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Thread: The future of mall-centered retail chains

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    Cyburbia Administrator Dan's avatar
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    The future of mall-centered retail chains

    As inspored by the Macy's site selection thread, I started thinking about the many retail chains whose locations are almost exclusively confined to traditional shopping malls.

    Some mall retailers have had great success with locations in lifestyle centers or hybrid high-end plazas: The Gap and Banana Republic to name a couple. Some new-ish chains are what I would call "crossovers", with locations in both malls and lifestyle centers; Metropark, Forever 21, Apple Store and Justice, for example, However, there are the established retail chains that are usually only found in malls; Hot Topic, Fye, Aeropostale, Spencer Gifts, Yankee Candle, Hickory Farms and Things Remembered to name a few, along with many sneaker store chains.

    Assuming the era of new shopping mall construction is truly at an end in the United States, and existing malls continue to go dark, what will happen to the mall-only chains? Do they have contingency plans to move to lifestyle centers, plazas or even main streets? What's the future of chains such as 5-7-9, Deb, Torrid, and Foot Locker, which really aren't suited to the tenant mix of mostly upper-middle- to high-end lifestyle centers?

    In my opinion, I think the future will bring far more retail chains are going to go the way Chess King, Merry-Go-Round, Airport and other lost mall chains. However, they'll fade away due to the decline of the mall rather than mismanagement or a struggling national economy.
    Growth for growth's sake is the ideology of the cancer cell. -- Edward Abbey

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    Cyburbian Cardinal's avatar
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    You are right on target with your conclusions, I think. Some of these chains will cease to grow, some will go away, and some will venture out. I have been saying for a while that downtowns are the final frontier for chain retail. I suspect they will become more palatable locations in the future. In the near term, though, it seems likely that some will at least move into the vacant space in strip centers.
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    Cyburbian Emeritus Chet's avatar
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    I agree with both of you and have some observations.

    Stores like Chess King, IMHO are fads.

    Sears and a HUGE mistake by venturing into stand alone stores. The K-Mart merger made it worse. They totally missed (lost) the demographic.

    And Dan I have never heard of 5-7-9. Torrid, or Airport

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    I agree with both of you, with the caveat that some chains will learn they can succeed in the right neighborhood environments. I'm always mildly surprised at the number of national chains I've seen venture out from Chicago's North Side neighborhoods to adjacent areas on the Northwest and West sides, and I think more retailers are going to get more comfortable with similar locations.

    They'll have to do modifications on their stores; they'll never again be able to benefit from the attraction of a major department store and they'll have to do more on their own.

  5. #5
    Cyburbian
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    Quote Originally posted by Cardinal View post
    You are right on target with your conclusions, I think. Some of these chains will cease to grow, some will go away, and some will venture out. I have been saying for a while that downtowns are the final frontier for chain retail. I suspect they will become more palatable locations in the future. In the near term, though, it seems likely that some will at least move into the vacant space in strip centers.
    Cardinal, I think you have a great point about downtowns being the final frontier for chain retail, and I want to add that when I was a kid growing up in Illinois in a smaller community, I remember the downtown having a major clothing/department store (Bergners - does anyone remember it? I may not have the right spelling), an Ace Hardware, a bank, a place to eat and several other chain retail stores specific to that time period. I sort of think history is going to have a neat way of repeating itself, in a new and improved (i.e. sustainable) way. I think the suburban mall was the original death-knoll for downtown shopping, was it not? I'm sure there's a fun thought about karma, here!

    Overall, I agree that the enclosed suburban mall is a dying breed. Here in Florida, it seems our trend is toward the Lifestyle Center or Power Center, or some hybrid variation on those ideas.

    (For giggles, I looked - Bergner's still exists! It's an Illinois-only based department store, though.)
    Last edited by Gatrgal93; 16 Oct 2009 at 2:29 PM. Reason: updated response

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    Cyburbian
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    Maybe I just don't understand the question.

    Folks-

    Around here, high-density, mixed-use development seems to be all anyone can think about. projects that look like Santana Row are looked on very favorably.

    To my eye, these are just shopping malls with condos on top—maybe not enclosed, but this is California.

    In watching the general plan development process that is going on right now, my city is planning for four of these within less than 4 miles.

    Why would the stores you're talking about just lease within this type of development? Maybe these are high-end now, but by the time there are as many of them as there are malls now, they won't all be high end.

    --don

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    Cyburbian Cardinal's avatar
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    Quote Originally posted by Gatrgal93 View post
    ...Bergners - does anyone remember it?...
    Of course I remember it! I worked there when I was in college. Bergners expanded through acquisitions. They bought Carson Pirie Scott, Boston Store, and Younkers. Eventually they were acquired by Bon Ton. Herbergers is also part of the chain.
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    Cyburbia Administrator Dan's avatar
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    Quote Originally posted by darnoldy View post
    Why would the stores you're talking about just lease within this type of development? Maybe these are high-end now, but by the time there are as many of them as there are malls now, they won't all be high end.
    Most lifestyle centers I've encountered are upper middle-end to high-end destinations. They're called "lifestyle centers" for a reason; most seem to have a similar tenant mix of upscale retailers and restaurants. I've seen a few middle-end lifestyle center-ish developments, for example Gresham Station in Gresham, Oregon, but the tenant mix of such centers seems to be a combination of power center staples and the step-above-middle-end "crossover" retailers like Chico's and Ann Taylor.

    Maybe lifestyle centers will grow increasingly middle-market, but right now I just can't picture a Spencer's Gifts, Hickory Farms, Foot Locker or GNC there.
    Growth for growth's sake is the ideology of the cancer cell. -- Edward Abbey

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    Cyburbian CJC's avatar
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    Quote Originally posted by Dan View post
    Maybe lifestyle centers will grow increasingly middle-market, but right now I just can't picture a Spencer's Gifts, Hickory Farms, Foot Locker or GNC there.
    Funny you mention GNC, because lately I've noticed more and more of them opening in non-mall places (not necessarily lifestyle centers). I was in the San Jose area last week and noticed at least three or four in strip malls next to Safeway grocery stores (I remember only because I made some joke about GNC only opening next to Safeways now).

    Several years ago, I worked in Palo Alto and was always found it odd that there was a standalone Foot Locker there (parking lot in front, looked like maybe an old Sherwin Williams paint store). That's still the only one I've ever seen outside of a mall and it always appeared empty.

    I'm curious to see what happens in many areas. In the Bay Area, we have a lot of small, healthy shopping streets in affluent suburbs that have had many typical "mall" retailers for years, just because the demographics worked for them. You're not a real yuppie Bay Area downtown unless you've got a Sephora, Gymboree, two Gaps, and maybe a J. Crew, White House/Black Market, or Restoration Hardware. Now, a lot of these smaller downtowns and shopping streets have quite a few vacancies, so it will be interesting to see if some of the healthier mall-based retailers take a shot at some of them. Not sure we'll see Hot Topic or Spencer's open on one of these streets, but I could see Pac Sun or Charlotte Russe trying out a non-mall location.

    I haven't been to it, but isn't the Stapleton redevelopment in Denver adding a lot of new urbanism type development with mid-level retailers, many of them mall-type places?
    Last edited by CJC; 16 Oct 2009 at 7:30 PM.
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  10. #10
    Cyburbian
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    Quote Originally posted by Cardinal View post
    Of course I remember it! I worked there when I was in college. Bergners expanded through acquisitions. They bought Carson Pirie Scott, Boston Store, and Younkers. Eventually they were acquired by Bon Ton. Herbergers is also part of the chain.
    LOL! I should have looked it up before I spoke! At least something from my childhood days isn't just a distant memory.

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