Thinking Outside the Big Box

As Macy’s, Sears and J.C. Penney plan to close hundreds of stores over the next few years, malls are finding creative ways to fill the large empty spaces left behind of these big box anchors. Even so, some malls will not survive and over 300 malls are expected to close over the next 10 years.

But there’s hope for malls that can find the right solutions. Here’s why:

• Brick and mortar is alive and well: Online sales still account for less than 10% of all retail sales.
• Amazon reported a $38 billion increase in sales from 2000 to 2013 while Costco’s sales rose by $50 billion over the same period.
• Malls catering to upscale shoppers can replace a Macy’s with a high-end department store such as Von Maur.
• Mall developers are adding new venues like gyms and other entertainment options;
  • g. Orland Square Mall is getting a 29,000-square-foot Sky Zone trampoline park and 33,000-square-foot Gizmos Fun Factory for kids with an indoor ropes course.
• Large supermarkets are moving into malls* because;
  • Space and parking are adequate
  • Good visibility and traffic
  • Appeals to millennials who like the efficiency of a one-stop visit

*Two examples:

Grocery giant Kroger Co., has purchased a former Macy’s Inc. location at Kingsdale Shopping Center in Upper Arlington, Ohio, and plans to build a new store in its place.

Natick Mall in Natick, Mass., is leasing 194,000 square feet of space vacated by J.C. Penney Co. to upscale grocer Wegmans, which is planning to open a store in 2018.

Time will tell whether malls will survive or thrive, but category managers need to understand how malls are changing and how to take advantage.