Aggressive store closures by retailers and a shift in consumer shopping to online channels have put immense pressure on shopping malls With retailers closing stores to cut costs and consumers shifting to online avenues for their shopping needs, some analysts think we may be witnessing the beginning of the end for shopping malls. Industry experts anticipate that the dynamics of malls will soon be reshaped. For underperforming malls this is especially true, as their difficulties are not limited to replacing anchor tenants at deserted malls. Even upon replacement, store traffic declines, as customers continue to compare the mall to its earlier organization. This then impacts the turnover of other retailers at these malls, resulting in more store closures. Gary Balter, an analyst at Credit Suisse Group AG (CS), commented on the spiral effect of store closures: “If one of them goes, it almost forces the other one out, because the mall just won't get enough traffic.” This issue was emphasized recently when J.C. Penney Company, Inc. (JCP) and Sears Holdings Corp. (SHLD) – which together have a presence in half of the US’s operating shopping malls – announced that they will pull down the shutters on some of their stores. Data released by real estate research firm Green Street Advisors suggests that about a quarter of the malls that J.C. Penney and Sears operate in have sales productivity of less than $300 per square foot. Moreover, vacancy rates have surpassed a fifth of total space, as an increasing number of national chains are shrinking their store footprints to reduce costs.
The thing about national chains is, they are for the most part, to many stores in to close of a geographical area. Do you really need four JC pennys within a 50 mile radius? I think it is true that mall usage is down, but this is more of a reflection of over all spending being down. Of course online sales look stellar because there simply is not as much historical data to compare it to. Brick and mortar stores have been around for hundreds of years, but online shopping has only been around for a decade or two. It has far from peaked as far as usage goes. Don't forget some merchants are reflected in that online buying statistic. I do think some malls will end up closing down, the ones that last will be the ones with a big mix in an area that can survive the ups and downs of the economy. I am surprised to see many more independent shops opening in different urban areas. I think this will go a long way in helping the economy in the long run. the malls that remain will be big mega malls that offer more then just shopping.
Technology is very rapidly changing the market and how consumers shop these days. Mom and pop shops are going out of business because they can't adapt. Simple. It's not like there aren't online stores and places like eBay popping up in their place though.
Here in the UK, city centre stores are closing down all the time because of E-Commerce. Soon, the nearest retail outlets will be confined to out of town locations which are practically inaccessible for those without cars. There are so many shop units lying empty in my city and the over-inflated rentals charged by the landlords prohibit many prospective tenants form taking them on.
Walmart and Amazon, all that will be left. This is nothing new, technology always makes a rapid change in how things are bought and sold. Remember, Malls only happened a couple decades ago once the price of cars came down to the point where everyone had them and could easily get to the suburbs. With Amazon and Google working on drone deliveries, it isn´t going to get any better for the malls anytime soon.
It was bound to happen sooner or later. Maybe it's time they started trying to sell more online? I mean if their customers are online why shouldn't they try to do what everyone else is doing. Get their customers to buy "local" online? It's the convenience of not going to the malls that people want to embrace after all.
I agree, e-commerce offers a lot of discounts and advantages, so retail stores really have to change their ways if they want to keep their doors open and this basically means better prices.
I personally like shopping online much more than I do actually going to the mall. Malls are busy and hard to get around, at least that is the case where I live. Even if you have a mall near you, they are a time waster. I much prefer to sit in the comfort of my own home and open the web pages to my favorite stores.
I also hate having to find a parking space and sometimes PAYING for that space. Why should I leave my comfy home to do that when I can just get stuff delivered straight to my door??
