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Friday, January 30, 2015

Pour one out for your local mall

 "Dixie Square Mall in Harvey, Illinois" by Brian Ulrich.

Two big fashion retail announcements made headlines yesterday. Kate Spade will shutter its Saturday and Jack Spade lines, while GAP said its current creative director has resigned and will not be replaced. This comes on the heels of last week's announcement by GAP that it was shutting down its Zappos copycat Piperlime with its one stand-alone store in NYC. Additionally, in the past three weeks C.Wonder, the low-priced prepster mini-chain founded by Tory Burch's ex-husband, filed for bankruptcy, closing its online business and all 11 of its stores; teen retailer Wet Seal announced its bankruptcy and the closing of two thirds of its storefronts; and Target decided to cease operations in Canada, closing 133 stores and laying off over 17,000 employees.

If the Great Recession is winding down and job numbers are up, why does traditional retail seem to be in its death throes? Several factors are dragging down the mall experience, including changes in how people buy goods, an enormous surplus of retail square footage, and a general suburban exodus. Online purchases, including those made via tablet and smartphone, make up 13% of all retail sales and that number is growing. For ease of browsing, brick-and-mortar stores cannot compete with online retailers. There is also an overabundance of choice when it comes to these stores, with 50 square feet of retail space for every man, woman and child in the U.S. Growth of square footage has simply outpaced demand. And while consumers are shifting their shopping experiences from the social to the individual, there is also a shift taking place in where these shoppers live. More young consumers are choosing to reside in big cities, ringing a death knell for the sprawling indoor suburban mall.

But can't teenagers be counted on to prop up flagging interest in brick-and-mortar shopping? The short answer is "No." Teen retailers have been especially hard hit with 1990s and Aughts powerhouse Delia's closing it doors and filing for bankruptcy in early December. Aeropostale closed 75 stores over the holidays with another 50-75 locations on the chopping block this year. Rival Abercrombie's longtime CEO Mike Jeffries recently stepped down after being sued by company shareholders for poor governance in the face of lagging sales. Teens are flocking to fast-fashion brands H&M, Forever 21 and Zara whose lightning-fast distribution networks are able to deliver new designs to stores within a matter of weeks. These retailers are often choosing to locate in larger cities or newer open-air "lifestyle centers."

Bankruptcy expert Chuck Tatelbaum sums up the recent retail shake-out: “Because of the changes in buying habits of U.S. consumers, as a result of the continuing hesitancy to spend, the 2014 holiday season was not sufficiently successful for many retailers that have either over expanded, fell out of favor or had insufficient capital and merchandise.” In other words, today's shoppers are online, "showrooming," and creating a new frontier for retail.

All 2015 Store Closings - Stores Closed by U.S. Retail Industry Chains [About Money]
Retailers are closing up shop. Here's why... [CNBC Retail]
Retail Earthquake: All These Big-Name Stores Closing [WND Weekly]
A 'tsunami' of store closings expected to hit retail [CNBC Retail] 

7 comments:

Unknown said...

Painful times.
I wonder if part of the fall out has to do with flawed interpretatins of buying patterns. Retail is supposed to be able to use algorithms to tailor merchandise to the consumer.
What I see in most malls in the seven cities I have frequented in the past few years is: nothing that I want to buy.
So I buy the bare minimum needed.
Targeted merchandise is, in my estimation, always a lowest common denominator of style and quality.
Maybe brick and mortar stores need to look at ages other than teens. They don't have all the money.

Coulda shoulda woulda said...

Retail is at such a very unique juncture. I imagine there will be a saturation point soon with online stores too though. Most companies now for instance are sold on local operators and walk in stores. Browsing is half the fun and nothing will replace tactility. We can't keep buying the same thing over and over. Plus interestingly the biggest growing sector in the UK is click and collect where you buy online but still come to store to get it.

Kathy said...

I can't remember the last time I was at a mall and that may have been to return something bought online. Lately, I have been enjoying local Facebook shopping groups and Instagram flash sales in addition to Amazon Prime.

Gray said...

As a former shopowner, this post was so so interesting to me. After some family tragedy, I am trying to reinvent myself, professionally and personally. This is great food for thought. I would love to sit and chat with you about where to go next!!! If you are ever in Richmond, VA, call me, maybe.
Or email me.
Again, I found your blog recently from Interior Design Musings, and I LOVE IT!!!!!!!!

Marcheline said...

I haven't set foot in a mall in over 25 years. I've been much happier shopping online! Way fewer impulse buys, because I search for exactly what I want, then comparison shop for the best price. Back when I used to go to malls, I'd get home with armfuls of bags of stuff I didn't need, and didn't even remember buying. Ugh. Hate, hate, hate malls. Packs of degenerate teenagers with nothing better to do, screaming parents pushing strollers holding screaming kids - it's a nightmare I'm glad to have left far behind! Now if only I could grocery shop on Amazon I'd be in heaven!

Keri said...

NO TARGET IN CANADA?!?!?!? I would die. I do pay a premium for small businesses, local, handmade, Etsy, etc because I don't want those stores to go and take that knowledgebase with them. Since Bernie started his business I've stopped using Amazon given how little of a profit he would make selling on their site. Thanks for this post, missed your POV!

Don Richards said...

I know Memphis is supposedly making a comeback. As a child who had a Met Home subscription, Memphis still seems ugly. Bette Midler's bedroom in "Down And Out In Beverly Hills" is a perfect museum example of the type.

Mario Buatta was a hero at that time, though, I've veered completely off that course.

I think a country style can be incorporated into everything. Just can't be Duck on a stick, or Amish friendship hearts. Gack.