The Malls

The Malls

   Here we are at the second part of the holidays, the shopping part.  And like many of you, I tend to drive by the malls, see the congested parking lot, and breathe a sigh of relief that I am merely heading to Costco for groceries.  And on I drive, leaving the crowded malls behind in my rear view mirror.  But perhaps that isn't quite true...the crowded part, at least.

   In a recent posting in Bloomberg Businessweek, malls seem to be in quite a bit of trouble.  The closing of stores in malls tell the story:  Aeropostale closing 175 stores in malls, American Eagle closing 150 stores in malls, Abercrombie & Fitch closing 60 stores in malls.  Carts and kiosk sales are down nearly 5% in malls, and vacancies are nearing the 8% mark.  In fact, according to projections by Green Street Advisors (a real estate analysis company), close to 15% of malls are "expected to close or convert to other uses over the next decade."

   So what happened?  Wasn't there a time when the blocky corner stores formed the foundation for all the smaller stores to join them?  Weren't the malls a place to hang out, not only for teens but for seniors doing fitness walks in large groups, parading gallantly down the walkways in the morning hours, well ahead of the crowds.  Call them what you will --shopping centres, shopping arcades, shopping precincts, or shopping malls-- they seem to be giving way to a new way of life, becoming a dinosaur in need of a new boost (notice how many malls are spending money to spruce up their outer appearance, hoping that that will do the trick).

   According to Wikipedia,  "The idea of a regional-sized, fully enclosed shopping complex was pioneered in 1956 by the Austrian-born architect and American immigrant Victor Gruen.  This new generation of regional-sized shopping centers began with the Gruen-designed Southdale Center.  For pioneering the soon-to-be enormously popular mall concept in this form, Gruen has been called the "most influential architect of the twentieth century" by Malcolm Gladwell."   The key was the "fully-enclosed" part, allowing shoppers and sellers the convenience of protection from the weather and varying temperatures.  Prior to this, the open-air mall concept, that of hundreds of shops gathered together in a single area, dates back to the early Romans and Turks in the middle-east, whose forums and bazaars were popular for centuries.

   But as with so many things large, the popularity of malls began to shift as big management groups and investors sought (and received) tax breaks and began gobbling up malls by the dozens.  Again, from the article,  "A shopping property management firm is a company that specializes in owning and managing shopping malls.  Most shopping property management firms own at least 20 malls.  Some firms use a similar naming scheme for most of their malls; for example, Mills Corporation puts "Mills" in most of their mall names and SM Prime Holdings of the Philippines puts "SM" in all of their malls, as well as anchor stores such as SM Department Store, SM Appliance Center, SM Hypermarket, SM Cinema, and SM Supermarket.  In the UK, The Mall Fund changes the name of any center they buy to "The Mall (location)", using their pink-M logo; when they sell a mall it reverts to its own name and branding, such as the Ashley Centre in Epsom.

   Such firms can be pretty demanding on stores, setting minimum sales goals since a portion of the stores' profits goes back to the firm, that in addition to the lease payment (this is much the same pattern with retail stores and restaurants located in major airports).   For some stores, such as the famous McInerny in Hawaii, it was simply too much, closing one of its flagship stores in Ala Moana Center (which is still the largest open-air mall in the world).  When the store closed, Honolulu's local paper at the time, The Advertiser, posted this story:  "I think it's the same thing that went wrong for Andrade," said Rodney Pontillo, managing director of Grubb & Ellis/CBI's retail services group.  "I used to work for Andrade way back when, and there were three big ones: McInerny, Andrade and Liberty House.  "That was in the late '60s, early '70s.  We sold quality and service.  We sold suits to Gov. (John) Burns and Mayor (Neal) Blaisdell.  "But that was the old style," he said.  "Now we're in the new style, and everything is rush, rush, rush.  People don't care about that old style.   They want to see Macy's, they want to see all these big discount stores where they can buy everything cheap.  It's like when (longtime Hawai'i retailer) Arakawas bit the dust.  We just live in a different world, where we can buy things on eBay."

   That was back in 2002;  and ironically, there's the crux of the story.  Ebay...well, more generally, online sales.  By next year, online sales are projected to grow 800%, this as construction on new malls comes to a halt or at least a prolonged slowdown.  Despite going vertical (as in Tokyo), increasing floor space to 9 million square feet (as in Dongguan, China), adding more food courts and security (unfortunately, gun shootings in malls are on the rise) and an increasing crowd of browsers (but not buyers),  malls appear ready for another transition as big icons such as Sears and Penney's begin to show signs of toppling.

   In addition, the concept of "reality" shopping or virtual shopping is making big inroads.   Kevin Plank, CEO of Under Armour, told Bloomberg Businessweek this about retail storefronts:  It's critical that you have it.  People need to go places; they need to see things; they need to touch things.  But...the idea --or the cliche-- of omnichannel retail is a reality.  It's happening.  Our mobile business, for instance, is extraordinary.  Literally, three years ago it was nonexistent, and now it's over half of our business.

   On the other hand, perhaps it is simply a matter of people deciding to gather elsewhere (some malls are adding indoor parks in an effort to draw shoppers)...or choosing to not gather at all.  Perhaps this is a good thing as people head back to family and small gatherings, of meaningful discussions instead of mindless wanderings, of feeling content with what one has instead of an impromptu search for something one might want, and of parking on a small street instead of a big lot...for as Stephen King says in his recent book, Revival, "home is where people don't want you to leave."

   The mall management companies might be expressing the same sentiment;  but somehow, that message just isn't ringing true.  When you look up, the screen door is open, the family and some friends waiting at the table this holiday.  The mall, you decide, can wait...again.