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1 in 3 Retailers Couldn’t Make Rent in April: Study

Victor resides in the Netherlands and writes about freedom and governmental and social changes to the democratic form of nations.
Published: May 8, 2022
The economic consequences of COVID pandemic spending and lockdowns are so severe that 1 in 3 retailers could not pay April rent, a survey found.
A woman walks past a store displaying a liquidation sign on August 4, 2020, in Arlington, Virginia. According to a study, many small enterprises not only cannot make their rent, but expect the situation to worsen amid soaring inflation rates, despite predictions of a recovering consumer market. (Image: OLIVIER DOULIERY/AFP via Getty Images)

More than a third (34 percent) of North American retailers could not make ends meet and pay their rent in April due to inflation, gas prices, and supply chain issues.

The alarming number of delinquencies is up 6 percent from February, and is based on a survey to monitor and report the effect of the epidemic on small businesses, and their attempts to recover, among 2,279 retailers interviewed between March 31 and April 27 by online pollster Alignable.

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Worst hit were the arts and entertainment industry and the event and planning business, of whom 59 percent and 50 percent failed to make the rent, respectively.  

Other sectors performing dramatically poorly included travel, lodging, and hospitality (41percent), retailers (34 percent), and massage therapists, restaurants, and construction (all 33 percent).

Minority report

Despite the alarming economic forecasts, the publication mainly focussed on the upsides of how well certain categories of owners, such as members from minority communities, performed. 

The segment jubilates a score of “only” 36 percent, or a decrease of 10 percent compared with February and an 18 percent decrease compared to April of 2021, in terms of being unable to make rent.

Minority-owned businesses, however, account for a relatively small number of shop owners in the industry, as the overall deficiency rate stayed at 28 percent, staunchly.

Nonetheless, the outlet praised retailers’ overall resilience and resourcefulness, calling it “a true milestone for minority-owned small businesses and a testament to their incredible resourcefulness and resilience in overcoming countless obstacles.”

According to the researcher, other types of proprietors who also performed relatively well were women and veterans who scored modestly better in their rent delinquency rate at 27 and 19 percent, respectively.

Cautiously optimistic

Other publications like Bisnow, a B2B platform focused on real estate and events, also highlighted optimistic reports about expectations of a recovering economy and receding inflation rates even though, in fact, overall, 46 percent of proprietors reported an increase in their rent compared to six months ago.

Additionally, another seven percent expected this to happen in the short term, too, Alignable calculated.

The outlet cited National Retail Federation Chief Economist Jack Kleinhenz, who expects the soaring inflation to recede somewhat later this year while retail sales will be going up. In the Federation’s Monthly Economic Review for May, Kleinfeld shared an expectation for shopping numbers to increase between six and eight percent from $4.86 trillion to $4.95 trillion.

The outlet noted that another think tank, The Bureau of Economic Analysis, issued a Personal Consumption Expenditures Index, which hit a record high of 6.6 percent in March,  

However, despite these alarming numbers, Kleinhenz assumes the “underlying strength and momentum from both the consumer and business sectors are likely to offset a modest slowdown and should leave the economy bustling forward this year.”

The Federal Reserve just hiked its interest rates by half a percentage point to 0.75 percent on May 4, with an expectation this could reach 1.875 percent by year-end.

More half-point increases in order to keep inflation surge under control are “on the table,” Fed chair Jerome Powell said.

“How much and how fast the Fed raises rates will, of course, depend on how the economy performs in the months ahead,” Kleinhenz argued. “While policymakers would like to raise interest rates gradually, more aggressive action may be needed and appears to be the direction that will be taken.”