Moody’s has lowered its 2022 outlook for the U.S. retail and apparel industry from positive to stable. The delta variant of COVID-19, supply constraints, labor shortages and increasing costs will challenge retailer profits next year, according to the credit ratings agency. “Following a ferocious pace of growth in U.S. retail and apparel in 2021, we see momentum slowing considerably in 2022, to 3.9% revenue growth and a 2.3% increase in operating profit,” said senior vice president Christina Boni.

10 tenant updates

Walgreens Boots Alliance will spend $5.2 billion to up its stake in primary clinic operator VillageMD from 30% to a controlling 63%. Walgreens wants to open at least 600 Village Medical at Walgreens primary care practices in more than 30 U.S. markets by 2025 and another 400 by 2027. More than half of those will be in communities that are underserved medically, as the retailer said more than 75% of Americans live within five miles of a Walgreens. VillageMD remains a standalone company with its own board and management, and the company plans to go public in 2022.

Michaels is taking on online crafts market Etsy. The retailer, which operates about 1,200 stores, is adding a feature to its website and app that will allow customers to sell their own craft creations by mid-2022.

Home improvement chain Lowe’s will roll out an in-house advertising network to compete with existing services at Amazon and The Home Depot. Brands can buy advertising in the company’s stores to help boost sales for their products.

Beauty retailer Sephora will offer a two-hour delivery option for web and app orders and “live beauty chats” via web or app. According to the chain, cosmetics customers are demanding instant gratification.

Beach lifestyle brand Salt Life will open five stores in coastal communities early next year, in Florida’s Fort Lauderdale, Boca Raton and Sarasota; Hilton Head, South Carolina; and Foley, Alabama. A Myrtle Beach, South Carolina, location opened in September, and a Texas City, Texas, location will open in November. These seven will bring the retailer’s footprint to 10 stores. The flagship is in Jacksonville Beach, Florida, where four avid boaters founded the brand 15 years ago. Salt Life, now owned by Delta Apparel, also sells products in surf shops, specialty stores, department stores and sporting goods retailers.

Mall-based retailer Windsor is doubling down on physical locations because its customers want to buy its special occasion women’s apparel now and wear it now. Windsor wants to open 70 stores this year, including nearly two dozen by the end of the year, bringing its total to 300. The chain aims to open 30 and 35 more next year. It also will launch a buy-online-pick-up-in-store service next year, as half of e-commerce returns occur at physical stores, according to president Andy Solomon.

Hyperlocal food-and-beverage microbrands are expanding. One example is Blank Street — a 14-unit, Brooklyn-based coffee chain that debuted in 2020 and just secured $25 million in venture capital funding to open 100 locations throughout New York City by 2022. Another is independent Chicago chain GoGrocer, known for grab-and-go meals. It recently opened its 16th store, in Chicago’s Lincoln Park.

Upscale Chicago convenience chain Foxtrot will open a ground-floor unit in the iconic, 108-story Willis Tower, hoping workers soon will return fully to the office. Foxtrot’s 2,625-square-foot store will be on the ground floor within the tower’s new, five-level retail, dining and entertainment space, where tenants like Shake Shack and Do-Rite Donuts already are open.

Even the highest-profile retail centers are bringing in relatively untested tenants to add local flavor. At Brookfield Properties’ Ala Moana Center in Honolulu, 17-year-old high school junior Beri Maeda opened her first brick-and-mortar bakery, Baked by Beri, as a pop-up this summer.