Rural malls hit hard times, leaving shoppers adrift as more stores close
Rural malls hit hard times, leaving shoppers adrift as
more stores close
Donnelle Eller, Des Moines Register Published 4:30 a.m.
ET June 8, 2018 | Updated 9:27 p.m. ET June 8, 2018
National retail distress is emptying rural regional malls
such as in Ottumwa. Rodney White, rodwhite@dmreg.com
OTTUMWA, Iowa -- This city's Target store is gone.
So is Kmart, MC Sports, JCPenney, Vanity and soon
Herberger's, a department store.
"The mall is pretty sad," says Amanda Cain, a
teacher and mother. "Once Herberger's closes, we'll have no anchors."
About two-thirds of Ottumwa's Quincy Place Mall will be
empty with Herberger's loss.
Bon-Ton Stores, of which Herberger's was a part; Toys R
Us; MC Sports and others are bankrupt. JCPenney, Kmart and other department
stores are closing unprofitable stores in their struggle to survive against
growing online competition.
National retail distress is emptying rural regional
malls, experts say. But long-term economic deterioration is driving their
inability to bounce back: Fewer jobs and fewer people mean less money spent on
TVs, couches and clothes.
Ottumwa and most other small Iowa cities have failed to
recover the jobs lost in the recession, said David Swenson, an Iowa State
University economist.
Wapello County, where Ottumwa is the biggest city, with
24,450 people, had 3% fewer jobs last year than in 2008. Even with mostly
steady employment over the past two years, the city's retail sales have tumbled
6.8%.
Buying power follows workers, who are moving to metro
areas for jobs.
"They're going where the economies are stronger and
they can make more money," Swenson said. "The only alternative left
in many of these rural areas is Walmart."
Cain, who's not a Walmart fan, does most of her shopping
at Kohl's in Ottumwa.
"Whenever we can, we'll do an out-of-town shopping
trip, spend a Saturday and do our shopping in Des Moines. ... We make it a fun
outing," Cain said, whose family hits Jordan Creek and Valley West malls,
TJ Maxx and other Des Moines-area stores she wishes were closer.
"It would be nice just to run to the mall whenever
we want and find the stores we like," she said.
A mall shakeout is coming
Many small urban centers are suffering, said Liesl
Eathington, an ISU economist.
Fort Dodge, Mason City, Clinton, Spencer and Keokuk are
among small Iowa cities that posted annual retail sales losses, based on Iowa
State University's inflation-adjusted data.
"It’s too soon to say the mall is dead,"
Eathington said. "But we may see a shakeout when there are fewer and fewer
of them."
Swenson said retail in small cities is likely struggling
because manufacturing has suffered, both statewide and in rural Iowa. Plus,
more consumers are ordering goods from Internet sites.
Total online sales spiked 16% last year over 2016, while
total sales climbed 4.4%, the U.S. Commerce Department reported. Amazon and
other e-commerce businesses made up about 9% of total sales, an ever-growing
percentage, the data show.
"These are challenging times for retailers. ... There's
a clear shift in power from the retailer to the consumer," said Mark
Mathews, the National Retail Federation's vice president of research and
development.
"When I was younger, when I wanted to buy something,
it was a question of what was open within driving distance. Now you can buy
anything, anywhere," he said.
New hope for downtown?
There's one bright side of the troubles facing rural
malls. It's giving new hope to struggling downtown shopping districts.
Even though it has a ways to go, downtown Ottumwa is
moving from blighted to revitalized.
Ottumwa has snagged about $10 million in state and
federal grants to change it, mostly over the past three years, said Fred
Zesiger, the city's Main Street director.
They'll have about 100 apartments when the work is
completed. "People thought these buildings were worth saving, and they
were right," Zesiger said.
Redevelopment of downtown gives Ottumwa leaders some
opportunity to boost shopping, when most of the control lies with large
corporations, said Holly Berg, an Ottumwa council member.
"This is something we can take into our own hands,
instead of being at the mercy of national chains," Berg said.
Tough to find replacements
Replacing big retailers becomes more difficult in smaller
communities, said Scot Snitker, national portfolio manager at Lexington
International Realty, the New Jersey company that owns the Ottumwa mall.
His company is looking to attorneys, doctors and other
service providers to help fill space. And it's recruiting entertainment
providers — mini golf in Ottumwa, paintball in a Minnesota mall and a hockey
rink in a South Dakota mall.
"There are plenty of retailers that are expanding.
But they require a bigger population base, higher earnings," Snitker said.
"So we just have to get more creative" in smaller markets.
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