|The recent wave of retail bankruptcies is pushing mid-range malls to the brink. Already on shaky ground before the pandemic, they’re facing even more vacancies as consumers shop online and take their business to bigger malls. (Bloomberg)|
NH: Malls have been inching towards extinction for years. Covid-19 has simply accelerated their demise. Coresight Research predicts that 25% of American malls will close within the next five years.
But not all malls are being affected equally. Malls in the US are rated on an A through D scale, with A being those generating the most sales revenue per square foot and D being those generating the least. While A-rated malls are expected to survive, the almost 700 B through D malls can’t fill shop vacancies nor compete with the rise in e-commerce.
Since March, hundreds of department stores have closed. Over 25 major retailers have declared bankruptcy in 2020, including J.C. Penny, Brooks Brothers, and J. Crew. Now, over two-thirds of B-rated malls have an anchor store vacancy, and almost one-third have two or more vacancies. (See charts below.) Typically, when one shop goes empty, more stores tend to leave.
Before the pandemic, the most successful malls catered to an older (Silent and Boomer) consumer. These malls were more upscale and offered a tourist-like experience. But with Covid-19 being most dangerous for older people, this age group is staying home and shopping online. A RAND Corporation poll found that only 27% of those ages 55+ shopped online every week before the pandemic. That has risen to 34% since the pandemic started.
We've been writing about hopeful plans to revive malls ever since the Great Recession. (See “A Mall Built for Entertainment Rather Than Shopping?"; "Mall Landlords Double Down on Renovations"; "Could Teens Save the US Shopping Mall?") I have always been skeptical about mixing roller coasters and retail. But I have been more optimistic about shifting malls away from consumer goods entirely and towards more "experiential" services--like bars, gyms, clinics, bowling allies, and spas. Also, turning malls into public squares with a civic dimension (social services, volunteering, ministry) would match the Millennial focus on community and engagement.
All of these longer-term solutions, of course, can't possibly work until the pandemic is over. While it rages, there's no way make congregating indoors appealing to generation that carefully assesses and manages personal risk. For the time being, malls just have to try to hold on.
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ABOUT NEIL HOWE
Neil Howe is a renowned authority on generations and social change in America. An acclaimed bestselling author and speaker, he is the nation's leading thinker on today's generations—who they are, what motivates them, and how they will shape America's future.
A historian, economist, and demographer, Howe is also a recognized authority on global aging, long-term fiscal policy, and migration. He is a senior associate to the Center for Strategic and International Studies (CSIS) in Washington, D.C., where he helps direct the CSIS Global Aging Initiative.
Howe has written over a dozen books on generations, demographic change, and fiscal policy, many of them with William Strauss. Howe and Strauss' first book, Generations is a history of America told as a sequence of generational biographies. Vice President Al Gore called it "the most stimulating book on American history that I have ever read" and sent a copy to every member of Congress. Newt Gingrich called it "an intellectual tour de force." Of their book, The Fourth Turning, The Boston Globe wrote, "If Howe and Strauss are right, they will take their place among the great American prophets."
Howe and Strauss originally coined the term "Millennial Generation" in 1991, and wrote the pioneering book on this generation, Millennials Rising. His work has been featured frequently in the media, including USA Today, CNN, the New York Times, and CBS' 60 Minutes.
Previously, with Peter G. Peterson, Howe co-authored On Borrowed Time, a pioneering call for budgetary reform and The Graying of the Great Powers with Richard Jackson.
Howe received his B.A. at U.C. Berkeley and later earned graduate degrees in economics and history from Yale University.