As Foreign Tourists Stay Away, US Retailers Dust Off Their Covid Playbooks

At Bal Harbour Shops, a high-end outdoor mall at the northern tip of Miami Beach, four out of every five visitors are from out of town, and often overseas. While there have been plenty of headlines about Canadians and Europeans cancelling their US travel plans in protest of various Trump administration policies, in South Florida, at least, those shoppers are still showing up.

“We’re not aware of any of our stores today suffering impact relative to tariffs, and honestly it’s not something that is at the forefront of the concerns our tenants are sharing with us,” said Matthew Whitman Lazenby, CEO of Whitman Family Development. “If we don’t bring it up, they don’t bring it up.”

Whether that will still be true this time next year — or even next month — is an open question.

Global travel was in a slump even before President Donald Trump announced the highest tariffs in a century earlier this month. International tourist visits to the US were already down 12 percent year over year in March, according to the Commerce Department. Declines are particularly steep from Canada, the UK and Germany, where a combination of tariffs and Trump’s harsh rhetoric towards longtime allies have turned many off potential visits.

Goldman Sachs estimated the US economy could take a $90 billion hit if tariffs provoke a global consumer boycott of American goods and as a travel destination. The bulk of that blow will be felt by airlines and hospitality, according to Katie Thomas, lead of the Kearney Consumer Institute. “But it will flow into retail,” she said. “There is risk for any traditional mainstream American retailer.”

In addition to shopping destinations like Bal Harbour Shops, internationally-known American brands such as Nike, Levi’s, Ralph Lauren, Abercrombie & Fitch are particularly vulnerable to a backlash.

If international customers stop coming to the US, one strategy is to reach them where they live. Brands with a global presence can reach foreign customers through collaborations and partnerships in their native markets, Thomas added.

At home, retailers are looking back to the last time international travel ground to a halt for guidance. In 2020, international tourism didn’t just decline — it vanished altogether. During this time, malls and retailers that once relied on these shoppers learned to court the local customer.

For instance, Chinese tourists used to flock to South Coast Plaza in Costa Mesa, Calif. for its impressive roster of designer stores. When the country was in lockdown, the mall cancelled its retainer with a marketing agency in China and allocated that budget toward advertising campaigns in its native Southern California.

“We’ve been through it before and we’ve well positioned to handle a [downturn] because we learned some lessons through Covid,” said Debra Gunn Downing, the executive director of marketing at the mall. “We have a lot of tricks up our sleeve in good times and bad times alike.”

The Covid Playbook

As soon as the lockdowns started to lift, US retailers saw firsthand how resilient American consumers can be when it comes to spending during times of uncertainty. Retailers were able to drive sales among their local customers by hosting events, offering loyalty perks and shifting online advertising toward a more regional audience.

“If we get to a point where it looks like we do have fewer international guests … then [our marketing team] is plugged into ways to make that [local] customer feel more special,” said Lazenby of Bal Harbour Shops. “We’ll go out and find that customer where they are.”

Bal Harbour’s events team regularly invites shoppers to fashion shows, book signings, dining pop-ups and other activities, such as an annual ice cream festival and flower show. Leaning into food and beverage can also bring more local consumers; as part of Bal Harbour Shops’ expansion plans, its dining tenants will increase by 50 percent in the coming years, Lazenby said.

Partnership between brands and their landlords will be another crucial component to driving business during tough times, as it was during and after the pandemic. South Coast Plaza, for instance, works with new tenants to help them put together marketing plans that cater to the coastal Californian clientele.

Many retailers sought and received rent relief and other concessions in 2020. If tariffs lead to a drastic consumer pullback this year, some landlords say they’re ready to weather the financial blow in tandem with their tenants.

“We view all of our retailers as partners so if they’re going through difficulties, we’ll work with them as we did through the pandemic,” said Philippe Lanier, principal at EastBanc, the real estate company that owns the majority of storefronts in Washington, DC’s popular retail corridor, Georgetown.

The Brick-and-Mortar Opportunity

Trump’s trade policies could send more American consumers to their local stores and shopping centres, according to Thomas of Kearney, as platforms like Shein and Temu that ship from China raise their prices.

US retailers can appeal to shoppers’ desire for value and instant gratification by running in-store promotions and communicating directly to them about the effect of tariffs.

The de minimis ban, which would levy new fees on shipments into the US valued at under $800, also poses an opportunity for American fashion companies to explore new categories, such as athleisure or intimates, Thomas added. (Shein is the fastest growing seller of underwear in terms of global market share, for instance, according to Euromonitor.)

“This is a good time to innovate effectively, lean into hero products and run some deals on them,” she said. “It’s about striking the right balance between making people feel they can get something new and also a good deal.”