Regional Malls Not Dying; Rather Rising Like a Phoenix

I’ve been sitting on this story for nearly a month now, but Retail Traffic had an excellent piece in their last issue outlining a trend that most readers of this blog have likely suspected–that malls, especially the big, super-regional centers–have not only proven resilient in the economic downturn but have been performing strongly:

“As the Great Recession unfolded, regional malls—rather than being pushed to the brink—weathered the storm better than any of their supposed replacements. The very things that made fortress malls seem so outdated—their size, their enclosed environments, their dependence on anchors—proved to be powerful assets instead.

Quarter after quarter, U.S. regional mall REITs have outperformed shopping center REITs, beating analyst estimates and occasionally posting NOI growth. By 2010, class-A regional malls shot up to the top of both retailers’ and real estate investors’ list of preferred product types.”

It’s easy to make the case for why this happened. Big box centers relied on too few tenants in number, so when one went belly up, the entire center suffered (and was hard to repurpose). Malls carried a certain sense of place and offered entertainment value (our favorite argument -Ed.), while these other centers didn’t, so they thrived. Most (though not all) of the new “lifestyle centers” failed to achieve a critical mass. Whatever. The point is that we’re seeing a paradigm shift that’s being noted by one of the foremost publications in the industry.

Retail Traffic’s blog did a follow-up after the fact as well. If you don’t follow them, you should–they’re the best source for news in the industry.

*On a related note to the TITLE of this blog post, I made a trip to Phoenix and Tucson, Arizona a few weeks ago, and managed to visit every single mall in those two cities. Look for more content on these in the future.


Jordan’s Furniture to Open Mall Store

Former Caldor/Old Navy Store at Warwick Mall

Jordan’s Furniture, a New England chain of large, destination-oriented furniture stores, is moving into the former Caldor/Old Navy store (pictured above) in the Warwick Mall in Warwick, Rhode Island.

Last spring, the Warwick Mall was heavily damaged by a flood and was closed for months. As a result of the renovations, many retailers either left the center entirely or moved to new spaces. As part of the process, Old Navy–who had occupied part of the first floor of the massive, two-level former Caldor store at the mall’s center court–decided to move to a more appropriately-sized in-line space instead of moving back into their too-large digs. The second level of the store has been unused since Caldor shuttered the store in 1999. This created a space for a new anchor to move in, and enter Jordan’s:

Furniture shopping remains a tactile experience, according to an industry spokeswoman, as American consumers still like to see and touch furniture pieces before buying them.

“It’s not unusual in midsized cities for there to be a cluster of home furnishing stores in proximity. It’s happening all over” the country, said Jaclyn C. Hirschhaut, of the American Home Furnishings Alliance, a furniture manufacturers’ trade group. “Ultimately, to the consumer, it makes the process of shopping for furniture so much easier.”

Typically, furniture stores make for sleepy mall anchors–we’ve all seen a dying mall here or there with an Ashley or Bob’s Discount Furniture store clinging on to one of the darkened anchors for cheap rent. Jordan’s, however, is a bit of an anomaly in that their stores are destinations in and of themselves, and often feature a variety of attractions and eateries (many with a local focus) to draw people to them even when they’re not looking to buy a sofa:
Jordan’s is well known for its splashy store layouts — one has an IMAX theater, another has a trapeze school. Eliot Tatelman, Jordan’s president and chief executive officer, declined to say what people will find in the Warwick store when it opens later this year.

Jordan’s stores are typically very, very large, so this will be one of the smallest stores (if not *the* smallest store) in their portfolio, and their first in Rhode Island.

In other news, it was announced only a few weeks ago that the adjacent, long ailing, and almost completely vacant Rhode Island Mall–the oldest two level mall in New England and the only one designed by Victor Gruen–will finally be put out of its misery and shuttered on April 30.


Retail News Digest for Monday, March 14, 2011

Comings and goings:

Other retail news:

  • An article on investigates the growing trend of putting grocery and upscale/foodie vendors in malls.  The grocery thing isn’t new, though.  Early malls frequently had a grocery store anchor, and most closed by the 1970s-1980s.   Malls in other parts of the world, even Canada, often currently feature a grocery anchor.  It’s neat that the trend is coming back though, because I’m not entirely sure why it left.
  • According to WSB-TV in Atlanta, the Atlantic Station project will be changing from a ‘mall feel’ to be ‘more like Atlanta’.  I’m not sure exactly what this means, but they plan to retenant about 25% of the development and give it a more local, personalized feel.
  • Westfield’s Warner Center development is underway in the San Fernando Valley region of Los Angeles. When complete, the area will be a new ‘downtown’ node for the area, if not for the entire valley.
  • According to The Atlantic, will be the mall of the future.  Is this entirely a new idea?  On one hand, many people do spend an inordinate amount of time surfing Facebook, but does aggregating online retail purchases from many sites into one somehow completely usurp bricks-and-mortar establishments?  I think being able to go to a store and physically feel merchandise will always be the trump card for keeping actual retail stores in business in many sectors.
  • A blogger on explores the implications of sameness in malls across the country, and the reasons why fewer local stores exist in malls today.
  • Maplewood Mall in the suburban Twin Cities is getting a much-needed renovation to compete with Goliath, also known as the Mall of America.

