Shopping malls were already struggling. Then Sears announced it would close 150 Sears and Kmart locations. Macy’s announced it will shutter 68 stores.
These stores are anchors for malls across the Midwest. The new round of closings is yet another blow for shopping malls.
And the news hadn’t been good before these closures were announced. Retail analyst Jan Kniffen last year predicted, on air on CNBC, that 400 of the nation’s 1,100 enclosed malls will shut down in the coming years. Kniffen said that of those that remain open, only 250 will do well. The rest will continue to struggle to hold onto tenants and shoppers.
An example of the struggles of malls can be found in the St. Louis market. In November of last year, construction crews started demolition of the former Crestwood Plaza mall in Crestwood, Missouri. This 1.1-million-square-foot mall opened in 1957 and closed in 2013.
That mall has a new future, though. Chicago-based UrbanStreet now owns the mall and received approval last year for a redevelopment plan that includes 47 acres of entertainment, retail, restaurant, office and housing.
Mark Kornfeld, managing director for retail services for Sansone Group, said that St. Louis is like most markets: It has some core malls that are thriving — such as the St. Louis Galleria, West County Center and South County Center — that are doing well. But it has others that are struggling or have already closed.
“Some of the malls that were built 30 or 40 years ago have already failed or are on the verge of being completely obsolete,” Kornfeld said.
Crestwood Plaza, which Sansone is marketing, fell into this latter category. The mall thrived for about three decades, Kornfeld said. But when it officially closed, it was completely vacant.
UrbanStreet, though, has big plans for the site. Kornfeld said the developer is going to turn part of the land into a stand-alone movie theater with restaurant pads in front of it.
“They are using the theater to bring folks back to the area,” Kornfeld said.
Sansone Group already has experience with marketing former malls. The Northland Shopping Center in St. Louis was once a thriving shopping center. But then, like other malls, it struggled to attract tenants. The shoppers stopped coming.
Construction crews tore down the center and replaced it with a grocery store and Target.
“That site is now doing extremely well,” said Jim Sansone, principal of Sansone Group. “Sometimes a mall just becomes obsolete, and the best choice is to demolish it and start with something new.”
Malls still matter
Kornfeld said that malls still have their place. But they need to be designed differently to meet the needs of today’s consumers, he said.
This might mean offering major mall tenants their own entrances facing the parking lot. Instead of having to go into a main mall entrance and then walk two or three minutes to find the retailer they want, shoppers can just park outside the store of their choice and run into its own front door.
“If I just want to run into a sporting goods store and it has its own entrance in the parking lot, I’ll do that,” Kornfeld said. “That’s a better option than paking, entering into the mall itself and trying to figure out how to get to the sporting goods store from inside.”
Location matters, too, of course. Sansone said that those malls in the St. Louis area that are thriving tend to be located near major interstates. For instance, the Galleria is located just off of Interstate-64.
“The other malls that are struggling are the ones that you might have to exit the highway and drive down another road to reach,” Sansone said. “The days of those malls being vibrant are over.”
Finally, the mix of tenants matters, too. Kornfeld said that the Galleria recently added Nordstrom to its tenant mix to bring in new shoppers. This particular Nordstrom boasts its own entrance, too, off the mall’s parking lot.
“The owners of the Galleria have kept that mall updated,” Kornfeld said. “They have put money back into the main corridor where people are walking. They have brought in new retailers. That’s what you have to do.”
Other malls are focusing on offering experiences for consumers, something more than just a food court and a string of storefronts. Think of places like Round 1, a bowling and entertainment chain popular in malls, or Pinstripes, which offers the same kind of enterainment choices.
Other malls focus on everything from indoor miniature golf to that old standby, the high-end movie theater.
According to a survey published late last year by Coldwell Banker Commercial Affiliates and Harris Poll, nearly 75 percent of adults say they are happy to shop at brick-and-mortar stores if they can have an experience.
t’s all about what is known as experiential retail. Respondents to the survey said that they are more likely to visit phsyical locations — instead of online options — if those locations offer in-store classes, product demonstrations, free samples, celebrity appearances, holiday events or book signings.
“What does this mean for commercial real estate developers and the like? You will see more event-driven retailers like theaters, restaurants and exercise facilities integrated into malls and shopping centers,” said Fred Schmidt, president and chief operating officer of Coldwell Banker Commercial, in an earlier interview with Midwest Real Estate News. “At the same time, traditional retail space is changing. There is more square footage devoted to common areas and locations where shoppers can have experiences.”
The message here is clear: Malls can survive today. But to do so, they have to adapt, and they have to offer today’s choosier consumers a reason to enter their doors.