The fashion, retail and real estate industries are looking to President-elect Joe Biden and Vice President-elect Kamala Harris to revive the economy and quell the COVID-19 pandemic, which has been raging with the number of new cases hitting record highs in several states.
Biden today announced a 13-member COVID-19 task force as Pfizer PFE-0.1% revealed that a coronavirus vaccine it has been testing is 90% effective. If the vaccine passes other hurdles and is approved by the Federal Drug Administration for emergency use authorization, it could be widely available in the third quarter of 2021.
The economy and the pandemic are inexorably linked. Millions of Americans remain unemployed, and retailers and restaurants – those lucky enough to have found ingenious ways of serving consumers with contactless delivery, curbside pickup and outdoor dining – are operating at a fraction of their full capacity.
Working remotely has given rise to and the so-called Zoom wardrobe, which doesn’t bode well for fashion brands, which is why designers are focusing on casual offerings.
Here’s what members of the fashion, retail and real estate communities have to say to the President- and Vice President-elect.
“It’s not the most fun time at retail,” said Stacy Bendet, chief executive officer and creative director of Alice & Olivia. “This is the year of being able to be nimble and pivot. It’s also, the story of how do we encourage women to continue to work. Women are falling out of the work force right now.
“I know a lot of women who decided not to work this year,” Bendet said. “I’m launching an entire casual line for that reason. We launched a beautiful line of workwear in December of 2019. We have to launch chic casual clothes for the woman who’s working from home home now.”
Bendet in June introduced Creatively, a platform for creatives to post their resumes and portfolios, on LinkedIn. “If you’re in the early part of your career and exit now, I worry about the barrier to reentry,” she said, adding, “The country needs positive leadership for the millions of people who are unemployed. We need get through the next several months of the COVID-19 pandemic. I don’t think we’ve even seen the worst yet.”
Rent relief and free trade would go a long way toward improving retailers’ fortunes, Bendet said, adding, “We need to eliminate all the tariffs that were implemented on imports. All the tariffs and drama with China needs to be over. We need free trade.
“We’re going to need some assistance for the retail industry to be able to afford rent this year,” she added. “We’re going to need some Federal assistance, where the government helps the real estate industry or fashion brands or restaurants or hotels. There will have to be assistance to make up for the lack of tourism and lack of overall traffic. We need leadership to make sure people can get through this year.”
There are three things that the new administration an do help the retail industry regain its footing, according to Daniel Kulle, CEO of Forever 21. “First, it’s making sure we have a clear strategy to contain the coronavirus. Second, it would be getting an agreement with Congress for a stimulus package to get the economy going. With a stimulus package, people will feel that there’s safety and they’ll believe in the economy, and start spending again. Finally, on the macroeconomic side, there needs to be no uncertainty about tariffs and international trade. Retailers need more predictability, and need to know what the rules are.”
Designer Zang Toi, said, “The most important thing is, we have to open up smartly and safety. The lockdown is killing stores. Now, we know the data and the science, what age groups and what types of people get serious COVID-19. The prolonged lockdown with restrictions is killing retail business. The President-elect has to be able to work with the landlords to lower the rents. The landlords aren’t helping at all.
“We’re so thankful to President Trump for passing the loans,” Toi said, referring to the Cares Act. “My landlord wouldn’t give me one penny of discount. He said, ‘We have taxes to pay.’ It’s disheartening during this pandemic. Even if you give us a 10 percent discount in good faith. Everything happened so suddenly, we can’t sell one thing and we have to cough up this rent every single month.”
On the positive side, Toi said people are still spending money. On the road on a trunk show tour for Saks Fifth Avenue clients, Toi’s fall stops include Indianapolis, Palm Beach Gardens, Raleigh, San Antonio, St. Louis and Tulsa. “People still have the ability being discerning,” Toi said, noting that he $1,300 and $1,800 face masks with no price resistance.
“Whether it’s high-end or regular price, it’s more important than ever to have a good product,” Toi said. “I’ve been sending pictures to clients with my little Blackberry. I sold a $13,000 leather trench to a client in San Antonio. It’s all about the service and personal relationships.”
Rick Friedland, a principal of Friedland Properties, said local, national and global factors will play into a retail revival. “A lot of retail in New York is driven by tourism, and tourism is nonexistent now. That’s a huge factor,” Friedland said. “The world needs to get a hold of the coronavirus and the country needs to get a hold of the coronavirus, whose importance supersedes the retail and real estate industries. Getting people heathy and getting people back into the city and rejuvenating the economy is a huge issue.
“President-elect Biden has talked a lot about his tax plan. The balance of power in Congress remains to be seen, based on two runoff elections in Georgia to be decided in January. He also talked about eliminating 1031 exchanges,” Friedland said, referring to section 1301 of the Internal Revenue Code, with allows investors to defer paying capital gains taxes on investment property sales if the proceeds are reinvested into a similar property within a prescribed amount of time. “Biden also talks about increasing corporate tax, but if you start attacking companies’ bottom lines, they’ll cut employees and start driving more traffic away from brick and mortar.”
