Those four have said they hope to use the restructuring process to cut debt and emerge as more sustainable companies.īut their plans also include hundreds of store closures, including 242 planned by J.C. Penney and Neiman Marcus as well as apparel retailers Brooks Brothers and J. Recent Chapter 11 bankruptcy filings have included department store chains J.C. And many are already facing existential crises. On the other hand, department stores and apparel retailers, which dominate most malls, have been floundering. While some retailers have flourished during the pandemic, nearly all of them – such as Walmart, Target, Kroger and Home Depot – offered essential services of some kind, including groceries and home improvement goods. Of the nation’s 1,793 enclosed shopping malls, nearly 500 “are at risk due to their location being poor” or “due to their dependence” on office workers or tourism for foot traffic, CoStar senior consultant Kevin Cody said. Mall occupancy rates hit their lowest level in at least a decade in the second quarter of 2020 at 94.4%, according to CoStar Group, which tracks real estate. “They’re either having to shut down or limit capacity or customers are very reluctant to go there.”
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“A lot of the things that malls have built-in like gyms, movie theaters and restaurants, food service are just not able to operate and pull in customers the way they once did,” Saunders said. “They’re trying to plug the holes in a dam,” Weinswig said.Įven malls that bet big on in-person experiences that were considered to be extremely resilient in the age of digital retail are suddenly experiencing nothing but pain. But so-called “B” and “C” malls, which have lower-priced stores and more vacancies, are facing a high risk of closure.
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In general, analysts say that high-end “A” malls are in the best shape because their luxury retail tenants have higher profit margins and thus are better able to withstand the downturn. “That ends up changing the face of America.” “How many is anybody’s guess, but we’re hoping it’s a minority.”īed Bath & Beyond store closings: Bed Bath announces plans to permanently close 200 stores over next two yearsįace mask requirements: Can stores make you wear a mask? Do kids have to wear masks?Īnalysts at Coresight Research, which tracks retail closures, projected that about 25% of America’s malls would disappear within the next three to five years.īut that could rise to as many as 50% “if we can’t stop the bleeding,” Coresight CEO Deborah Weinswig said in an interview. “There are malls that this crisis will accelerate their closure, no doubt,” said Kat Cole, president and chief operating officer of Focus Brands, parent company of mall classics like Cinnabon and Auntie Anne’s. The bleak turn of events has provided more fuel to online retailers already swiping market share away from malls that were relying on diminishing foot traffic to apparel shops and department stores in particular. “The whole business model of a mall, which is about pulling in as many people as you can and getting them to stay for as long as you can, has just unraveled,” said Neil Saunders, managing director of consultancy GlobalData Retail.
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Save better, spend better: Money tips and advice delivered right to your inbox. Penney trying to avoid liquidation, smaller retailers closing or requesting rent relief, and venues like theaters still temporarily shut down due to COVID-19, anywhere from 1 in 4 malls to 1 in 2 could go out of business altogether, analysts projected. Having seen their recent move toward dining, entertainment, fitness and personal services come to a screeching halt – a pivot that was supposed to help them survive the Amazon age – malls throughout America are suddenly running out of time.
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Just when many shopping malls had finally figured out how to adapt to the era of digital retail, the coronavirus pandemic upended everything.
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Watch Video: Can malls survive COVID-19 pandemic and permanent store closings?