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Article 6Consider some notable statistics: The past five years have seen the closure of approximately 25 enclosed malls, and 60 others appear at risk of closure. Among the survivors, around one-fifth of them suffer vacancy rates of at least 10 percent, and 3 percent of them are “dying,” as signaled by their vacancy percentages that exceed 40 percent.

It’s a bleak portrait. Yet, as we have discussed previously in these abstracts (see “What’s Different About Tomorrow’s Mall? You Never Have to Leave” in the June 2014 newsletter, or “Reinventing the Mall” from the July 2014 newsletter), some malls appear to be making a comeback. How can we reconcile these opposing trends?

One explanation relies on the increasing trends of income disparity. As the gap between haves and have nots expands, high-end malls filled with luxury retailers and specialized services are enjoying remarkable growth. Mid-range and working class malls, once anchored by struggling retailers such as Sears, Kmart, or JCPenney, instead are faltering.

Another explanation that often is cited as the conventional wisdom is proving less accurate though. That is, many observers predicted that the growth of online retailing would be the end of malls. But in truth, online shopping accounts for only about 7 percent of retail sales, and in most cases, it takes sales ways from big-box retailers, rather than the fashion chains that have long been the primary inhabitants of enclosed malls.

Instead, malls might be suffering from increased competition from other brick-and-mortar locations, outside of these enclosed spaces. Building booms in the previous decade created a “glut of stores in many parts of the country.” When there is more retail space than retailers to fill it, stores can pick and choose their locations. For many, the prominence of a stand-alone outlet is more appealing than a location in a fading mall.

Moreover, the bankruptcy of several chains that were a familiar presence in most malls, including Wet Seal and RadioShack, suggests that there are fewer retailers in the market for space in a mall.

Discussion Questions

  1. What is the state of the enclosed mall in the United States?
  2. What characteristics are common to malls that are doing well and those that are not?


Source: Nelson D. Schwartz, The New York Times, January 3, 2015