Shoppers Begin To Trickle Back To Houston’s Retail Centers

Retail stores, shopping malls, restaurants and movie theaters around Houston opened their doors to customers on May 1, as Texas Gov. Greg Abbott’s reopening executive order came into effect.

Shopper turnout at outdoor shopping center Rice Village on May 1 and over the weekend was still relatively low.

“When it comes to shoppers, what we saw here was, they trickled in,” REIS Associates Senior General Manager Aj Coffee said.

Coffee manages 54 tenants within outdoor shopping center Rice Village. On May 1 and extending over the weekend, a total of seven retail stores opened their doors to customers.

Abbott’s order allows certain businesses to reopen at 25% occupancy. That order has been widely welcomed by retailers, which have been bearing some of the harshest effects of the coronavirus pandemic.

In some limited cases, the April 27 announcement had an initial positive effect. Restaurant bookings in Houston skyrocketed that day, increasing by 1,797% from the day prior, according to OpenTable data.

Reservations increased by 847% during the May 1-May 3 period, compared with the same period a week prior. Though this represents a major increase, reservations are still down by 89% compared to the corresponding weekend last year. The data included online seating or pending reservations in the Houston metro area.

But that hasn’t been felt broadly.

Local dessert company The Chocolate Bar has two locations in inner Houston, including one in Rice Village, and reopened both at 25% occupancy on May 1.

“We haven't seen a huge influx in people coming in to dine,” a spokesperson for The Chocolate Bar said. “A lot of Houstonians are still doing takeout and still working from home and enjoying their treats at their home.”

Prior to the stay-at-home order, The Chocolate Bar did not have an online ordering system. When businesses were ordered to close, the company quickly put together an online store and ordering system, which has proved popular with customers.

While some retailers were able to reopen May 1, others are taking a slower approach to opening their doors. There are many businesses still developing social distancing and sanitizing measures that comply with the governor’s order. Others are still trying to recall furloughed staff.

The ones that reopened in Rice Village were part of a larger chain or franchise, such as Urban Outfitters, Athleta and Banana Republic. All were apparel stores.

“The larger ones were in a position to put more things in place, as it related to how they were going to open the stores, because they were doing it nationwide,” Coffee said. “These were the ones that were in a position where they could modify their store in a way, and ensure that everyone was complying in order to do that."

Retailers that reopened had taken certain measures, such as reconfiguring the layout, strategically placed signage and staff wearing masks, Coffee said.

Of the 13 food vendors and restaurants in Rice Village, only two have remained closed during Harris County’s “Stay Home, Work Safe” order: Starbucks and Susie’s Cakes. The other restaurants in the center have been doing curbside pickup. 

Over the weekend, most began to reopen at 25% occupancy.

The Texas Restaurant Association conducted a statewide poll last week of restaurants in Texas about the May 1 reopening. Of the 400 respondents, about 43.4% said they would reopen, while 47.4% said they would not. The remaining percentage was unsure.

Hair salons, nail salons and makeup stores remain closed. Two new tenants in that category were supposed to open in Rice Village within a week of the stay-at-home order, and are simply waiting for the governor’s permission to reopen.

“They're just waiting. They have their staff ready to go, they have the merchandise in the store, they're pretty much ready to go,” Coffee said.

About three-quarters of the tenants at outdoor shopping center CityCentre, located at I-10 West and Beltway 8, are operating in some capacity, Midway Cos. Regional Property Manager Aimee Braswell said. That could be via curbside pickup, or physically opening their doors. Restaurant tenants at CityCentre have remained open during the stay-at-home order, moving to curbside and delivery. And since curbside pickup for retailers has been permitted, some have opted to do FaceTime styling sessions and style boxes for customers.

Only some of the center’s 58 retail, restaurant and lifestyle tenants opened their doors to normal shoppers Friday. Still, it boosted activity at the center.

“We have seen that sales and traffic have steadily increased over the last few weeks,” Braswell said. “This past weekend has been the busiest since mid-March." 

She noted that some retailers are waiting for May 18, which will mark the beginning of Abbott’s second phase of reopening businesses. If the number of coronavirus cases doesn’t spike, stores will be permitted to reopen at 50% capacity.

“Some of them are taking their time, because May 18 is kind of the new date. Some of them haven't opened yet and I think they're just kind of waiting to see what the next directive will be,” Braswell said. “That 18 days might help them understand a little bit more of how they want to reintroduce the new way that they're going to conduct business.”

Even if in-person shopping hasn't skyrocketed, general activity at centers appears to be accelerating. The number of stores in Rice Village choosing to do curbside pickup of goods has increased over the past weeks since Abbott allowed retailers to begin that practice April 24. During the curbside-only period, Rice Village shoppers simply pulled up outside stores, collected their orders and left. Coffee said customers this weekend were actually parking outside open stores to enter and exit. For the time being, parking is free at Rice Village.

Braswell said people visiting CityCentre over the weekend appeared to be investigating what stores have reopened on the property. While there weren’t lines of people waiting to enter stores, visitors were choosing to use the mall’s green space to relax and socialize.

“Some of the comments were, it just doesn't feel too terribly different,” Braswell said.

The economic impact of the coronavirus pandemic has taken a particularly hard toll on the retail sector across the country.

Advanced monthly sales estimates for retail and food services in March showed a decrease of $483.1B, or 8.7%, according to the U.S. Census Bureau. That number will be revised as more data becomes available, and does not reflect the full impact of compulsory stay-at-home orders in April.

Personal consumption expenditures decreased by nearly $1.13 trillion in March, a drop of 7.5% from the prior month, according to the U.S. Department of Commerce’s Bureau of Economic Analysis. Personal income decreased $382.1B, a drop of 2% from February.

The BEA’s advanced estimate for U.S. gross domestic product during the first quarter of 2020 also suggested it contracted at an annual rate of 4.8%.

These trends are also visible on a state level. In Texas, April state sales tax revenue decreased by $2.58B, or 9.3%, according to Texas Comptroller Glenn Hegar. That was the steepest decline since January 2010.

The majority of April sales tax revenue is based on sales made in March and remitted to the agency in April. Sales tax is the largest source of state funding for the Texas state budget, accounting for 57% of all tax collections.

Next month’s remittances likely will show steeper declines compared to a year ago, as the effects of both the shuttering of businesses related to the coronavirus and plummeting oil prices were manifest throughout April, Hegar said. The coronavirus pandemic forced 19% of Texas restaurants to close permanently between March 19 and April 6, an online survey conducted by the Texas Restaurant Association and the University of Houston showed.

For the most part, it is still too early to tell what effect Abbott’s order has had on Texas retail and restaurants. Sales tax data and employment data won’t be available for a month or two, making it difficult to measure at this stage, Greater Houston Partnership Senior Vice President of Research Patrick Jankowski told Bisnow.

“At this point, all we have is anecdotes,” Jankowski said.