The future of shopping malls

**bjl584** · 04-13-2017, 08:47 AM

Retail is tough right now. The combination of people ordering more and more online, and the younger generation not going to the malls is really putting the squeeze on retailers. The only ones doing well are the ones that have products that can't easily be ordered online and shipped to you. Grocery chains and home improvement stores come to mind. It's hard to ship eggs or sheets of drywall.

**msomnipotent** · 04-13-2017, 08:57 AM

I think the anchors will be replaced by other stores like H&M. I have no idea why Lowes or Home Depot wouldn't grab an anchor spot. You would think that would be ideal for families. Drop the teens off and go do what you have to do. They would even have room to expand their appliance offerings.

**james.hendrickson** · 04-13-2017, 09:07 AM

I know we don't normally post full-length articles in threads, but in this case I think its appropriate. The trend that you guys are noticing has been driven in part by Amazon.com's growth (see the article below).

It is entirely possible that Amazon will become a retail monopoly. They have invested billions of dollars in 2 day shipping and their online porthole is extremely effective.

How joe and jane average will be able to save money using Amazon is still up in the air, but usually monopolies are bad for consumer prices.

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Bankruptcies and Amazon Impact on Retail Hiring
Phil Wahba
Apr 07, 2017

After the bloodbath that was the 2016 holiday season for major store chains like Macy's (m, -0.38%) and Target (tgt, +0.17%) among many, it follows that job creation in the retail sector would be underwhelming in the aftermath.

But the U.S. Bureau of Labor Statistics job market report released on Friday showed it was an even bigger disaster than expected, with 30,700 jobs lost. Combined with similar job losses in February, the retail industry had its worse two-month job creation period since the depths of the Great Recession. And retail, which employs nearly 16 million Americans, was one of the very few industries to ditch jobs last month and certainly cut the most jobs by far of any industry.

In January, as the major retailers gave Wall Street their holiday season post mortems, one mass store closing announcement came after the other: J.C. Penney (jcp, -4.32%) was shedding 140 stores; Sears Holdings (shld, -4.42%) shuttering 75, Macy's (m, -0.38%) paring its fleet by 100 locations. And specialty clothing chains have similarly been trying to get leaner, from The Gap (gps, -1.93%) and Abercrombie & Fitch (anf, -3.50%).

Adding to the considerable pain, countless retailers have been seeking bankruptcy protection in the last few months, taking advantage of a Chapter 11 filing to get out of leases and shut stores: Payless ShoeSource, hhgregg, BCBG Max Azria, Limited Stores, Radio Shack (for the second time!), Gordmans Stores, and the list goes on and on. Some of those have gone out of business, while those that remain have closed stores.

One of the biggest culprits of these retailers' pain has been the unrelenting growth of Amazon.com (amzn, -0.83%). Despite valiant efforts by many top brick-and-mortar chains, notably Walmart (wmt, -0.18%), Amazon along generate 53% of e-commerce growth during the holiday season, according to Slice Intelligence, padding its lead over the rest of retail. (Walmart's e-commerce growth has sped up again, yet its digital sales remain a fraction those of Amazon's.) Amazon announced 30,000 new part time jobs this week, a stark contrast to the drumbeat of bad retailer news.

Under enormous pressure from investors, retailers are cutting costs, including personnel, in a bid to hit earnings per share targets despite soft sales, thereby meeting projections and mollifying investors. The irony of course is that leaner store staffs will likely compromise store service and give shoppers more reason to go online. And many of them have made it clear, when they go online, they go to Amazon. Hello, vicious cycle.

Here is a list of major chains to have announced large-scale store closings so far this year:

J.C. Penney: 138 stores;
Macy's: 68 stores (with another 32 planned in the mid-future);
Sears/Kmart: 150 stores;
Staples: 70 stores;
hhgregg: 88 stores;
The Limited: 250 stores;
RadioShack: 187 stores;
Wet Seal: 171 stores;
Bebe Stores: 170 stores;
American Apparel: 110 stores;
Gordman's: 100 stores;
Abercrombie & Fitch: 60 stores.
Gander Mountain: 32 stores.

And we are only three months into the year.

**rennigade** · 04-13-2017, 10:10 AM

Shopping malls in general are just a gloomy place. The whole feeling of being inside this massive structure with stores is dated. Theres a reason why outdoor shopping centers are sprouting up. Outlets are being built and "outdoor malls." If anyone has been to oahu theres an outdoor shopping mall called ala moana center...its basically a shopping mall that is open. Its just a place with a lot of stores but it has a better vibe.

Go to any given mall and get a count of how many stores are in the mall. Then do a walk around and mark down the stores you would actually go in and potentially buy something. The ratio is terrible. Its store after store where on a good day gets 5 people an hour going through it.

And the obvious issue is ecommerce. Its easier to order things from online than it is having to get to a brick and mortar store, walk around, find item, stand in line, drive home, etc etc.

