When physical malls confront a virtual reality, the brand’s the thing.

Amidst all the talk of mall death—at least some of it from yours truly—it’s becoming easier to spot the retail sector’s outright desperation. When was the last time you visited a chain retailer and were not asked about becoming a member of the rewards program? And how long did it take you to find a staffer on the floor—anyone who wasn’t operating a cash register? And, since no employees seem to patrol the aisles anymore, how long did it take before you came across a display in complete disarray?

It’s not likely to get any better any time soon, and the proof is in the thin parking lots, the increasing dependency on mom-and-pops, the seasonal operations, or even other uses like call centers and mega-churches in those vacant department stores. That apotheosis of suburban living—the enclosed shopping mall—is dying. But it’s not exclusively a suburban phenomenon: most of the downtown malls in third-tier American metros (those with fewer than two million people) have already bit the dust. And now, some of the most income-dense alpha cities are facing the same vulnerabilities.IMG_4283Manhattan MallSmack in the middle of Midtown, the Manhattan Mall is hardly a regional center. Metro NYC has at least two dozen larger malls, so this one’s 40-odd stores make it little more than a retail center for the borough itself, if even that. But the astronomical density of workers and residents within a square mile blows all those suburban malls out of the park. It is the most densely populated place in the country, after all.

Nonetheless, the Manhattan Mall doesn’t appear to be doing so hot; it consists of a repurposed old Gimbels department store, a name which today largely survives thanks to its role in founding the Thanksgiving Day Parade, as well as the still-flourishing (relatively speaking) Gimbels spinoff, Saks Fifth Avenue. But Gimbels went bankrupt in the mid-80s; this Manhattan flagship location got repurposed in 1989 as a short-lived center called A&S Plaza after another now-defunct chain, Abraham & Straus, that served as an anchor for part of the tower, while the remaining space went to in-line tenants. The 13-story model that worked for a single department store never emulated Gimbels’s success, and when Federated took over in 1995, it first became a Stern’s department store, then a cluster of smaller, category killer tenants like Steve & Barry’s, then, finally in the late 2000s, a J.C. Penney, which is what it remains to this day. But it’s a single anchor to a mall with relatively few national brand names (at least according to the current directory). And—this might come as a surprise—but J.C. Penney isn’t doing so well.

Most of us already know this, and even if we didn’t know J.C. Penney’s specific woes, we know that bricks-and-mortar retail is struggling, that Penney’s is retail—and, well, we can all complete the syllogism. But J.C. Penney made some bad decisions even well before the demise of the mall hit the mainstream, and it’s broadly visible here at the entrance to the Manhattan Mall.Short-lived Penney's logo at Manhattan Mall Remember when Penney’s made that brief attempt to re-brand with the chic, succinct “JCP”? And it tanked? And that it was the third effort at logo in as many years? And, after less than a year of plunging sales, the chain went back to the look it had promulgated for nearly four decades? Yeah, it’s the thin, sans-serif font I wrote about at another middling mall in suburban Philadelphia a few years ago, when “JCP” was still the national standard. J.C. Penney’s—now often rebranded JCPenney in text—just can’t make up its mind, and it’s manifest here at Manhattan Mall.

Though these Midtown Manhattan pictures date from spring 2016—long after corporate had given up on the “JCP” and returned to the old standby—the façade still features the short-lived initials. It costs a lot to change logos—and becomes an even shoddier investment when a company re-changes in such a short period. Since not everyone can draw the conclusions they need to from “JCP” (probably one reason the rebranding failed), the murals on either side reinforce the last name that everyone knows, along with a horrible slogan “GET YOUR PENNEY’S WORTH.”  I’m rarely one to thumb my nose at a pun, but this one conveys bottom-of-the-barrel prices, which has never been the aspiration of the nation’s most middlebrow department store. Do they really want customers to think they’re competing with Dollar Tree?

At least they evoke the classic logo with a vertical banner projecting from the wall:

IMG_4285

There’s the ticket. I haven’t been back to Manhattan Mall for at least a year, so maybe the owners have changed out the logo by now. But does it really matter at this point? After all, the next biggest name is an even bigger stink bomb:

IMG_4284

Look above the Manhattan Mall label: yes, its Aéropostale, the teetering-on-the-precipice youth retailer that got delisted from the NYSE about the same time I took these photos, filed Chapter 11, closed a bunch of locations, then—in an unprecedented move—found a buyer for its remaining 229 stores (down from a peak of nearly 800) in the form of a partnership between the REITs of mall managers General Growth Properties and Simon Property Group, who desperately needed the mall stand-by to keep their occupancy levels up. Concurrent with relegation of the Aéropostale name to hospice care was a retooling of the logo, deviating from the tall-caps red it had brandished for decades to a softer, more playful cursive above, which only a few malls—such as the Bridgewater Commons that I blogged about last year–have adopted. It’s expensive to change out all those signs/lights/gift bags! And why bother, when the reality is that Aéropostale, JCPenney, Macy’s and just about every other clothier will most likely live out their remaining days in a virtual marketplace? At least the computer coding necessary to rebrand doesn’t pose any OSHA risks, compared to the good old days, when we put those workers on a ladder or harness, changing those enormous letters above the doorway to a dying mall…suburban or manhattan.

