Apparel Online India Magazine May 1st Issue 2018 | Page 10

WORLD WRAP
Niche malls carrying high-end brands are thriving, while malls housing department stores are closing down
Decaying mall culture... A blow to department stores in the US
T
he malls, once considered as
the driver for retail growth, are
today dying a slow death. The rapidly
changing retail environment has put
added pressure on malls, severely
damaging the very foundation on
which malls grew in stature…, leisure
shopping with fun-filled ambience.
Today, people no longer want to spend
time on shopping and prefer to shop
online or go to standalone stores for
the in-store experience, rather than
going to crowded malls that are like
glorified ‘fairs’. Some analysts predict
that by 2022, 1 out of every 4 malls in
the US could be out of business, being
victims of changing tastes, a widening
wealth gap and the embrace of online
shopping.
There is an estimated 26 sq. feet of
retail space for every person in the
US, compared to about 2.5 sq. feet per
capita in Europe. The year gone by was
very difficult for most US department
stores, for the most part; these stores
were much more worse hit than their
other retail peers in 2017. As a result,
most department stores faced major
downsizing and consequently the
malls that housed these stores are
Vicki Howard,
author of the
book From Main
Street to Mall:
The Rise and Fall
of the American
Department Store
said, “I think the
story of department
stores is closely
twinned with
the story of the
shopping mall… Can
[mall] developers
continue to find
ways to make things
appealing? That
would be something
that could benefit
department
stores as closures
continue.
facing a serious crisis. This downsizing
by some analysts is being seen as a
market correction as the number of
stores in operation by most retailers
was unviable. Macy’s, JCPenney, Sears
and other major department stores
have been so-called anchor tenants for
malls, and as they pull out, it opens
the door for other stores to break their
leases or negotiate for much cheaper
rent. In fact, as soon as one big store
closes, it has the potential to take
several smaller stores along with it.
The seriousness of the situation
can be gauged from the fact that the
vacancy rate in the shopping malls
across the United States has gone
up by 8.4 per cent in the first quarter
of 2018 as compared to 8.3 per cent
in the fourth quarter of the previous
fiscal year. This vacancy rate is the
highest since the fourth quarter of
2012, revealed a report released
by Reis Inc., which is engaged in
providing commercial real estate
market information and analytical
tools. At least 77 metropolitan areas
were covered in the survey.
In addition to malls, the vacancy
was also reported in neighbourhood
10 Apparel Online India | MAY 1-15, 2018 | www.apparelresources.com
and community shopping centres.
At least 41 of the 77 areas reported
vacancy during the 12 months ending
on March 31, 2018. While, most
industry watchers attribute mall
vacancy rate to the rising fascination
towards e-retail among consumers,
Dan Bell, a filmmaker who produces
the Dead Mall Series on YouTube, an
eerie record of the nation’s fading
commercial temples, says that the
younger Americans look at malls in an
antiquated way… They see it as: ‘That
was my parents’ thing, and it’s not my
thing’.
In an interview to CNBC, Vicki
Howard, author of the book From
Main Street to Mall: The Rise and
Fall of the American Department
Store candidly said, “I think the
story of department stores is closely
twinned with the story of the shopping
mall… Can [mall] developers continue
to find ways to make things appealing?
That would be something that could
benefit department stores as