Friedland is also worried that retailers will close locations and shift their presence online if the corporate tax is raised. “The extent to which there’s a stimulus package and economic relief and a bail out will affect what kind of shape New York State and New York City are in and will impact property taxes. If they continue to go up, that will put that much pressure on landlords and will put more pressure on tenants.
“The heavily residential areas of the city are back,” Friedland said. “The restaurants have been incredibly innovative in terms of taking over sidewalks and the first lane of parking. People are still shopping, but the tourist isn’t there.”
Mike Rudoy, CEO and cofounder of Jetty, a financial services and property technology company, said the industry buzzword, experiential retail, had been gaining traction prior to the pandemic, with retailers such as Lululemon offering everything from yoga classes to strength training at its Lincoln Park flagship in Chicago. Those sessions have since moved to Zoom. “If those trends continue, these businesses and models could be seriously disrupted, Rudoy said.
“Cities will be losing a lot of tax revenue,” he added. “Who’s going to bear that tax burden. Will it be put on consumers or businesses or taken on by the government? It doesn’t seem like it will be businesses, and if you’re trying to get people to come out of their homes and buy something, asking them to pay more sales tax isn’t helpful.
“The President-elect has to think of ways to encourage spending, once the pandemic is over and we can more safely and go into these spaces,” Rudoy said. “Maybe it’s remove the sales tax for a number of months. This is either a Federal or more likely a state decision about how they’ll encourage retail tenants to believe there’s a real business model to be had in physical locations while giving an incentive to consumers to shop.”
“I would advise the President-elect that businesses cannot return to normal until we have the virus under control,” said Kajak Kheledjian, cofounder of Intermix and founder and CEO of Inscape. “We need to be able to operate in this new reality. We need to help businesses stay open and have proper rules in place such as mandatory mask-wearing and social distancing. Additionally, the President-elect needs to expedite a stimulus package for businesses and landlords as well as incentivize consumer spending. Consumers are nervous to spend, so the government needs to allow stability for the country and provide incentives such as a tax deduction for anything consumer-related incremental over 2019.”
Ken Downing, chief creative officer of Triple Five Worldwide/American Dream, said a recovery in the retail and real estate development sectors would begin with a COVID-19 recovery plan.
“We would look to the President-elect to put into play a comprehensive COVID-19 crisis response to regain customer confidence in the safety and well being of their daily lives and regain confidence in the stability of the economy,” Downing said. “When customer confidence returns, and safety fears are mitigated, we believe the consumer will then willfully return to shopping, dining, entertainment and other out of home activities. Once businesses have a clear line of sight to the customer rebound, a critical investment in spaces like retail and real estate development will follow.
“This unprecedented moment has forced all of us to innovate and reimagine the customer experience unlike ever before,” Downing said. “A collective effort that fuels growth and recovery is what we are all looking for.”
“The retail industry will need a fearless champion in the Biden White House, somebody who can advocate for retailers big and small, somebody who understands that retail is one of the pillars of job creation and economic health,” said Simon Doonan, writer, bon-vivant, window dresser, fashion commentator.
Jay Norris, CEO and cofounder of Guesst said the government should support small businesses. “There should be concessions made for the small businesses, to keep them, so we don’t live in a totally homogenous society. We need to nourish the small business communities that add vibrance to our lives and give us amenities. Before you to incentivize consumers, you should empower and help fund the businesses. Even if they’re loans, let them be at a really low interest rate and allow 10, 20 or 30 years to pay them off. If the government can help smb’s finance their dreams during the season, they will be able to put their blood sweat and tears into their physical retail channels.
“From our lens, what we’re seeing is brands that are e-commerce phenomenons, like The RealReal REAL-5.5% and Net-a-Porter, which have built so much traction globally, they can now afford to take an amicable lease. On the other side, there are brands that have been in brick and mortar forever, and need some type of concession to stay in place.
“The brands in the middle are having a really hard time,’ Norris said. “They need to find a lane because they never pivoted. These older, midlevel brands need a cultural reset.”
E-commerce brands are signing specialty and short term leases based on a percentage of sales to test the real estate waters with Guesst software’s new performance analytics tool,” Norris said, adding that hybrid stores are also turning out to be “a smart play for the future. How do you have multiple locations. You just can’t. Retailer are consolidating stores and fulfillment centers as hybrid showrooms. You can consolidate your logistics all in one place and there’s no more need for that excess space and excess inventory.”
Tal Zvi Nathanel, CEO and cofounder of Showfields, said “Having an overarching fact-based plan, and understanding of what to do and when/if we need to anticipate closures, would allow us to operate from a place of understanding and also allow us to more clearly communicate with our customers. One set of protocols, such as masks mandated in all indoor shopping, would mean that we are all on the same page.
“From outdoor shopping to an innovative vaccine and aid packages, including innovative aid packages for landlords and business owners, the President-elect must run this country like an entrepreneur,” Nathanel said. “There is no set playbook for how to get through this time, and the President-elect must try anything and everything to find the right path forward to keep Americans safe, happy and working.”