9 thoughts on “When physical malls confront a virtual reality, the brand’s the thing.

  1. Alex Pline

    Interesting this is as much or more about the programming than the building form. I am surprised this has not been repurposed given the value of that real estate in that location. Why would a building owner not find higher value programming? I contrast this with an observation I made last weekend when I was just in Brookline MA wandering around doing the “American Dirt Style” observation. I was looking at the Landmark Center (a former 1920s Sears distribution center) that is now an internal mall and offices on the upper floors. There is a huge amount of residential in the area including younger, less affluent college students as well as some very pricey new condo towers. It appears to be doing quite well (including a not often found urban movie theater – Regal Fenway 13) and there is a huge makeover happening outside. The only down market tenant I could see there was Best Buy. Unfortunately, it was Sunday morning so I couldn’t get a better sense of the retail vibrancy but given the investment in the property that appears to be happening I would think it’s doing well. This leads me to believe the programming is the problem in Manhattan and again makes me wonder why they have not been replaced. Surely, there has to be a better tenant.

    Reply
    1. Chris B

      I doubt Penney’s would have taken the space without a half-century’s worth of leases and options…so they are likely the ones in control of the real estate, not the actual owner. (Same thing as Sears..middlebrow department stores are now real estate plays.)

      Reply
      1. AmericanDirt Post author

        Thanks for your comments, both of you. And I agree that JCPenney probably has a pretty sweet deal, because, from what I can tell, Manhattan Mall has always been an underperformer. It may enjoy the usual anchor tenant benefits–i.e., paying next to nothing.

        Beyond that, I’m guessing the property owner (Vornado Realty Trust) has prepared leases for whoever is willing to consider them. But we’re obviously not at a point where either the landlord or the tenant have many bargaining chips to play. Therefore, despite all the traffic and income density outside, apprehension and retail timidity are forcing a great old building toward Class C retail status.

        Reply
        1. Chris B

          What’s funny is that Vornado (the REIT and building owner) is the ultimate corporate successor to…a couple of failed retail chains.

          Reply
  2. Astara

    I’m beginning to see this concept of the death of the mall as a self-fulfilling prophecy. One perhaps naively-unanticipated side effect is the death of the retail talent pool. The best talent is fleeing mall stores and leaving the mediocre to scrap for retail positions both full and part-time. This only exacerbates the problem by diminishing the customer experience. We know that a unique and positive customer experience will bring customers back to brick and mortar stores, but we are having a harder time delivering with unskilled or under-skilled associates.

    In addition, younger generations lack conversational skills and the understanding of establishing in-person emotional connection due to a dependence on social media and text for interaction. It’s a real mess.

    Reply
    1. AmericanDirt Post author

      You raised a serious point, Astara, because while retail management positions seem pretty secure (for now) and talented retail strategists can rake in big bucks, the lower-tier sales clerks, many of whom are experienced and talented, are often getting cut to save costs, leaving big stores largely understaffed. At the same time, the biggest industry that’s expanding at bricks-and-mortar retail’s expense is warehousing. While the work environment is probably not great, the warehouse jobs can pay better for the less experienced employees, and they’re particularly lucrative for the ones who lack great customer service skills or who speak limited English. But that leaves that middle-tier retail talent—-too extroverted for the warehousing jobs but also too expensive to keep in the store—-stuck between a rock and a hard place. Creating experiential retail with amazing services seems to be the solution, but not every place can be IKEA. Cabela’s tried to do the same thing for outdoorsy folks, and look at the shape it’s in.

      Reply
  3. Stephen Padre

    I get to Penny’s only when in the suburbs, but when I do, and when I look at their ads in the paper, it seems like they’re begging people to come shop there. They offer so many deals and coupons, and it’s like they’re even paying you to come spend money in their store. Pathetic. I don’t want to shop at a store that’s so desperate like that. But it’s a catch-22 with consumers like me, I realize.

    Reply
    1. AmericanDirt Post author

      I agree completely. But, reflected in their desperation are some pretty good deals for middle-of-the-Road stuff. At least so far they aren’t as depressing as Sears. Though the displays are often disheveled (and the lights are dim to save utilities costs), they at least appear in good repair.

      Reply

Leave a Reply

Your email address will not be published. You are not required to sign in. Anonymous posting is just fine.