Universally the Walton family is pretty much hated. Walmart is to blame for so many b&m stores going out of business...yet Jeff Bezos who owns amazon is universally loved...yet he is responsible for all of these huge b&m stores closing. Double standard much? Explain that one to me??

**msomnipotent** · 04-13-2017, 10:52 AM

Outdoor malls are gloomy in the Midwest during winter and most of autumn. There are 3 that I can think of in my general area. I avoid them during winter and the height of summer.

I think so many stores are closing simply because there are too many stores. There are 6 malls within 15 miles of me. There are 3 Kohls and 3 Walmarts with 5-10 miles of me. No one needs that many stores.

**creditcardfree** · 04-13-2017, 11:06 AM

We moved from a town almost two years ago that had two malls. In one there were literally only two anchors and probably less than 20 stores left. It was ghost town in there! The town finally created tax incentives and raised the entire mall except for the anchor stores and created a more outdoor type of mall scenario. I'm sure it is getting more traffic and new tenants as a result.

I personally will go into a JC Penney, but the chain type stores in a mall no longer offer me anything I want or need. Probably helps that I'm frugal and don't buy much!

**Thrif-t** · 04-13-2017, 04:18 PM

I admit I don't really go shopping that much anymore, it just wipes me out

. But I can't imagine not going to a store when I need to buy clothes. I gotta try those on! And usually a ton of sizes and styles to find something that actual fits and looks decent. No way would I be able to buy say work clothes on line!

My girls are 21 & 19 they still go shopping at the mall and stores, they don't buy anything online, maybe as they get older??

**TexasHusker** · 04-13-2017, 05:22 PM

Indoor malls are in the ICU and failing...

**snafu** · 04-13-2017, 05:36 PM

All the research suggests there has been a sweeping change in buying habits and the big anchor stores have not kept up defining their customers. The women are working and don't have time or energy to meet their friends for a leisurely stroll in the mall. Worse yet, the malls all have the same selection of smaller chains with the same merchandise with the same price.

WalMart raised the prices of their poor quality merchandise to an unacceptable level and the economic thump 2008-12 ended their tight relationship with staff who provided a huge percentage of sales.

My group is downsizing quantities, 'The Life-Changing Magic of Tidying Up.' I'm taking a couple of boxes to one of the Thrift shops every month or so.

**97guns** · 04-13-2017, 05:58 PM

I see bad things coming for retail real estate, when a big box store closes it takes a very specialized tenant to come in and take that space. I have a good 6-8 large stores in my immediate area that have been vacant for a long time. New big box stores are opening but they are going into brand new shopping centers

**disneysteve** · 04-13-2017, 06:32 PM

Originally posted by 97guns View Post

I see bad things coming for retail real estate, when a big box store closes it takes a very specialized tenant to come in and take that space. I have a good 6-8 large stores in my immediate area that have been vacant for a long time.

That's really my question, though. What's going to become of all of that real estate? I know why malls are failing, but once they do, then what? There can't just be millions of square feet of vacant buildings sitting around.

**TexasHusker** · 04-13-2017, 06:50 PM

Originally posted by disneysteve View Post

That's really my question, though. What's going to become of all of that real estate? I know why malls are failing, but once they do, then what? There can't just be millions of square feet of vacant buildings sitting around.

Sure there can. They'll sit empty for years and years, until the price gets cheap enough to either raze them and replace with new retail, or re-purpose them for office space, call centers, churches, etc.

You always know the death of a shopping center is near when a chunk of it becomes a college or church. While those are valid and necessary things, they do zero to help out a shopping center.

**kork13** · 04-13-2017, 08:19 PM

Originally posted by disneysteve View Post

That's really my question, though. What's going to become of all of that real estate? I know why malls are failing, but once they do, then what? There can't just be millions of square feet of vacant buildings sitting around.

I read an article a while ago that said some malls have had success in eschewing the retail scene altogether. Some have converted to massive data centers, filled with server racks and hard drives. They add super-fast internet connectivity, then lease out their data storage & routing capacity to companies like Google, Microsoft, and (ironically enough) Amazon. Others have turned their retail spaces into office space or call centers.

If mall owners don't repurpose the buildings, there's likely going to come a time when they just sending up razing it to the ground and do something else with the land. Stand alone stores/restaurants, or whatever else the market demands at the time.

**frugal saver** · 04-13-2017, 08:46 PM

Even before Amazon became huge our local malls had become teenage hangouts for roving bands of wanna-be thugs that would push through the inner courts knocking people aside and generally scaring people.

I actually started shopping more on Amazon because of the teenagers--I wonder how many others did also?

Our biggest mall is still there, but most of its anchors have either left or are fading away--but the teenagers are still there. The mall nearest me has ended and will soon be a huge movie complex and a Winco grocery store.

I don't think Amazon caused this--but I think Amazon created the perfect alternative for those who could see the malls were changing for the worse.

The future of shopping malls