Shopping malls in identity crisis
A surge in vacancy rates has left many locations struggling to fill empty stores and maintain revenue.
Many malls across the country are a shell of what they once were, having said goodbye to the likes of Mervyn's, Blockbuster, Circuit City and Borders.
The store closings continue. Sears Holding (SHLD) is closing as many as 120 Sears and Kmart locations. Gap Inc. (GPS) is closing 200 stores and downsizing others. Talbots (TLB) will close 110 stores by 2013. Abercrombie & Fitch (ANF) closed 50 stores and is struggling financially.
Vacancy rates hit an alarming 11% at strip malls and 9.4% at large malls last year.
The store closings reflect a bad economy, of course, but they also say something about the changing shopping habits of Americans. Now harried shoppers want to visit stores they can access directly from the street, The New York Times reports. They don't want to waste time walking across a mall.
People are shopping more online and doing more online research. They know exactly what they want and the price they're willing to pay. They aren't as willing to browse.
Wal-Mart (WMT) is also changing in these times. People don't want to spend hours navigating a monstrous store, so the retailer is scaling down, offering smaller stores and neighborhood markets that carry a smaller selection.
The mall used to be the iconic American shopping experience. It once was the preferred hangout for teens before Facebook. It was where families could kill time on a Friday night. The mall is still there, but it's getting an overhaul.
Simon Property Group (SPG) is adding cooking demonstrations, stadium-seating theaters and lots of events to the malls it operates, the Times reports. Another operator, Westfield, is adding dog runs and lounges that serve beer.
So the mall is becoming more of a lifestyle destination, with events, classes and entertainment. Will that be enough to keep these properties alive?
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