COVID-19 has been tough on State Street. Will Primark’s opening be a sign of better things to come?
After a year when many retailers closed their doors, a new one opened Thursday on State Street: low-cost apparel retailer Primark.
A lot has changed in the Loop’s retail hub since Primark signed its lease in 2019. The crowds of tourists, office workers and students have shrunk since the COVID-19 pandemic forced people to hunker down at home. The number of empty storefronts dotting the street has grown.
Still, there are signs foot traffic is picking up, and when retailers are ready to consider filling vacant storefronts, Primark’s presence could boost confidence in State Street, said Greg Kirsch, executive managing director and Midwest retail leader for Cushman & Wakefield.
“They (Primark) don’t do a lot of deals, and when they do, people pay attention,” Kirsch said.
Primark, founded in Ireland as Penneys in 1969, has more than 385 stores worldwide and opened its first U.S. store in 2015. The 36,600-square-foot Chicago store will be its 12th, with Primark’s bright blue name replacing Gap, which closed in 2017. The store is expected to have about 250 full- and part-time employees.
About 29% of the retail space around State Street is vacant or occupied but available to lease, which is comparable to vacancy rates on Michigan Avenue and other retail corridors in the city, and about 10 percentage points higher than pre-pandemic levels, Kirsch said.
As of late February, foot traffic around State Street remained below 40% of typical pre-pandemic levels, while the percentage of parking spots occupied was closer to 60% of normal, according to the Chicago Loop Alliance.
Activity in the Loop picked up midway through February with better weather, but “people are being cautious,” Chicago Loop Alliance president Michael Edwards said in an email.
There are also more empty or soon-to-be empty storefronts. New York & Co. closed all stores during the pandemic after seeking bankruptcy protection, including one about two blocks south of Primark. Next door, a Naturalizer store has a sign saying “Everything must go,” and at Block 37, the Disney Store is expected to close before the end of the month.
State Street is “showing the scars from COVID and the decrease in activity in the Loop,” but that doesn’t mean it won’t recover, Kirsch said. “There have been multiple rebirths over past 30 years, and this is part of that.”
Primark, which carries women’s, men’s and kids’ apparel and footwear, as well as accessories, beauty products and home goods, all under its own brand, is planning to compete aggressively on price with some of its fast fashion and off-price neighbors. Signs on sales racks advertised $20 jeans, a $7 one-piece swimsuit and 90-cent flip flops. The most expensive item in the store is a $60 extra-large suitcase.
The company said it keeps costs down by making and selling items in large quantities, doing minimal advertising and watching even seemingly small costs, like playing music in stores — a feature Primark is testing for the first time in Chicago.
The pandemic didn’t slow the store’s opening, but it did prompt a few changes, said Andy Stewart, president of Primark U.S. Shoppers are buying pajamas and candles, not office wear, so there’s more space devoted to joggers and casual tops than suits.
Primark also left more space for shoppers to spread out in the checkout line and installed clear shields around each register. Dressing rooms are temporarily closed.
One thing that hasn’t changed: Customers can browse Primark’s merchandise online but can only buy it in stores. That saves costs associated with delivery and returns but makes it an outlier among major retailers, particularly after a year in which stores were forced to close for months and many shoppers shifted to buying online.
Still, three days after Primark’s first U.S. store reopened last spring after the COVID-19 shutdowns, “there was a line around the mall,” Stewart said. Other stores saw a similar response, except the one in Boston, which is Primark’s only downtown store outside Chicago.
“City centers are not yet what they will be … but we’re building for the future,” he said. “We’re invested here.”
There’s still uncertainty about how quickly tourists, students and office workers will return downtown, and how many of those workers will be back in the Loop full-time rather than showing up to a scaled-down office a few days a week. Still, retail brokers said companies have begun inquiring about downtown properties again over the past two months as vaccine distribution began.
The suburbs are expected to bounce back before downtown, “but as soon as January rolled around, we got a lot more calls,” Kirsch said.
Food and beverage tenants are “still in a moment of triage,” but entertainment offerings like golf simulators and virtual reality experiences are beginning to explore options, said Todd Siegel, senior vice president with CBRE who represented Primark in the State Street deal. So are retail brands that primarily operate online, though those companies are typically looking for small shops that are hard to find on State Street.
When retailers do start looking, Primark’s decision to choose a block where another international brand, Japan-based Uniqlo, recently opened a second store could encourage them to give State Street a close look, especially if Primark performs well, said John Vance, principal at Stone Real Estate.
“It’s important for all high streets and streets like State Street, when a new retailer comes in, that they perform, because performance attracts other retailers,” he said.
