores need a little Christmas, right this very minute
As we head into a holiday season unlike any other, malls are indeed doing their best to bring some good cheer. Will they succeed in enticing shoppers to the stores? Like children waiting for Christmas morning, retail investors will just have to wait and see.