SYLVIE DOUGLIS, BYLINE: NPR.
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SALLY HERSHIPS, HOST:
This is Sally Herships. I'm in for Stacey Vanek-Smith. And I'm here with NPR business correspondent Alina Selyukh. Alina, hello.
ALINA SELYUKH, BYLINE: Hi.
HERSHIPS: You have brought us a pretty surprising story.
SELYUKH: And it starts with this really incredible scene. OK, I want you to picture it. It's February, so we've traveled a bit back in time, and you are on the Jersey Shore. It's cold and gray and dreary. There's ice caps floating off a desolate beach.
HERSHIPS: I am picturing not a happy scene - like, empty restaurants and maybe like a sad little mini golf course and, like, totally deserted. Why am I here?
SELYUKH: You are about to sign a lease - ready? - on a brand new brick-and-mortar clothing store.
MARGUERITE ADZICK: I think me even saying it out loud was a little, like, comical.
SELYUKH: That's Marguerite Adzick, to whom all this actually happened. She stared at those ice caps, thought about surging coronavirus, wondered if mass vaccinations might ever be a thing, then called up her investors and asked them to back her very first physical store.
ADZICK: And they were just, I think, speechless. But we ran the numbers. We knew it would work.
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HERSHIPS: This is THE INDICATOR FROM PLANET MONEY. Today on the show, American retailers' unexpected pandemic pivot to opening more brick-and-mortar stores.
SELYUKH: What you might think you know about retail struggles and dying malls is only part of the story.
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HERSHIPS: So I want to leave Marguerite for a minute on that icy, cold, wintry beach. Sorry, Marguerite. We will get back to her in a bit. But first, Alina, let's talk big picture. To be honest, this idea of new stores opening mid-pandemic feels a bit like a parallel universe of American retail because, especially last year, it seemed like constantly, storied brands were declaring bankruptcy, like Brooks Brothers, JCPenney, Neiman Marcus.
SELYUKH: And that is what happened. Last year was rough, especially on department stores. For a while, people almost stopped buying clothes. So the retailers that were already kind of wobbling, they collapsed. Real estate firm CoStar Group counted a record number of store closures last year - 12,000.
HERSHIPS: And this year, more stores are still closing.
SELYUKH: But not as many as expected. And at this moment, openings are actually outpacing closures.
HERSHIPS: More openings than closures?
SELYUKH: Slightly, yes. Coresight Research, which tracks all this, says stores have announced nearly 5,000 openings so far this year.
HERSHIPS: And what are these stores?
DOUGLIS: About a third of them are dollar stores, with hundreds of new locations. Then you've got other discounters, like Foot Locker, Aldi, Burlington, also Tractor Supply, Ace Hardware. Sephora is opening stores inside department stores - and a few clothing stores.
KENNY MINZBERG: We will be opening a store in Tampa in the next couple of months. We opened in both Chicago and Detroit. We're also opening in Minneapolis.
HERSHIPS: That's Kenny Minzberg. He is chief operating officer of a menswear company called Psycho Bunny.
MINZBERG: What we're really known for is our funky bunny logo, the bunny, you know, with crossbones right underneath.
SELYUKH: Its like skull and bones, except the skull is a rabbit, obviously.
SELYUKH: Their concept is classic with an edge. Think, like, a polo with like a crazy pop of color. And Psycho Bunny is fairly new. It went into the pandemic with five stores. That's where it got interesting because since then, the company has tripled its fleet. Now they're planning to have 29 stores by the end of the year. And these 29 stores...
MINZBERG: They're all in malls, yes - all in malls.
SELYUKH: So it's the middle of the pandemic. And you guys are saying, let's sign a contract with, like, a bunch of malls right now.
MINZBERG: Pretty much that's what we did, yeah. Look; we made the calculation that these are the top, you know, assets in the country from a real estate perspective. They're not going to go away. And let's take a shot.
DOUGLIS: So I guess what he's saying is that some malls are better than others.
SELYUKH: That's exactly what he's saying. Historically, America built way too much retail space, much more than any other country.
