Chicago-area retail sales hit record high in 2021, Melaniphy report shows

Many retailers and restaurants are gone for good, and the recovery has bypassed some places. North Michigan Avenue, Chicago’s most famous shopping district, continues to struggle with a 24.7% retail vacancy rate, up from 12% in 2018, according to Cushman & Wakefield. Retailers and restaurants in the Loop are still suffering as many of their key customers, downtown professionals, continue to work from home. And some big shopping malls, including Chicago Ridge Mall and Lincolnwood Town Center, have run into loan trouble.

Still, the big jump in sales last year offers a hopeful message for retailers with physical stores—and their landlords: “Brick-and-mortar is not dead,” Melaniphy said.

One segment especially vulnerable to e-commerce—apparel—staged an impressive comeback in 2021. Chicago-area apparel sales rose 73.1% last year—more than any other category—to $5.54 billion, as more people refreshed their wardrobes in anticipation of their return to the office and bought new outfits for vacations, Melaniphy said. But the long-term trend illustrates the impact of e-commerce: Local apparel sales rose just 11.7% from 2007 to 2021, well below the 42.8% increase for all retail categories over the same period.

Sales rose 10.8% last year, to $10.85 billion, in another category threatened by online retailing: General merchandise, which includes department stores. But department-store chains are losing the war. Many, including Macy’s, which closed its Water Tower Place store last year, are shrinking their footprints, while others, like Carson’s, have gone out of business. The local sales data underscore their struggles: General merchandise sales dropped 9.2% from 2007 to 2021, according to Melaniphy.

The Melaniphy report also highlights the zero-sum game between grocery stores and restaurants. In 2020, as more people ate at home, sales at Chicago-area grocery stores rose 6.4%. It was only one of two categories—the other was home improvement stores—with rising sales in 2020. Sales at restaurants and bars, meanwhile, plunged 30.8%.

The pendulum swung back in 2021. As more people went out to eat and drink, restaurant and bar sales rose 31.6%, to $17.80 billion; grocery sales slipped 0.4%, to $17.94 billion, according to Melaniphy. It was the only category of 10 in the report with a decline last year.

Melaniphy expects a big jump in automotive and gas sales this year, mainly due to surging gas prices. An average gallon of gas costs $4.49 in the United States today, up 37% from $3.28 at the beginning of the year, according to the U.S. Energy Information Administration. Even if motorists buy less gas, sales are likely to increase because of the price hike.

Retailers and their landlords weren’t the only ones happy about the increase in sales last year. The big jump boosted sales tax collections for state and local governments, helping them balance budgets that looked precarious just a year earlier. Sales rose 38.3% in the city of Chicago, 31% in Naperville and 33.8% in Schaumburg, according to the report.

“This was very good news for municipal governments,” Melaniphy said.