February 8, 2016
Does Macy’s closing signal the end of malls?
These days most department stores are hemorrhaging cash. Macy’s was supposed to be one of the big holdouts. Strong, while JC Penney’s and Sears suffered (some by self-inflicted wounds) Macy’s stood strong on the strength of unimpeachable positive consumer PR. Everyone loved Macy’s thanks to the Thanksgiving Day Parade and Miracle on 34th Street. Consumers see Macy’s as more than a department store. It’s a part of Americana, as ubiquitous as shared holidays and apple pie.
Maybe not anymore. The company recently announced plans to shutter up to 40 stores nationwide. Not a huge number, but a significant one. The closures are seen as harbingers of the end of an era. America isn’t interested in malls anymore.
Once the go-to hangout for American teens and the go-to shopping destination for suburban moms, malls were all the rage. It was where you met your friends, where you browsed. Cultural groups defined themselves by where they shopped. Were you a “Sears” shopper or a “Macy’s” shopper? Foot Locker or Journeys? Chess King or Hot Topic?
Now, while many of the malls in question teeter on the brink, a Macy’s departure could be all she wrote. Consultants have already said replacing Macy’s could be “all but impossible.”
Now the malls in question have a big problem. What to do if and when Macy’s leaves. Some have said just give it up. Move on, because that’s what America is doing. The social aspect of hanging out at the mall can’t trump the loss in revenue when an anchor store leaves. Lose the anchor, the rest of the place begins to drift.
There’s no question that department stores are suffering. Pretty much the bottom of the barrel in retailing. Higher costs, negative growth, and plummeting customer base. Consumers are quickly pushing themselves into two categories – bargain shoppers and boutique shoppers.
Bargain hunters don’t want to go to perceived high-end retailers and boutique shoppers are looking for a specific item. They don’t want to sort through stacks and racks of Everything Else to get what they want.
Those who have fully embraced this potential reality have already begun looking for ways to convert mall space into different uses – offices, churches, that sort of thing.
Others are hoping for a different retail option. But answers are not readily obvious. It will take a totally new idea and a strong PR push to grab consumer attention and begin to influence their buying habits in a world where online shopping and specialty stores already cater to them like personal butlers.