The Decline of the American Mall - Selling Out Week

ADDITIONAL CONTRIBUTORS Chloe Kent

By Chloe Kent

In January, JC Penney announced it plans to close 33 of its locations, leading to the eventual loss of 2,000 jobs. That came on the heels of Macy’s announcement that the mall giant would be laying off 2,500 workers. Then in March, Staples, the country’s largest office supplies retailer, reported it will shut down 225 stores.

Perhaps the most alarming statement yet was when shopping mall staple Aeropostale said last month that it plans on closing 125 of its locations by the end of the fiscal year, “citing changing consumer habits.” Food court titan Sbarro filed for bankruptcy for the second time in three years, citing an “unprecedented decline in mall traffic.”

Given the rash of rampant closures, are malls as we know them in danger of shutting down all together? Retail consultant Howard Davidowitz told Business Insider that he expects as many as half of the country’s malls to fail within 15-20 years.

Part of the reason malls are continually shutting down relates to the domino effect inherent in large-scale retail operations.

“When a major department store leaves or goes out of business, it leaves a huge void,” explains Mike Kalasnik, who co-runs the site Dead and Dying Retail. The website’s other co-runner, Nicholas Eckhart, created an interactive map detailing the rampant closings and conversions of dozens of Kmart Superstores across the country.

Kalasnik further explains to BTR the dynamics of mall closures.

“Smaller inline shops will often ‘jump ship’ if an anchor leaves because people no longer have a driving reason to go there anymore,” Kalasknik tells BTR. “The more inline stores leave, the more business is lost. There are now entire wings of the mall that have no stores. Once these malls can’t make their mortgage payments and keep up with repairs or simply keep current, they fall into foreclosure and are shut down.”

If the company announcements and anecdotal evidence weren’t enough, cold hard statistics also support the idea that the very apex of the country’s retail industry–once as closely aligned with American culture as apple pie–is now in danger of ceasing to exist altogether.

Yahoo! Finance reported that “a decade ago there were more than 1,100 enclosed shopping malls in the US Since then more than 400 have either been “re-purposed” or closed outright. No new malls have been completed since at least 2009.”

Also in 2009, The Wall Street Journal predicted a rise of “dead malls,” which they defined as “centers debilitated by anemic sales and high vacancy rates.” As of now, hundreds of malls across the nation either remain “dead” or are in danger of dying.

Not all malls in danger of shuttering, however. The pattern has to do with class.

About 40 percent of America’s shopping malls cater to upper-income shoppers. The high-end locations, actually, are not being affected by the turbulent times their lower-end peers face, according to data from Green Street Advisors.

While the lower-end malls are hit by store closures, Davidowitz predicts that only upscale shopping centers with anchors like Saks Fifth Avenue and Neiman Marcus will survive.

A March New Yorker article entitled “Are Malls Over?” cited a January speech given by real estate CEO Rick Caruso at the National Retail Federation’s annual convention. Caruso offered some speculation about the cultural space shopping malls are expected to occupy in the future: “Within 10-15 years, the typical US mall, unless it is completely reinvented, will be a historical anachronism–a 60-year aberration that no longer meets the public’s needs, the retailers’ needs, or the community’s needs.”

Despite the fact that malls have been in near constant decline since the advent of online shopping, Kalasnik tells BTR that he believes the structural skeletons left by retail conglomerates will eventually find new life. He points out a trend where numerous “dead malls” get converted into so-called “medical malls.” Once revitalized, smaller shops often become doctors’ offices or administrative units, and former department stores are changed to clinics or rehab facilities.

“Rarely,” he says, “Do I see malls reopen as a retail mall. It’s been done and currently it’s a growing trend, but [repurposing malls seems to be] working and people are gravitating towards it.”

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