Hunton Retail Law Resource

Strip malls are seeing a surge in valuation, perhaps due to Americans’ desire for the in-and-out convenience that they offer due to their proximity to main roads. Once seen as eyesores, some strip malls are getting face lifts. With many Americans working from home at least a few days per week, consumers are craving accessibility, one-stop shopping and easy parking. As a result, strip malls are seeing an increase in foot traffic during weekdays. Trips to strip malls increased 18% in 2022 compared with before the COVID-19 pandemic. Most visitors of strip malls are hyper-local and visit the centers frequently and for short durations. 

Electric vehicles (EVs) are becoming increasingly popular, especially with rising gas prices over the past year. EVs now make up roughly three percent (3%) of the global vehicle fleet, up from one percent (1%) at the end of 2020. Last year, President Biden announced a lofty goal for EVs to make up fifty percent (50%) of all vehicles sold in the United States by 2030. The Bipartisan Infrastructure Law, signed by President Biden in November 2021, invests billions of dollars in EV chargers to create accessible charging stations for electric vehicles, and the Inflation Reduction Act passed by Congress in August 2022 provides incentives and tax credits to encourage Americans to purchase EVs.

The past decade has seen an explosion in consumer products and services going digital—especially during the last two years of the COVID-19 pandemic. You can order your groceries, have your clothes dry-cleaned and your car detailed without ever leaving your home. While companies like Teledoc have created a realm of virtual health care, many medical procedures and other healthcare services still demand physical space outside of a patient’s home. Consumers are increasingly seeking convenience in their daily tasks and errands, and medical appointments are no exception. Enter medtail.

During his 2020 campaign, now President Biden promised to raise the federal minimum wage to $15 an hour, something progressives have long been proposing.  The Democratic-held House of Representatives introduced and passed the Raise the Wage Act in 2019, but the bill never reached a vote in the then-GOP controlled Senate.

Few other retail sectors have seen the expansion that dollar stores have in the past decade, not to mention in the chaotic first half of 2020. During a time when other retailers are struggling to stay afloat due to social distancing requirements and widespread economic uncertainty, dollar stores are continuing to increase their physical presence as well as their profits. Dollar stores tend to cluster in either rural areas where access to traditional grocery and retail stores is limited or in underserved urban communities that lack full-service grocery stores.

Retail stores and businesses are generally free to develop their own policies regarding acceptance or non-acceptance of certain forms of payment. For years, many small businesses have refused credit card payments entirely or credit card payments for transactions under a certain amount due to high transaction costs. Smaller retailers may also refuse certain brands of credit cards. However, a different trend has emerged in recent years as an increasing number of retailers are refusing to accept cash and instead accepting only credit/debit and smartphone payments.

The rise of e-commerce and the struggle many brick-and-mortar retail stores face is nothing new.  Customers are increasingly choosing to shop for clothes, furniture and even groceries from the convenience of their own homes. More recently, however, this shift in the way consumers shop has given rise to new types of retail stores – small showrooms and “pop-up shops.” While showrooms are not entirely new concepts, purely digital companies are increasingly opening up physical showrooms where customers can see and touch merchandise before deciding to buy, while the actual transactions often remain online. Pop-up shops – another retail store model - allow retailers (often online or seasonal retailers) to have a physical presence for a limited duration to essentially test run whether a permanent store would be lucrative.  

Most retail tenants desire to locate their respective businesses amongst other retail businesses in malls, retail shopping centers or other mixed-use centers. Therefore, when negotiating retail leases, some of the most heavily discussed provisions involve the tenant’s share of Common Area Maintenance (“CAM”) expenses. CAM expenses essentially determine how much money a tenant will contribute to the upkeep and maintenance of the surrounding shopping center owned by the landlord.

Due to volatile and record-breaking valuations, cryptocurrencies and their underlying technology, blockchain, have been at the forefront of financial news headlines. Blockchain technology is, very simply, a decentralized digital ledger that records economic transactions in a way that cannot be copied or destroyed, therefore eliminating fraudulent or duplicative transactions. Bitcoin is perhaps the best known cryptocurrency, and for which blockchain technology was invented. Bitcoins are discovered through “mining,” a process whereby computers use processing power to solve difficult puzzles. The miner who finds the solution receives bitcoins, essentially digital tokens, as a reward. Unlike traditional currencies, bitcoin and other cryptocurrencies do not require a third party or central authority for its users to transfer value. 

Leveraged loans may have a role in recent retail bankruptcies. Leveraged loan volume is nearing pre-recession highs and is on track to surpass 2007 levels, concerning many regulators and investors. Leveraged loans are typically offered to companies that already have large amounts of debt, and therefore, leveraged loans carry higher interest rates due to an increased risk of borrower default. Companies often use leveraged loans to finance mergers, refinance debt or for general company purposes. Private equity firms also utilize leveraged loans in order to fund takeovers of companies, including struggling retailers. Loans issued to fund leveraged buyouts from private equity firms rose 74 percent in 2017 and totaled 88.5 billion dollars. Additionally, nearly a third of loans to companies backed by private equity firms are leveraged six times or more.

At the end of May, President Trump unveiled his latest proposed budget blueprint for 2018. The proposed budget contains significant funding cuts for many government programs, including more than a 25 percent cut to the Supplemental Nutrition Assistance Program (“SNAP”), formerly known as the Food Stamp Program.

Many online retailers are exploring how to use drones to quickly deliver online orders to customers. In June 2016, the Federal Aviation Administration (“FAA”) issued a final rule permitting flights by commercial drones under certain conditions, including the drone and its cargo weigh less than 55 pounds and the drone stays within sight of the pilot. While the rule was a welcome step forward for the commercial drone industry, the operational restrictions prohibited drones to fly over any populated areas due to safety concerns, essentially forbidding commercial drones in most urban areas.

Traditional shopping malls across the country are facing a decreasing amount of customers, declining profits, and, in certain cases, overall viability. Though numerous specialty malls continue to be quite profitable, many regional shopping malls are not as fortunate. Online retailers dominate an ever increasing share of the retail market, and the retailers that have traditionally made up mall tenants may no longer see the value in as many, or any, brick and mortar stores. Due in large part to the convenience and success of online retailers, American consumers generally spend less time shopping at brick and mortar stores, opting instead to shop from their computers or other media devices. In response, and out of necessity, major department stores have dramatically consolidated their number of locations over the past few years. Regional malls anchored by troubled department stores such as Sears and Macy’s are perhaps faring the worst. 

If you live in an urban environment, you have likely seen food trucks on city streets, in parking lots or at any number of local events. The mobile food industry has grown significantly over the last few years and, with that growth, vendors and their brick-and-mortar competition have been faced with a changing regulatory landscape. 

A recent flurry of Texas law changes have local and national retailers considering whether to prohibit customers from openly carrying weapons inside of their stores.

This past January, Texas’s “open carry” law went into effect, allowing gun owners to carry their weapons holstered either at their hip or on their shoulder. The Texas law does have limitations, including an exclusion banning open carry on the premises of restaurants and bars that make more than 51 percent of their gross profits from alcohol sales, and, significant for retailers, a provision that allows businesses to prohibit open carry on their premises, as long as they post certain specified signage alerting customers of the ban.