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Department stores have been stumbling for years, and the findings of a new report suggest that they could drag down malls that already are teetering on the brink.

Even though major department store chains have been shrinking their footprints for a number of years now, the closures haven't been enough to spark a turnaround, and according to estimates by Green Street Advisors, more drastic measures are needed.

"The department store industry has been struggling for some time and is likely oversaturated in today's retail environment," the company said. "A faster pace of department store closures could happen in the next few years."

Green Street calculated that 800 locations need to go if department stores want to return to pre-recession health. Put another way, that's all of the anchors at 200 malls, or 20 percent of mall anchor space in the country.

Read More: Wal-Mart to Close 269 Stores in 2016, Open Up to 405 Others

And that's bad news for malls, especially in smaller and less-affluent markets.

One of department stores' earliest and biggest miscalculations, analysts say, was that websites would not be a popular channel for apparel sales. But with people willing to buy jackets and jewelry with a click or a tap, department store showrooms became less important. At the same time, stand-alone brand stores, off-price retailers and big box stores also chipped away at department store clothing sales.

"Markets are over-stored, and with competition from the Internet and competition from multiple stores and areas, they're just not making enough money to justify staying open," Vicki Howard, an associate professor of history at Hartwick College, said of department store chains.

 

Because the loss of an anchor can exacerbate the challenge of attracting customers and lead to other stores closing, "Malls are being torn down or repurposed," she said.

"It's a bit of a challenging atmosphere … for mall landlords," said Garrick Brown, vice president for retail research at Cushman & Wakefield.

Overall, retail real estate has recovered from the effects of the Great Recession, but not all storefronts are created equal.

A recent Cushman & Wakefield report said retail growth was driven "overwhelmingly" by just a few categories — most of which aren't traditional mall retailers at all.

Dollar and discount stores have done well, and department stores themselves are catering to the current popularity for outlet and discount stores, opening off-brand versions like Macy's Backstage even as they close flagship stores. In its annual report in April, Hudson's Bay Company said same-store sales grew by 2 percent at its discount Saks Off Fifth stores, while falling 1.2 percent at Saks Fifth Avenue.

"The restaurant sector remains extremely active," Cushman & Wakefield report said. The commercial real estate company noted that both discount and high-end grocery stores are also growing, with some even moving into space vacated by department stores.

"To survive, everyone's adapting and … all the old rules are out," Brown said.

"The word anchor is used still to this day, but it does not hold the same value as it did in the past," said Greg Maloney, retail CEO at JLL, a real estate investment management company.

Read More: Kohl's Closing in 18 Locations, Planning Smaller Format Stores

In wealthier neighborhoods, developers tear down aging malls and replace them with open-air "lifestyle centers" designed to cater to a high-end clientele's every whim.

A recent announcement from mall owner Simon Property Group regarding renovations and additions at a high-end shopping center in Palo Alto, California talked about "elevating the shopping experience" and the "Bay Area's upscale and outdoor lifestyle," listing new brands including Anthropologie, Lululemon and even electric carmaker Tesla.

 
Abandoned malls: See inside these U.S. shopping relics5:05

"The one category that hasn't been hurt at all is the luxury centers," Maloney said.

In many ways, department stores were a victim of the success of a few major players, Howard said.

"The situation department stores are in now is really a product of their own making," she said.

Howard laid much of the blame for the current state of the industry on consolidation that began in the 1980s and resulted in lots of stores of the same brand planted too close to one another. As chains merged, merchandise that catered to local or regional consumer tastes was replaced with standardized inventory.

"Every store in every mall is the same, so there's not a lot of consumer interest," Howard said.

Read More: Men's Wearhouse Parent Company Closing 250 Stores

Howard worried that this dynamic of closing anchors would be especially detrimental to smaller metropolitan areas where the number of places to shop is already limited, or neighborhoods without the pull to attract developers eager to reinvent the local mall as a lifestyle center.

Industry analysts echoed her concern.

"While non-traditional anchor concepts are emerging and serve as suitable replacements for spaces formerly occupied by department stores, malls further down the quality spectrum may find re-tenanting large space problematic," Green Street warned.

"Most closures have been weaker malls, secondary or tertiary markets," Brown said.

"People are nostalgic for the downtown department store, but people are also becoming nostalgic for the traditional mall," Howard said. "The heyday of malls seems to be passing."

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I've noticed a trend that as more and more new shopping complexes are built they are getting away from the old mall concept and going to a much newer open air mall concept like is evidenced at Bridge Street shopping complex in Huntsville.  The older, enclosed, malls are being sold off or find that the areas around them are often in decline.  There are still some very active and successful multi-level malls but by and large I do believe that they are on the decline and especially at risk when the large anchor stores are closing or disappearing. 

Along with that latter thought I very much fear that Sears is the next large shopping store to declare bankruptcy and close.  It's sure not a good sign when you anchor a place in a mall and close your doors at 6PM daily at a mall that remains open until 9PM.  Such is the case at Florence Mall and the Sears store located here.  I felt that the future of Sears was in great doubt when the same owner of K-Mart purchased and bought out Sears also.

Time will tell because some stores have transitioned some and seemingly improved their lot but maybe for only a short time.  I don't know which is more dangerous to these mega stores WalMart or Amazon.com?   I dare think that Amazon.com tends to be a greater threat but then America is changing in it's shopping desires and patterns so maybe change is just normal and we are just observing the transition from the anchor type stores and the malls to the more open shopping experience. 

Case in point, the primary reason the recent mall built in
Collierville TN over here in Shelby Co. was to discourage
the packs of young school age pre-teens and teens that
would roam around for hours making trouble and stealing
what they could. Parents would drop hundreds off in the
mornings with lunch money only to have the mall babysit
their kids. At times they wouldn't return until after store
hours. As a matter of fact, this is what closed the "mall of
Memphis," one of the best in this area. The crime got to be
uncontrollable.
Liz Claiborne sold all their brick and mortar stores for
online shopping and out of other stores.
 
Something you see more of these days.   
 

 

Last edited by Jack Flash
jtdavis posted:

Shouldn't the malls and stores make you feel comfortable?  Now, the mall seems to be "give us some money and get out"

Taking out most of the benches where husbands waited and talked amongst themselves leaves the place empty looking at the Florence Mall. Guess they are directing traffic to the food court.

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