ISSUE: Shopping Malls

Shopping Malls

By Sharon O’Malley

Can they survive in the 21st century?

Executive Summary

For one analyst, the opening of a new enclosed mall is akin to watching a dinosaur traversing the landscape: It’s something not seen anymore. Dozens of malls have closed since 2011, and one study predicts at least 15 percent of the country’s largest 1,052 malls could cease operations over the next decade. Retail analysts say threats to the mall range from the rise of e-commerce to the demise of the “anchor” department store. What’s more, traditional malls do not hold the same allure for today’s teens as they did for Baby Boomers in the 1960s and ’70s. For malls to remain relevant, developers are repositioning them into must-visit destinations that feature not only shopping but also attractions such as amusement parks or trendy restaurants. Many are experimenting with open-air town centers that create the feel of an urban experience by positioning upscale retailers alongside apartments, offices, parks and restaurants. Among the questions under debate: Can the traditional shopping mall survive? Is e-commerce killing the shopping mall? Do mall closures hurt the economy?

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Resources

Bibliography

Books

Dunham-Jones, Ellen, and June Williams, “Retrofitting Suburbia: Urban Design Solutions for Redesigning Suburbs,” John Wiley & Sons, 2011. Two architecture professors call on urban planners, architects, developers, environmentalists and local governments to repurpose abandoned shopping malls and other suburban relics instead of razing them and bulldozing green space to build new structures.

Hardwick, M. Jeffrey, “Mall Maker: Victor Gruen, Architect of an American Dream,” University of Pennsylvania Press, 2004. A historian of American culture follows the life and accomplishments of Austrian-born Victor Gruen, widely credited as the architect of the American shopping mall.

Lewis, Robin, and Michael Dart, “The New Rules of Retail: Competing in the World’s Toughest Marketplace,” St. Martin’s Press, 2014. Two retail industry experts explain how, in an age of technology and globalization, retailers need three competencies to survive: an ability to anticipate and respond to changing consumer demands; a deep connection with consumers; and control of the “value chain,” the activities taken by the manufacturer, warehouse, carrier and supplier of a product as it makes its way to the consumer.

Scharoun, Lisa, “America at the Mall: The Cultural Role of a Retail Utopia,” McFarland & Co., 2012. A founder of the Cross-Cultural Design Lab at the University of Canberra in Australia regards the American shopping mall as more than a place to buy goods; it’s also a primary place for community and social interaction to which consumers have a spiritual and emotional connection.

Articles

Ajudua, Christine, “The World’s Coolest, Most Cultured New Malls,” The New York Times Style Magazine, July 27, 2016, http://tinyurl.com/j74hcpn. A travel writer describes five malls around the world that have combined shopping with culture and community.

Rothbort, Scott, “What the death of the American mall means for investors,” MarketWatch, Nov. 19, 2015, http://tinyurl.com/h2y3qpy. A personal investment counselor warns investors against sinking their money into shopping malls unless they are upscale and have been reinvigorated with restaurants and entertainment options.

Schwartz, Nelson D., “The Economics (and Nostalgia) of Dead Malls,” The New York Times, Jan. 3, 2015, http://tinyurl.com/mtuay55. A business reporter looks at two sides of the shopping mall “obituary,” showing that unlike dozens of dead and dying malls, top-tier properties continue to thrive.

Sinclair, Nicole, “5 retail groups that will survive the death of the mall,” Yahoo! Finance, Nov. 12, 2015, http://tinyurl.com/nostvtl. A markets correspondent says five kinds of retailers are thriving while others languish: Amazon; department store off-price brands; traditional discounters like TJ Maxx and Ross; active-wear makers like Nike; and those specializing in automobiles, home improvement, technology and health care.

Reports and Studies

“Industry Conditions: Shopping Centers: Where Americans Buy, Socialize, Play and Work,” International Council of Shopping Centers, May 19, 2016, http://tinyurl.com/gldqodq. The trade association for the shopping center industry summarizes the findings of an April survey about the frequency of visits and spending habits of Americans who go to shopping centers.

“Shopping Centers: America’s First and Foremost Marketplace,” International Council of Shopping Centers, 2014, http://tinyurl.com/zahdkef. A study of the shopping center industry by its trade association finds that shopping centers and malls remain “successful, vibrant and vital to commerce.”

“U.S. Mall Outlook,” Green Street Advisors, Jan. 26, 2016, http://tinyurl.com/h5luxzg. A real estate research firm forecasts more closures for those malls that cater to middle-income shoppers; it also predicts increasing competition from e-commerce over the coming years and more consolidations among mall developers.

Hanchett, Thomas W., “U.S. Tax Policy and the Shopping-Center Boom of the1950s and 1960s,” American Historical Review, October 1996, http://tinyurl.com/jj7hvb3. A former Youngstown State University history professor posits that a 1954 change to U.S. tax law was more influential in the shopping mall building boom of the 1960s and 70s than the automobile or urban flight.

Ortega, Lauren E., “The Rise of the Mall,” Columbia University, 2012, http://tinyurl.com/gpeljeu. A graduate student in architecture traces the history of the modern shopping center from its 19th-century roots and argues that a return to the concept of the mall as a community’s social and civic center can save it.

