STORES Magazine - May/June 2017 - 25
REMAKING THE GREAT
As anchor stores withdraw, malls see an opportunity to update and refresh
by CRAIG GUILLOT
he growth of Internet retail, saturation of mobile devices, faster shipping and
more selection is changing the mall environment faster than ever. As American
malls continue to evolve, retailers and property owners are adjusting their
strategies to cater to an increasingly complex retail environment.
There's a big shakeup going on in the mall
industry - nearly one in three properties are not
expected to survive. American malls have been on
the decline for more than a decade, with dozens of
large properties closing in recent years.
JCPenney said in February it would close
up to 140 stores, following Macy's January
announcement that it would close 68. But Sears,
which announced the closing of 41 namesake units
and 109 of its Kmart locations in January, dropped
the biggest bombshell in March. That's when it said
"substantial doubt exists related to the company's
ability to continue as a going concern."
Other mall-based retailers including Aéropostale,
PacSun, Abercrombie & Fitch and Wet Seal have
together closed hundreds of stores in recent years.
Experts say the pace of closures is rising, signaling a
new time for the industry.
TOO MUCH SPACE
David Kessler, national director of CohnReznick's
commercial real estate practice, says it can be "a
nightmare or an opportunity" for developers and
It might be more a shaking out of winners
and losers rather than that malls as a whole are
suffering. Mark Cohen, director of retail studies at
Columbia Business School and former chairman
and CEO of Sears Canada, says mall space has been
overbuilt and that changing shopping patterns have
reduced the need for space.
A 2016 report by Green Street Advisors said that
department stores need to close as many as 800
more locations to return to the levels of productivity
seen 10 years ago - equaling nearly one-fifth of all
anchor space in U.S. malls.
When malls reached their heyday in the '80s,
they were often built near interstate highway exit
ramps and catered to consumers within a sevenmile radius. Because the model worked for so long,
Cohen says developers just kept building.
Yet in the past seven to 10 years, the
"phenomenon of extraordinary space has turned on
itself," Cohen says.
Too much space, combined with competing
centers in close proximity, has increased competition
in many markets. The retail industry has also
been hit with two recessions and rapid changes in
technology that have shifted the way consumers
shop and engage in entertainment.
"Right now, there is more square footage per
capita in the United States than in the sum total
STORES May/June 2017 25