Why are American malls dying? Conventional wisdom often points the finger of blame at Amazon and a desire for shopping from home in your pajamas, but a new analysis claims that the real culprit is competition from newer, better malls that aren’t feeling the same pain as their withering forefathers.
While patterns of commerce in the coming decades are sure to change, Wells Fargo Securities recently performed a study of dead malls in its property database to figure out what killed them. The Wall Street Journal reports that out of the 1,000 or so malls in the database, 72 were officially closed and could be considered “dead.” Almost all had been demolished, and most were redeveloped into either a strip mall or some use not related to shopping.
The autopsy of these dead malls turned up a predictable cause of death: Newer malls killed them. It usually took a long time for the malls to die after a new upstart moved into the area, but their demise followed a consistent pattern.
Newer malls built since the ’90s drew the anchors from the area’s smaller and older shopping centers, which were generally in place before the mid-’70s. As newer malls opened in an area, that pushed the older and smaller centers down to maybe the fourth or fifth most popular mall in an area. It’s not that people don’t want to shop: Most areas simply don’t have enough shoppers to keep them all busy.
While consumers now aren’t too keen on department stores, that wasn’t the case through the ’90s and ’00s. Losing their anchors meant trouble for a mall, because it would lead to a retail death spiral.
“Relocation of an anchor department store from the weaker property to the newer mall was a common tipping point for the downfall of the weaker mall,” a Wells Fargo analyst told the WSJ.
If the weaker malls’ owners were able to fill those empty anchor stores instead of just demolishing them, it would be with lower-tier stores that attracted fewer customers. Fewer customers would mean that remaining anchors would close, or move to the area’s newer and busier malls.
Wells Fargo explains that what seems like a sudden collapse of malls and stores is the logical result of the last decade, when a recession made Americans, especially young adults, less interested in acquiring stuff for its own sake.
The malls that have succeeded are those that had the money to renovate and that have been able to bring in new venues that aren’t department stores. Restaurants, comedy clubs, play centers, party venues, bowling alleys, and other venues that sell experiences instead of stuff still draw people to malls.