The Next Step

Anchor Stores

Abrams, Rachel, and Sapna Maheshwari, “Macy’s to Close 100 Stores as E-Rivals and Discounting Hit Legacy Retailers,” The New York Times, Aug. 11, 2016, http://tinyurl.com/zj3dr9z. Macy’s, America’s largest department store chain, is set to close 100 stores because of consumers’ shifting shopping habits.

D’innocenzio, Anne, “Anchor stores go chic to shed big box image,” The Philadelphia Tribune, Aug. 16, 2016, http://tinyurl.com/jlmt4cw. Some department stores plan to revitalize their appearance—and bottom lines—by adding spas, restaurants and more-attentive staff.

Peterson, Hayley, “A new report signals disaster for American shopping malls,” Business Insider, April 25, 2016, http://tinyurl.com/znkqgd9. A real estate research firm says more closures of mall anchor stores such as JCPenney, Macy’s and Sears are necessary for the companies to return to the productivity levels of a decade ago.

E-commerce’s Future

Johnson, Lauren, “Walmart Buys Ecommerce Startup Jet.com for $3 Billion to Compete Online With Amazon,” Adweek, Aug. 8, 2016, http://tinyurl.com/jm3ub3j. Walmart bought e-commerce startup Jet.com in an attempt to improve its online and mobile presence and to compete with mega-online retailer Amazon.

Thomas, Brad, “Simon Says: ‘Malls Far From Extinct, Safe From E-Commerce For Now,’” Forbes, April 26, 2016, http://tinyurl.com/hv3jfqs. Simon Property Group CEO David Simon contends e-commerce is not killing the mall, saying “business is as solid as it’s ever been.”

Von Bergen, Jane M., “E-commerce is driving retail employment,” Albuquerque Journal, Aug. 16, 2016, http://tinyurl.com/zn6bnpy. In-store and e-commerce retailing are becoming more intertwined, with stores driving online traffic and websites spurring foot traffic in brick-and-mortar locations, according to an e-commerce and retail company executive.

Mall Competitors

Gustafson, Krystina, “Americans aren’t done with outlet malls just yet,” CNBC, Aug. 22, 2016, http://tinyurl.com/j3rbbr9. Traffic at outlet malls is rebounding after a decline in sales earlier in the year, according to a Cowen & Co. survey.

Lam, Bourree, “Why the Biggest Big-Box Stores Survive,” The Atlantic, May 11, 2016, http://tinyurl.com/zlhovuu. Two economists report that despite closings or bankruptcies among some big-box stores, sales are rebounding at warehouse stores and supercenters.

Sloan, Katie, “Outlet Centers Are Morphing into Lifestyle Centers,” Rebusiness Online, Feb. 16, 2016, http://tinyurl.com/jv6r6sm. Outdated shopping areas are being reborn as “lifestyle centers,” with the addition of enhanced restaurants, entertainment options and more luxury stores.

Reuse and Revamping

Del Rey, Jason, “A giant shopping mall company is turning to 10 startups to breathe new life into retail,” Recode, Aug. 1, 2016, http://tinyurl.com/hlb8gll. Westfield Corp., which operates 32 U.S. malls, is teaming with advertising agency R/GA and 10 startup companies to spur innovation in brick-and-mortar malls.

Semuels, Alana, “A New Life for Dead Malls,” The Atlantic, March 9, 2015, http://tinyurl.com/qcevowb. Defunct shopping malls are finding new purpose as schools, workforce centers and churches.

Wahba, Phil, “New Mall Cements Lower Manhattan as a Luxury Retail Mecca,” Fortune, Aug. 16, 2016, http://tinyurl.com/jseeyjc. Fifteen years after the 9/11 terrorist attacks, New York City’s new World Trade Center opened its 100-store luxury mall as the centerpiece of the complex’s commuter terminal.

Organizations

CoStar
1331 L St., N.W., Washington, DC 20005
888-226-7404
www.costargroup.com
A leading commercial real estate information and marketing provider.

Envirosell
907 Broadway, 2nd Floor, New York, NY 10010
212-673-9100
www.envirosell.com
A consumer behavior research and consulting firm founded by author and retail specialist Paco Underhill.

Green Street Advisors
600 Newport Center Drive, Suite 800, Newport Beach, CA 92660
949-640-8780
www.greenstreetadvisors.com
A market research, data and analytics firm specializing in research on real estate investment trusts, or REITs.

International Council of Shopping Centers
221 Avenue of the Americas, 41st Floor, New York, NY 10020-1099
646-728-3800, Option 1
http://www.icsc.org/
The global trade association of the shopping center industry.

J. Rogers Kniffen Worldwide Enterprises
405 Lexington Ave., 14th Floor, New York, NY 10174
212-724-2204
http://www.jrkwwe.com/
A firm specializing in equity research and financial and management consulting for the retail sector.

National Association of Real Estate Investment Trusts
1875 I St., N.W., Suite 600, Washington, DC 20006
202-739-9400
www.reit.com
The global trade association for REITs and publicly traded real estate companies with an interest in U.S. real estate and capital markets.

National Retail Federation
1101 New York Ave., N.W., Washington, DC 20005
202-783-7971
www.nrf.com
The world’s largest retail trade association representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and Internet retailers from the United States and more than 45 other countries.

Urban Land Institute
2001 L St., N.W., Suite 200, Washington, DC 20036
202-624-7000
http://uli.org
A nonprofit research and education organization that focuses on land-use policy and practice.

DOI: 10.1177/237455680217.n1