The Future of Malls: Anchors Away?

anchor closingsMany malls across the country have been undergoing, or at least considering, major facelifts and redesigns in recent years and months – the latter of course due to the COVID situation. Since the 1950s, most malls have followed the same format: anchor stores, food courts, smaller specialty national retail chains. Over the years they’ve added more entertainment, fancier restaurants, pop-up shops, multi-screen theaters, and more. But adding a fountain (oooh!) or community center (aaah!) is no longer enough.

Search through the data that we’ve painstakingly compiled and constantly update. You’ll see a growing number of examples where anchor stores are now listed as “closed” or “closing” whereas many anchors were once the mall’s main draw. Based on a search of our data, we found an increase in the number of anchor stores that closed over the last year representing approximately nearly 25 million square feet of retail space. This brings the total number of closed/closing anchors in our database to almost 4,000 anchors, covering 207 million square feet of retail, affecting almost 1,900 properties.

So, what are malls doing to combat that, recognizing that’s particularly difficult in times of uncertainty and shifting shopping habits?

Retail industry expert Robin Lewis, founder of the Robin Report, recently discussed the history behind the mall “anchor” strategy and what its future could hold, perhaps needing a “bold transformative miracle.”

Lewis refers to the late 1990s era through today for malls as a “Triple Whammy,” noting the rise of online shopping, a faltering economy, and then COVID-19.

“[A]long came Amazon, ushering in the ecommerce revolution. Amazon changed everything as it took off in the mid-2000s, nimbly responding to the changing values and shopping behavior of the emerging young consumer culture. Then whammo! The Great Recession! Many of the department stores had to take on heavy debt loads, much of it having to do with the necessity to make billions of dollars of capital investments in transforming their business models in order to compete in the new digital and technology era.”

So what are malls doing in this new era, when returning to normal and moving forward are the rallying cries of malls and shopping centers, many of are struggling under their home states’ complicated re-opening (or in some cases re-opening and re-closing) plans? This also comes at a time when there are concerns over whether we could see a coronavirus return. In New York, malls are partially open, with restaurants unable to operate at full capacity and movie theaters still not permitted to open at all.

As we’ve repeatedly documented here in our free, twice-monthly newsletter (click here to subscribe if you haven’t already), malls have been looking at mixed-use concepts: bringing in hotels, health care facilities, housing – areas that haven’t traditionally been a part of the shopping center scene but could be appealing to growing segments of the market that have in the past eschewed the mall, more so than ever lately. Newer generations have grown up being able to play video games, shop, and watch movies in the palm of their hands whenever and wherever they wanted, whether alone or in groups with their friends. Getting them to enjoy those things in a real-world setting has been the challenge, compounded by an unprecedented, global health care crisis.

casino at mallAnd some have already gone that route:

Some we don’t know how it’ll turn out. For example, the Westmoreland Mall in Hempfield Township, Pennsylvania, just outside of Pittsburgh, which broke ground in the fall of ’19 and is now set to open by the end of 2020 with a casino slated for the former Bon-Ton department store. In the pre-COVID era, there were many examples of malls that were able to think out of their boxes. And some these days are coming up with similar ideas, the history of which has yet to be determined. It’s good to see them trying.

So how can you figure out, with so much uncertainty, what can be done for your location, and even increase the odds of success? It helps to have ShoppingCenters.com’s “Custom Data Products” or integrate DMM’s “Retail Boundaries” into your own geospatial system to let you analyze what’s in a property’s surrounding areas. From there you can determine what solutions they may want or need in the future, or even extrapolate more about customers’ habits. You can learn more about it here.

Where this all ends, no one knows. Movies were once presented in black and white, without sound, for a nickel a-piece. Things change, but they also tend to stay the same. Malls will have a future, though they may look very different than they did when they first started dotting the landscape. And while it may hurt in the short-term, change is good. If it’s done right.

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