Retail News Digest for Sunday, February 6, 2011

Comings and goings:

Other retail news:

Retail News Digest for Sunday, January 16, 2011

This is a relatively new feature to our site.  While we’ve periodically reported retail news throughout the years, we’d like to establish a regular digest of major retail events on a bi-weekly or as-warranted basis.  We’ll see how it goes.

As with our mall articles, interactivity is key.  While we’d like to try to cover all major news stories, this is not possible for practical purposes.  There are some stories we will inherently miss – we live in a big world full of a lot of information.  As such, you can help us gather the news by posting relevant recent happenings to the comments page for these news features.  And, as always, you can post specific news items to their individual mall posts, if we have one. So, feel free to add stories you’d like to discuss and leave comments on the ones we’ve listed.

Comings and goings:

Other retail news:

Gottschalks to Return From the Dead?

OK, file this one under “WTF:”

Defunct California department store chain Gottschalks–who were claimed about a year ago by the recession–may be re-emerging under their old banner in some locations, starting with the Sierra Vista Mall in the Fresno suburb of Clovis:

Joe Levy wants to begin reviving the Gottschalk brand in Clovis, opening the first in a chain of “leaner and meaner” department stores on Nov. 1.

The former Gottschalks store in Sierra Vista Mall would become the flagship store and corporate headquarters for “Gottschalk by Joe Levy Inc.,” a company created by the now-defunct retailer’s former CEO. The new retailer uses a variant of its predecessor’s name to avoid legal concerns while promising to bring back the kind of store many Valley shoppers still love.

Although Gottschalks was far from hip, they did have their fans. Some of the vacant stores have been filled by Forever 21, which, um, appeals to a pretty different demographic:

“A Gottschalks-style store could go back into Century Center and do very well,” he said. “I think there is a void in Modesto and in the Central Valley for stores like that. My 88-year-old mom, for example, loved Gottschalks. She wouldn’t go to Forever 21.”

I, for one, welcome our new zombie retail overlords! Gottschalks was kind of a quirky old store to have around and this type of thing doesn’t happen often.

Simon Bids for General Growth in Hostile Takeover

Indianapolis-based mall giant Simon Properties Group Inc. lobbed a $10 billion hostile takeover bid today against bankrupt rival Chicago-based General Growth Properties, according to the Wall Street Journal and others. 

Some highlights of the bid and overall situation:

  • GGP is currently in bankruptcy, buried under $7 billion in debt after years of easy credit fueled its massive expansion efforts during the last decade. 
  • Simon’s first takeover bid of GGP was more friendly and kept quiet.  Simon chose to make the bid hostile and public after GGP reportedly ignored the bid.
  • Simon isn’t the only one vying for GGP.  Canadian-based Brookfield Asset Management has also been negotiating with GGP; however, with Brookfield’s infusion of capital GGP would still remain a separate company.
  • Brookfield has already given $1 billion to GGP in order to alleviate debt, so it already has an internal voice in GGP’s decision making.  If GGP chooses to accept Brookfield’s capital to settle the rest of its debt, it could emerge from bankruptcy as soon as next year. 
  • GGP could also quickly emerge from bankruptcy on its own, as they’ve already made agreements with their creditors to restructure loans and pledge their malls as collateral.
  • The ultimate decision will not only be up to GGP’s board, but also GGP’s debtors and the bankruptcy judge.
  • After all this news, GGP stock soared, and thus analysts expect a slightly sweetened bid by Simon.  However, part of the stock inflation is due to the volatility of GGP on the pink sheets, where stocks are listed during bankruptcy. 
  • If the takeover occurs, the new Simon would own 560 malls, a third of the U.S. market. 
  • Even though they would own a third of the country’s malls,  half of the top-ranking malls would be held by the new Simon after takeover.   These malls are defined with sales of more than $400 per square-foot. 
  • Simon and GGP are currently the two largest and oldest mall owners in the country.
  • Large-scale chain retailers like Gap and Limited Brands would be negatively impacted by a strengthened Simon, who would hold twice as much leverage over them as they negotiate locations while Simon tries to fill their malls.  
  • Wow?

For reference purposes, a list of all of Simon’s malls can be found here, and a list of GGP centers is here

What do we think about this?  Yea/Nay?  Leave some comments and let’s get a discussion started.

Waldenbooks Slowly Disappearing


This isn’t a shocker, but according to an article in the Wall Street Journal (which has been reprinted all over the place, including the San Francisco Chronicle), Borders plans to close another 200 of its Waldenbooks stores, leaving a paltry 130 remaining in the chain. Despite what the article says, it’s unlikely even those are long for this world.

