As the nation’s retailers adapt to more curbside pickup and outdoor offerings as a result of COVID-19, what will happen in cold-weather states like Michigan once winter hits?
Panelists pondered this question during “Michigan Retail Outlook,” a webinar hosted by Shopping Center Business and Heartland Real Estate Business that took place Tuesday, Aug. 25.
“We have tenants that are expanding their outdoor seating and planning ahead for winter by adding covers, plastic vinyl or outdoor heaters,” said Mike McBride, senior vice president of asset management for RPT Realty, which has an office in Southfield, Michigan. “We’re seeing them expand for the long term with outdoor equipment.”
Joining McBride on the panel were Deno Bistolarides of Encore Real Estate Investment Services, Thomas Litzler of Schostak Brothers & Co., Cynthia Kratchman of Mid-America Real Estate — Michigan, Nathan Forbes of The Forbes Co. and Eric Larson of Downtown Detroit Partnership. Todd Sachse of Sachse Construction moderated the discussion.
“Europe has lived with outdoor seating 12 months per year forever,” noted Forbes, who is managing partner in Southfield, Mich. “There have to be ways to keep that outdoor space open during the winter months through temporary heating or other measures. We have to expand the footprint beyond the indoor space where sales are going to be compromised significantly.”
In Michigan, Gov. Gretchen Whitmer enabled restaurants to reopen starting June 8 at 50 percent capacity. But fitness centers and movie theaters remain closed, as the state has continued to report a high number of coronavirus cases. As of Aug. 27, Michigan had 99,958 coronavirus cases, which is 26,820 more than neighboring Wisconsin, according to data from the states’ websites.
In Detroit, the unemployment rate skyrocketed from a pre-pandemic 8 percent to today’s 25 percent, largely centered around the service industry and retail, according to Larson, CEO of Downtown Detroit Partnership, which is a public-private partnership of corporate and civic leaders.
A lack of clarity regarding the longevity of the pandemic has been very hurtful for small business owners, said Larson. Many invested their life savings to stay afloat during the early days of the crisis and didn’t foresee the long-term implications.
Ways to adapt
In addition to outdoor seating, retailers are getting creative by hosting outdoor exercise classes and sidewalk sales, according to McBride. Tenants are responsible for any added costs associated with outdoor events, but they are not charged extra for expanding outside their premises, he added.
Some landlord involvement is needed for creating curbside pickup areas because retail centers weren’t built with this type of shopping in mind, said Kratchman, who is a principal with Mid-America. Landlords should be cooperative in this respect because having an omnichannel presence is imperative for a retailer’s success today, she argued.
“If there are 1,000 regional malls today, in 36 to 48 months there may be 300 to 400 left standing that are of any significance. Of those, maybe 150 to 200 really make an impact in a community,” said Forbes. “When retailers figure out what their matrix is between brick-and-mortar and e-commerce, landlords and developers better be there to support that infrastructure.”
Forbes is currently planning out ways to support various shopping methods, including personal shoppers, home delivery, curbside pickup and holiday pop-ups. Since customers are entering stores less frequently today, it’s imperative that retailers offer a shopping experience that is “efficient, effective and pleasant,” he said.
RPT has installed over 1,500 parcel pickup spaces throughout its portfolio of properties, according to McBride. This convenience-driven shopping model is here to stay, he said.
In addition to essential businesses like supermarkets and dollar stores, retailers that quickly adopted delivery and curbside pickup are thriving in today’s environment, said Litzler, COO and executive vice president of Livonia-based Schostak. The coronavirus pandemic has taken demographics and compressed them, he said. In other words, it has forced all ages to be more adept at online shopping.
“This isn’t a new concept; e-commerce has been the word of the day in our business for the past few years,” said Bistolarides, managing partner with Farmington Hills-based Encore. “The pandemic just pushed the fast-forward button on everyone’s plans to incorporate e-commerce.”
— Kristin Hiller