HERSHIPS: Especially malls. I think every American teenager knows that is true. They exploded inside the suburbs years ago, and now there are all these malls that are just dying away.
SELYUKH: Yes, but there are still very popular malls. They tend to be in happening places, and they have extra things, like a fancy food hall or an arcade or a health clinic or an outdoor plaza for music. Kenny says he remembers stories during the pandemic of cooped-up shoppers driving for miles to outdoor malls just for a sense of normalcy.
MINZBERG: We did see enough of life coming back to normal in May, June and July of 2020 that gave us the sense that people are pretty set in their habits. People are going to go back to shopping malls. It may take a little bit of time, but it's going to happen.
HERSHIPS: And there is a reason why retail is among the largest American employers. Americans love shopping. We do a lot of it. I'm guilty.
SELYUKH: And if you were, like Kenny, betting on shopping as an American pastime, the pandemic upheaval actually opened new doors. It created new opportunities. Some landlords got more accommodating. They agreed to assume more of the risk of opening stores. Some new tenants were getting discounts on rent or deals to exit their leases early if shoppers did not return.
HERSHIPS: OK, and we had promised to come back to Marguerite Adzick, who - poor lady - is still freezing in that wintry Jersey Shore beach town.
SELYUKH: Sorry, Marguerite.
HERSHIPS: What happened to her clothing store during the pandemic?
SELYUKH: So her online store is called Addison Bay. It's very small. And when the pandemic hit, things kind of fell apart for a while. But then she realized she had exactly what people were suddenly looking for - fashion-forward athletic gear. Think a puff-sleeve sweatshirt for your endless Zooms. And Marguerite was actually able to get to her warehouse to pack and ship those orders herself.
ADZICK: I think we got lucky. We had the right product class compared to some other brands. That is pure luck. I also think that we got lucky in the sense that I was able to walk to work every day and fulfill these orders. And if we didn't have that, we literally couldn't have stayed afloat.
HERSHIPS: And just to be clear here, this is the same person in the same business that about a year later was eyeing her first brick-and-mortar store.
SELYUKH: A few things obviously happened in between. Remember; Kenny said mid-last year, shoppers started coming back. That's when retail sales started climbing. And they never really stopped. Around that time, Marguerite, who was actually very pregnant, decided to cash in on this.
ADZICK: We decided to be the scrappiest group of gals and do pop-ups under tents on street corners, like, outside coffee shops at, like, 6:00 in the morning. I was there literally two days before I was delivering my child.
HERSHIPS: So Marguerite saw what Kenny saw, that the return of shopping was only a matter of time.
SELYUKH: And the pop-ups did so well that when a perfect location opened in February, Marguerite didn't feel like a physical store was that crazy an idea despite the pandemic.
ADZICK: I wanted to say no. I truly was like, I'm not ready for this. And it was too good of a deal, too good of a location. I couldn't say no.
SELYUKH: But, of course, there was one more pandemic twist. Everything was in shortage.
HERSHIPS: Of course.
SELYUKH: So till the very last minute, Marguerite was waiting - for a sink, window glass, siding. Floors were finished barely in time. About a week before opening, she brought her two little kids to check on renovations.
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ADZICK: So exciting. Bear (ph), what do you think, bud? Are you excited?
UNIDENTIFIED CHILD: (Unintelligible).
SELYUKH: Addison Bay's first store finally opened to Memorial Day weekend to a line down the street in the pouring rain.
HERSHIPS: That is never a bad sign for online sales.
SELYUKH: For physical and online sales, yes. Actually, both she and Kenny pointed out that final fascinating upside of a physical store - its presence actually gave a huge boost to their online sales, introducing the brand to shoppers who might otherwise never encounter it in the black hole that's the internet.
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HERSHIPS: This episode of THE INDICATOR was produced by Julia Ritchey and Brittany Cronin, with help from Isaac Rodrigues. It was fact-checked by Kaitlyn Nicholas. The show is edited by Kate Concannon and is a production of NPR.
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