NYC Retailers Going The Extra Mile This Holiday Season To Lure Shoppers Back
New York City retailers are gearing up for a robust holiday shopping season, even as anxieties over another virus surge hang in the air and supply chain issues prove to be a double-edged sword.
“I think the holiday season is going to be beyond anyone's expectations,” said CBRE Vice Chairman Richard Hodos, who has worked in retail in the city for decades. “People want to get out, they want to get into the mall, they want to get into the stores, they're tired of being cooped up at home.”
There is no doubt the 2021 holiday season is a very different one than that of 2020. And now, after nearly two brutal years of lockdowns and deserted streets in New York City, retailers are banking that shoppers will be returning in big numbers this year to make up for lost time. Last Thanksgiving, vaccines weren't available, most international tourists were barred from entering the U.S. and a bleak winter lay ahead.
But with travel bans now lifted and holiday staples like Broadway back up and running, retailers and their landlords are hoping a better mood will translate into fuller shops and more spending this season. CBRE is predicting brick-and-mortar shopping will increase 8% this season — the most in a decade — largely due to supply chain issues.
Those logistics problems, coupled with labor shortages, are a bit of a wrench in the works for in-person shopping as well. CBRE is predicting lines at stores and empty shelves, but Hodos said retailers are doing "extraordinary things" to get ahead.
“I was on the phone with Victoria's Secret the other day. … They're flying goods in from Asia rather than letting them get clogged up in Long Beach,” he said. “They want to make sure that the stores are well-stocked and that there are no bare shelves when customers go into their stores, in many cases for the first time in 15 or 20 months.”
That in-store experience is of the utmost importance this season, and some smaller retailers are hosting invitation-only cocktail parties and private shopping events to make it feel even more exclusive, said Robin Abrams, a retail broker and vice chair at Compass.
“It goes beyond that as many of these retailers are catering to their customers by offering comfortable seating for lounging in the store, and serving beverages — coffee, water, champagne — and sometimes light snacks,” she said in an email. “It is all about creating a positive in-store experience."
There are increasingly more promotional events at these stores that are connected to experience rather than price. This season, Hodos said, the focus will be on innovative ideas rather than the standard Black Friday sales.
“Kinds of things that are exciting,” he said. “That's what retailers used to do, before the late '80s and early '90s when everybody became price-sensitive.”
Price could be an issue in the season, however, said Brandon Singer, the CEO of retail leasing and advisory firm MONA. The U.S. inflation rate last month was at its highest level in three decades, pushing down consumer confidence.
“The one thing I do think is probably more impactful [than supply chain] is inflation,” he said in an interview. "Because things are so much more expensive than they have been."
Singer said there is still a sense the city isn’t out of the weeds yet. Europe is once again battling a surge in cases, with France this week hitting its highest infection rate since the summer, Germany’s health minister issuing dire warnings and Austria going back into a full national lockdown.
“[There’s] scary news in Europe happening," Singer said. "At the end of the day, I think people are optimistic that the worst is behind — we hope — and because of that, I think you'll continue to see people shopping and spending money in stores.”
Brik + Clik CEO Hemant Chavan, whose company brings online stores into physical retail, is already seeing it. The company opened two stores during the pandemic, one in the World Trade Center Oculus in Lower Manhattan and another in the Bay Area, as well as a holiday market in Los Angeles. Chavan said foot traffic and revenue in New York City have increased significantly, with sales up 160% last month.
“I’ve been [in LA] for the last week, and I've never seen foot traffic this high on a Monday and Tuesday, let alone on the weekend," he said.
He said New York City has begun to see more international tourists coming to the store since the country reopened the borders for vaccinated travelers from some 33 countries that had been shut out.
“[It’s] also the emotional connection — people haven't spent Christmas together, it's going to be two years,” he said. “People are kind of looking for new experiences.”
In 2019, there were 66.6 million visitors to the city, per NYC & Co., the city's tourist agency. That fell to 22.3 million in 2020 and is at 34.6 million so far this year. Pedestrian traffic in New York City's central business districts were 45.5% below their 2019 level in September, according to retail data specialist Springboard. Some of the city’s most storied shopping neighborhoods, like Madison Avenue, SoHo and Fifth Avenue, have been hit hard with challenges through the pandemic.
However, leasing velocity in Manhattan actually went up last quarter, the first increase since 2019, per CBRE, though rents went down by an average of 1% to $605 per SF.
Jerome Barth, the president of Fifth Avenue Association, said foot traffic is picking up, though sales are still uneven across the stores. He said the strip is seeing some 80% of foot traffic from 2019, a marked improvement from last year.
This year, there is extra effort to make the Fifth Avenue holiday experience extra special. In 2020, the stores were conservative in their spending on window displays, Barth said, but the holiday exceptionalism that has defined the strip — and seen it featured in countless Christmas movies — is back this year.
“Fifth Avenue is truly the home of the holidays, and you will see the windows of Bergdorf are magnificent, the windows at Saks are fun and playful and anchored in children's imagination," he said. “We know that people are vaccinated, we know that people have access to their booster, all the stores keep maintaining very high-grade-level procedures for sanitation, cleaning and washing, hand sanitizer is everywhere. … I'm fairly optimistic that this is going to be a great holiday season.”