My latest came out just in time for Black Friday, on Manhattan Institute’s City Journal: a world without malls. It’s my most recent rumination on the bleak future of retail in 2018–an industry that looks increasingly likely experience a collapse with no other precedent than era when the suburban shopping mall replaced the American town center as the place to purchase goods. Retail struggles have escalated to the point that they are part of common parlance. Everyone knows malls–and strip malls, and lifestyle centers–are in a nosedive, because everyone sees it.
I’ll confess that, until recently, I still thought the best malls might survive. But now that Sears has declared Chapter 11 and even luxury names like Lord and Taylor are floundering, it’s difficult to know what is likely to prevail a decade from now. And it’s not just the suburbs; the retreat of retail is hurting our urban neighborhoods’ nascent revivals. And the biggest culprit is broadly known by a majority of Americans: online shopping has all but supplanted a day out in the SUV toward that suburban megaplex.
In short, The Information Superhighway is bulldozing its way through the enclosed shopping mall, that hallmark of American retail enterprise for the last sixty years. It’s unfair to claim that Jeff Bezos, CEO of Amazon, is the 21st century Robert Moses. So what is causing the creeping retail pandemic? The real culprit is the average American consumer…just as it always has been. Just as Americans chose, after World War II, to migrate their consumption patterns out to the fringes of a city instead of its downtown, they have decided they prefer the convenience of shopping by mouse instead of minivan–resulting in the widespread retail struggles we see today, in which bricks-and-mortar showcasing of goods is increasingly passé.
While the featured article is mall-centric, the original draft of this article also explored the impending threat to walkable, urban main streets. It is probable that I’ll salvage that excised material for a blog post on retail struggles in the near future. In the meantime, please indulge this article; I’ll be happy respond either here or through City Journal comments. Thanks as always for your interest!
10 thoughts on “Society without shopping: the bleak future of malls in particular and retail in general.”
Nicely-written piece. I gather that you’ve turned almost wholly pessimistic on the future of malls absent some creative reuse of space to support shopping (i.e. relatively dense residential).
I guess we (the lucky 10%…who cares about the poors) will never have to leave our gated communities. Everything will come to us via robot delivery vans. Wall-E was amazingly prescient.
(Note the comment on the article at City Journal that confirms this. The commenter was perfectly happy never having to actually talk to other human beings).
Still…there is no answer. Online retail is amazing for some things. I am OLD, so I still vastly prefer buying clothes in person, but…
I do wonder that the bar/restaurant/distillery/escape room craze is merely a short-lived fad to reclaim a lot of the space formerly held by goods-oriented retail.
Once people get tired of waiting for food and dealing with incompetent servers, they’ll rely on Grubhub and social media to replicate the food/friends combo without ever leaving their computer desk (or smart phone).
so the future is everyone sitting alone in their houses staring at screens and never having to enter the dangers of the outside world?
I am glad I am oldish. It will be an ugly, ugly world.
well thought out and written piece, however as an active participant in the “big box” retail world I would add that a lot of space in power centers is still, and will continue to be absorbed by the downmarket retailers (TJX, Ross, Gabes, Ollies). New construction is too expensive but the value play retailers still have room to grow. Agree 100% that the malls are going to die, and the process will accelerate for various reasons…sad that the owners will be too slow to re-adapt due to their own structural issues.
1. I suspect Simon will find a formula. They bought themselves some time by selling off and spinning off their class C malls before they died.
2. Will the arrival of Burlington to replace a failed retailer (say, HHGregg or Toys R Us) in a power center be the kiss of death?
Short answer, yes.
The arrival of the discounters in a mall signals that the interior of the mall and the primary mall tenants (Vic Secret, Abercrombie, Banana) will soon exit. It means Dillards and the other anchors will likely be gone as soon as leases expire if on a lease. At that point the mall becomes an outward facing power center and the inside becomes a college, call center or just dark unless the owners are willing to invest a lot of capital to create something new.
I think this conversation pretty effectively covers it.
Steve, I agree that downmarket retailers will remain viable, largely because there is still a client base that does not participate heavily in online shopping…not because they lack access to the Internet (everybody has that), but because they lack access to credit. Low-income people who cannot secure credit will depend on bricks-and-mortar for shopping, and Gabe’s, TJX, Ross, Marshall’s, Ollies, Big Lots, even Walmart all fill that niche.
The power centers may prevail a bit longer, not so much because they’re a great retail typology–they’re ugly as sin–but because there are fewer of them, and they’re even more convenient than malls. In malls, you have to park outside the facility and may have to walk up to one-eighth of a mile to get to your inline store in the interior. With power centers, you rarely have to walk more than 200 feet. And then, since there are fewer of them, the sort of tenants that often favor power centers over malls–places like Kohl’s, Target, Lane Bryant, Michael’s–have positioned themselves accordingly and also seem to be faring better amidst this challenging economy.
I think you raise a great point about the sort of primary mall tenants that terminate their leases as soon as the discounters start to encroach–with Burlington being the most notorious, primarily because they routinely DO take space in malls that are otherwise failing. It’s definitely the case that a upper-middle retailer like Banana Republic, Talbot’s or Swarovski will high-tail it; so will Abercrombie, American Eagle and the struggling middle tier, though perhaps they’ll linger on a bit more. Victoria’s Secret is interesting because, despite targeting a middle-income demographic, it tends to linger along with GNC. I’ve come to the conclusion that a handful of retailers like Vic Secret, Bath and Body Works, and a few restaurants like Red Lobster will often prevail in otherwise declining areas because their income appeal is both moderate and middle-income, even if the pricing is more middle-income based.
Call centers are likely to become a very common use for old department stores in the years ahead. I’m increasingly curious to see if malls can get repurposed into a comprehensive continuum-of-care facility for people ranging from active adults to nursing/hospice/memory care. An old mall might operate as a strong retirement community with all services under one roof; the dying ones already have their fair share of mallwalkers…
Eric, I share your curiosity about the (obvious only to us?) potential for repurposing of malls or portions of malls as senior living/medical villages. I guess I’d be watching for it first in Florida, North Carolina, and Arizona, the big retirement destinations.
[Side note: I drove across Thompson Rd. from US31 to Emerson Ave. this morning because there was a long delay on 465. OMG. The strip at Carson and Thompson is just bleak…the biggest tenant is an escape room. The double strip SE of Thompson and Emerson used to have Marsh/Kmart and Kroger/Sears Hardware as anchors. Only the Marsh location is occupied today, by Ollie’s and Planet Fitness. I guess the Beech Grove Walmart/Lowe’s “power center that isn’t really a power center” combo killed all four.]
Funny you should mention Carson Square, which I blogged about many years ago (https://dirtamericana.com/2010/02/storefront-diagnosis-down-but-not-out/) and I believe you responded to under a different name. It’s still about the same as it ever was. It’s actually kept about a 75% occupancy all these years, just with large, low-grade, non-descript tenants. The parking lot might not look as oversized if they installed some tree islands, but that’s unlikely to change the fortunes. Apparently Carson Square has always been this way. The fact that it doesn’t front any arterials problem doesn’t help, and a major tornado wiped out some of the outparcels in the early 2000s. As for the others near Beech Grove at Emerson/Thompson, I’d say they aren’t likely to get any better either.
I could almost see a potential niche industry for a real estate developer to buy a handful of struggling strip malls within a 3-4 mile radius, consolidate the tenants into one that gets upgraded, then redevelop the others. Probably easier said than done, but if all the strip malls are low-value, it’s a strategy that could work.