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Has Santa Given Malls Any Hope This Holiday Season?

Dec 15, 2020 by Maurie Backman
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The coronavirus pandemic has changed the way people live, work, and shop. In fact, mall traffic has been sluggish this year due to capacity restrictions and general public apprehension. And unfortunately, the holiday season may not provide the shopping revival malls are desperate for. In fact, traffic in retail stores is expected to decline by up to 25% during the holiday rush, according to ShopperTrak. But malls may have one trick up their sleeves to draw in customers despite the pandemic: Santa.

Santa will still have a mall presence

In an age of social distancing, you'd think visits with Santa would be off the table. But many malls are, in fact, moving forward with plans to allow visitors to interact with the age-old Christmas icon.

Those interactions will look very different, though. Children will have to share their wish lists with Santa from a distance -- typically, six feet -- and many malls will put up plexiglass to create a barrier between Santa and his biggest fans. Forget about climbing atop Santa's lap -- pictures with Santa will largely be off-limits. And don't expect those complimentary candy canes, either; this year, visitors will get a free squirt of hand sanitizer instead.

Malls will also have to be careful about managing crowds who flock to see Santa. People in lines will have to be property spaced out, and some may get turned away. As such, while Santa's presence in malls may help draw some customers in, the experience won't necessarily meet everyone's expectation.

Of course, some retailers are saying no to Santa. Macy's (NYSE: M), for example, has canceled in-person visits at its flagship New York City store. But malls are trying to make it work in the hopes of drumming up traffic before shoppers hibernate for the winter and attempt to ride out the pandemic from the safety of home.

Struggling malls, meanwhile, may turn to Santa as a last resort. Mall operator CBL (NYSE: CBL), for example, which filed for bankruptcy in November, is featuring Santa visits in nearly 60 locations.

Will Santa be enough?

Over 10 million U.S. households visited Santa in a mall or a store last year, according to GlobalData Retail. And almost 73% of them spent money at nearby restaurants or stores in the process. But this year, many families are avoiding malls and outings to begin with, and those that would otherwise be inclined to shop in person may not relish the idea of their young children meeting a masked Santa behind a barrier.

Therefore, while Santa's presence could drum up some business, mall traffic on a whole will still most likely take a serious hit after all is accounted for this holiday season. The good news is that many consumers are shifting to online purchases, giving retailers the cash infusion they need to stay open into the new year. But just as it's possible to buy things online, it's also possible to visit with Santa online, and that's precisely what a lot of households may seek to do this year rather than deal with the risk and hassle of heading to malls at a precarious time. Mall investors will need to brace for the impact of a sluggish holiday season, especially at a time when retailers are dropping like flies and widespread vacancies are becoming more and more likely.

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Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.