Between 20% and 25% of U.S. shopping malls may close in the next five years, report says
Up to 25% of U.S. shopping malls may close in the next
five years, report says
By Makeda Easter May 31, 2017 6"30 PM
Between 20% and 25% of the nation’s shopping malls will
close in the next five years, according to a new report from Credit Suisse that
predicts e-commerce will continue to pull shoppers away from bricks-and-mortar
retailers.
For many, the Wall Street firm’s finding may come as no
surprise. Long-standing retailers are dying off as shoppers’ habits shift online.
Credit Suisse expects apparel sales to represent 35% of all e-commerce by 2030,
up from 17% today.
Traditional mall anchors, such as Macy’s, J.C. Penney and
Sears, have announced numerous store closings in recent months. Clothiers
including American Apparel, Bebe and BCBG Max Azria have filed for bankruptcy.
The report estimates that around 8,640 stores will close by the end of the
year.
Retail industry experts say Credit Suisse may have
underestimated the scope of the upheaval.
“It’s more in the 30% range,” Ron Friedman, a retail
expert at accounting and advisory firm Marcum said of the share of malls that
he predicts will close in the next five years. “There are a lot of malls that
know they’re in big trouble.”
By ignoring new shopping centers being built, the
research note took an overly simplistic view of the changing landscape of
shopping centers, said analyst David Marcotte, senior vice president with
Kantar Retail.
“There are still malls being built,” Marcotte said.
“Predominantly outlet malls and lifestyle malls.”
The change may not affect all sectors of the mall economy
evenly.
Paula Rosenblum, co-founder and retail analyst at RSR
Research, believes the report overstates the risks, and says lower-tier
shopping centers in particular would bear the brunt of the blow.
“The problem with a lot of these studies ... is they look
at what’s dying, they don’t look at what’s being born,” Rosenblum said.
But analysts agreed that to survive and stay relevant,
malls need to make serious changes.
“A lot of malls are being redone. We are seeing
mixed-use, many more restaurants and service providers, and less clothing
stores,” Friedman said. “You’re going to see a future where you’ll be living at
the mall.”
“If you have food and entertainment, that gives you a
court to build around,” Marcotte said. “Once you get past that you need to
create a space that is lifestyle oriented.”
Rosenblum says shopping centers will be driven by the
demands of millennials and members of Generation Z behind them, who are more
likely to spend money on entertainment rather than just clothing.
Malls, Rosenblum said, “are going to become more of a
destination, not just for shopping but for activities and experiences.”
Comments
Post a Comment