Black Friday could be make-or-break for downtown Seattle retailers

If you want to understand how important this year’s holiday season is for downtown Seattle retailers, stop by Kristeena and Ron Sabando’s jewelry stall in Pike Place Market. 

Sales at Sabando Designs have been brisk in recent weeks as tourists and locals mobbed the market. But the office workers who brought 30% of the Sabandos’ pre-pandemic business are still largely missing. Overall sales this year are just half of 2019 levels — which makes the next four weeks all the more crucial. 

“December is everything for us,” says Sabando. “It’s when we’ll actually make our salaries.” 

Sabando could be speaking for most downtown retailers as they brace for their third pandemic Black Friday in an economy giving off massively mixed signals. Inflation, fears of a recession and a recent round of tech layoffs have some retailers fearful of a slow holiday season. At the same time, many consumers appear to be shrugging off economic anxieties and determined to put the pandemic in the rearview mirror. 

“Definitely looking forward to feeling more like a normal holiday,” Bainbridge Island resident Colbi Rae Brawner said during a Tuesday afternoon visit to the Nordstrom flagship store with her partner, Dave Graybeal. “We didn’t even end up coming down for holiday shopping last year. Nothing was really going on downtown.”

In fact, parts of downtown do seem in the midst of an actual revival. Even on a rainy midweek afternoon, the sidewalks in and around the central retail core were thronged with bag-toting shoppers, and store staff appeared busier than they had in, well, years. 

And unlike last year, when retailers were dealing with a busted supply chain and half-full shelves, that doesn’t appear to be much of an issue. “Whatever problems they were having with the supply chain are gone,” said an employee at the very stuffed Nordstrom Rack.

“We’re finally getting back to normal,” said Carissa Carson, manager at Zebraclub on First Avenue, adding that the upscale clothing store has seen a recent increase in traffic. “We’re hoping this is the year that brings back Black Friday.”

That optimism is shared by some retail industry insiders. Renée Sunde, president of the Washington Retail Association, expects spending across Washington to tick up 6%-8% this holiday shopping season, in line with national projections. 

One major factor is shoppers’ declining fear of COVID-19, said Zachary Warring, an equity analyst at CFRA Research who focuses on consumer discretionary sales. “I think people will return [to physical stores] because overall people enjoy … the atmosphere of brick-and-mortar shopping,” Warring said. “It’s almost entertainment.”

That’s certainly the pitch that downtown boosters continue to make for the third year. With in-person shopping, “you find what you’re looking for and you’re able to pick it up,” said Jerry Irwin, senior general manager at Westlake Center. Irwin reports “a great energy and a good buzz” around the mall, but declined to share any sales figures or projections.

For all the buzz, downtown Seattle retailers also face serious challenges this holiday season. 

For starters, downtown still isn’t anywhere near as busy as it was before COVID. 

Although foot traffic from September through early November was up about 15% over the same period last year, it was still only around three-quarters of the levels from the same period in 2019, according to data posted by the Downtown Seattle Association. Most downtown office buildings remain only partly full, with around 38% of the workers they had in 2019.

“We’re not all the way back yet, but we continue to move in the right direction,” Downtown Seattle Association President Jon Scholes said. 

Some retailers say some shoppers are still kept away by concerns over homelessness and street crime, despite recent efforts by City Hall.

The city has markedly increased the police presence downtown and the King County Regional Homelessness Authority launched an effort focused specifically on reducing the number of people living outside downtown, including in Pioneer Square and the Chinatown International District.

Downtown retailers also face broader economic challenges that predate the pandemic. For years, brick-and-mortar stores have felt rising pressure from online retailers such as Amazon — and even from their own online operations.

They were also feeling competition from their physical rivals elsewhere in the area — just try visiting University Village on a Saturday — which only intensified during the pandemic, retail experts say. 

Those factors have contributed to store closures. About 12% of retail space downtown is vacant today, far higher than the same time in 2019, when the vacancy rate was just below 2%, according to commercial real estate firms Kidder Mathews and CoStar.

A case in point: the Pacific Place mall, which has struggled for years to keep tenants. At a lunch hour this week, crowds were sparse and the most popular shopping bag appeared to be one carrying takeout from the ever-popular Din Tai Fung.  

Those missing retailers can hurt the overall attractiveness of downtown, which can then make it even harder for remaining retailers to bring in shoppers, said Jeff Green, a retail analyst with Hoffman Strategy Group who follows the Seattle market. That snowballing effect, he said, is “affecting these downtown department stores’ ability to get back to 2019 levels.”

But even with these challenges, some retailers are still betting big on downtown Seattle. 

Japanese clothing store Uniqlo opened to fanfare last week in the former Macy’s building at Fourth and Pine. Other recent or planned openings include Pandora on Pine Street, and Ben Bridge, according to the Downtown Seattle Association.

And even at struggling Pacific Place, retailers inside the mall were hopeful for a busy holiday shopping season. In fact, at Proto101, a clothing store at the mall, the biggest problem is finding enough staff to handle the holiday shoppers.

Owner Liyin Kok said she “would love” to hire more employees but has struggled to find applicants for the $25-per-hour positions.

Taken together, the biggest challenge retailers face this holiday season is uncertainty. 

Among the unknowns: how sales will be affected by the recent round of layoffs in the tech sector and whether inflation and supply chain hang-ups will continue to drive up costs. 

That’s a concern at Bored of Authority, a high-end outdoor clothing store with a new shop inside Pacific Place, said owner Tim Gluck. 

“Across the board in my industry, everything is like 20% more than it was last year,” Gluck said. 

So far, customers seem to be “very accepting,” said Gluck, which has him optimistic about his holiday sales.

Still, like many retailers, Gluck wonders about next year, and whether shoppers will pull back if the economy slips into a recession, as many experts think will happen in 2023. 

“I think they’re going to spend this Christmas,” he said. “Next Christmas, I’m a little more worried about.”