In the 1960s, ‘70s, and ‘80s, the regional, indoor shopping mall wasn’t just a place to hang out, buy a pair of sneakers, or a hot pretzel and Orange Julius, it was the place that most Americans – especially those who moved from the city to the suburbs – did the bulk of their shopping that wasn’t related to food or basic essentials.
It’s been well documented that over the past few decades, however, as online stores, big-box discount retailers and quick-fix retail strips have proliferated – leading to the collapse of the mall’s economic engine, the department store – indoor shopping centers across the country have lost most of the market share that once made them beacons.
In the larger metropolitan Milwaukee area, almost every single indoor mall has either undergone, or is in the process of undergoing some form of redevelopment that will ultimately reduce its indoor square footage. In the case of Southridge Mall, Mayfair Mall and Brookfield Square, those past and upcoming renovations have largely been the result of the demise of major anchor department stores like Sears and the Boston Store. For Regency Mall in Racine, city leaders are planning a massive redevelopment that would not only include tearing down the former Boston Store building, but also razing nearly half of the mostly vacant mall’s overall footprint.
Speaking to the future of malls, Cory Sovine, a retail broker and senior vice president of retail at Colliers International, and Nick Egelanian, a retail historian and founder of SiteWorks Retail Real Estate Services, predict that the only indoor malls that will survive are those that innovate enough to draw people from a larger radius and abandon the regional, cookie-cutter models that led customers to walk away.
The move to the outdoor, town center model, as has been done at Bayshore in Glendale and newer developments like The Corners of Brookfield, is part of a new focus on customers’ time and experience, Sovine said.
“The consumer has said repeatedly through this whole transactional process: ‘My time is worth something to me, more than money. In order for me to spend my time on this experience of driving to the mall, parking, walking into the mall, walking through the mall, going to my store, you as the retailer or (owner of the mall) need to make that an incredible experience,’” he said.
To Egelanian, the demise of the mall has more to do with a 1960s U.S. Supreme Court case – U.S. vs. Parke, Davis, & Co. – that ushered in the growth of large discount stores like K-Mart, Walmart and Target and specialty stores like Best Buy and Toys R Us, than it does with Amazon.
“(The typical department store) used to have 100 to 150 departments. They had furniture, they had toys, they had photography, appliances and electronics,” Egelanian said. “Every time a competitor emerged in a retail category, the department stores exited that category.”
Only the strong survive
Looking at the market nationwide, Egelanian believes that within the ensuing decades, only about 150 of the strongest malls will still be around. In the Milwaukee area, Wauwatosa’s Mayfair, with its top-notch merchandising and ability to draw from a 360-degree radius – will likely be the last mall standing, he said.
But even malls as strong as Mayfair – many of which still have struggling department stores as anchors – will have to pump hundreds of millions of dollars into renovations and improvements once those department stores ultimately go under, he said.
On the bright side, Sovine said, there is a newer wave of retailers and mall owners who are working to shift the remaining malls from the formulaic designs and tenant mixes of the 1990s, to an approach that emphasizes customer experience and variety. A shift to dining – like the new 3rd Street Market Hall at The Avenue in downtown Milwaukee – and the advent of modern movie theaters and games – like Marcus Theatre’s BistroPlex at Southridge and WhirlyBall at Brookfield Square – show how operators are working to drive traffic.
The likelihood that even more online retailers may soon start charging for returns and shipping is another factor that should work in favor of malls and brick-and-mortar retailers in general, Sovine said.
“All of these things are providing an experience that is giving the consumer the justification of spending their time capital on going to the mall,” he said.