In an era where the long tail of content is well-served online, Borders and Barnes & Noble have survived by positioning themselves as cultural and social gathering spaces. Plus, the stores are big, so they can carry a lot of titles. Waldenbooks and B. Dalton–who B&N is closing up at the same time–have no such luck. These tiny stores were always meant to bring a representative selection of literature to shopping malls and small towns, and like record stores before them, there’s just no need anymore.

It’s still a little sad, since I have plenty of fond memories of shopping at the Waldenbooks in my local mall when I was young.

Retail Newsbrief: Tim Horton’s, JCPenney, Smith & Hawken, Ritz Camera, Goody’s


Two large, popular chains are coming to New York City this month.  Tim Horton’s, the venerable Canadian donut-and-coffee outlet, is opening 12 outlets across Manhattan and Brooklyn this month, with 3 more coming in August.  The stores are replacing former Dunkin Donuts outlets, and hopefully will find a niche in one of the toughest and most saturated markets in the world.  These locations aren’t the first in the country for Tim’s – they’re already in 11 U.S. states, mostly in New England and the upper Great Lakes.  Good luck to them, and may they open more. 

JCPenney, with stores in other parts of New York City, is opening a giant store in Manhattan Mall across from Herald Square on July 31.  The store, on the former site of Gimbel’s, Abraham and Straus, and Stern’s, is the first and only location in Manhattan.  In accordance with opening one of the chain’s largest stores in the densest city in the country, JCP is embarking on a hip marketing campaign, attempting to debunk the chain’s reputation for being average and unfashionable.     

In sadder news, the economy has claimed two more chains: Smith & Hawken, an upscale garden retailer, and Ritz Camera.  Smith & Hawken is a 56-store chain owned by lawn-care giant Scotts Miracle Gro, of suburban Columbus, Ohio; however, the Smith & Hawken chain is based in tony Marin County, California.  Ritz Camera, a 400-store chain operating under that name and several others, including Boater’s World, is also closing all of its stores unless a last-minute save occurs.  The hope is that a going-concern buyer will purchase at least some of the stores to keep the chain going, but it’s not looking good.  In the end, it means more vacancies for your local mall.

In a bit more astonishing news, a family clothing/variety chain that went out of business earlier this year is back in the fray, somewhat randomly.  Goody’s family clothing, which closed all 287 stores earlier this year, has been reinvigorated by Texas-based Stage Stores, Inc., who purchased the Goody’s name and intends to reopen Goody’s-branded stores in markets where Goody’s existed and was proftable.  Kind of neat.

Big Lots Gets All Fancy

According to an article in the May 15, 2009 Columbus Dispatch, Big Lots – a discount chain known for selling overstock and closeout merchandise – aims to make an even bigger name for itself in the eye of the consumer.

Not only is it the company’s first new store in central Ohio since 2005, it is a departure from the past strategy of locating in retail centers and strip malls aimed at discount shoppers.

By choosing a former Linens ‘n Things site across from Polaris Fashion Place mall, Big Lots is hoping to upgrade its profile and test some new ways of presenting its merchandise.



According to an article in the May 15, 2009 Columbus Dispatch, Big Lots – a discount chain known for selling overstock and closeout merchandise – aims to make an even bigger name for itself in the eye of the consumer. 

Not only is it the company’s first new store in central Ohio since 2005, it is a departure from the past strategy of locating in retail centers and strip malls aimed at discount shoppers.

By choosing a former Linens ‘n Things site across from Polaris Fashion Place mall, Big Lots is hoping to upgrade its profile and test some new ways of presenting its merchandise.

“This is the kind of location we couldn’t touch in the past,” said Chief Executive Steve Fishman. “Now that our performance has improved and there is a good supply of valuable real estate available, we can capitalize on prime real-estate opportunities like Polaris. We’ll feature the same great deals Big Lots customers have come to expect — in an A-plus location and in our hometown.”

Such expansion is actually to be expected for a company such as Big Lots during an economic downturn, said Sandy Skrovan, senior vice president and lead analyst at Columbus-based consulting and analysis firm Retail Forward.

“Generally speaking, a recession is a good time to be in the dollar store/closeout business,” Skrovan said. “Solid performance results being turned in by some leading small-format value retailers are enabling them to invest in more stores” or renovate old ones.

The 35,000-square-foot Polaris store showcases a “next generation layout” for Big Lots, including a center court, better lighting, new signs and wider, angled aisles.


I’m not sure if this will be Big Lots’ only location like this, but it’s certainly a departure from the norm.  And, although they don’t appear to be changing up the merchandise mix itself, the change in marketing tactic is almost certain to acquire the type of customer Big Lots hasn’t been able to nab – upper to upper-middle class households. 

As an example, the company is displaying furniture on a hanging rack above a piece from the same set. “We got that idea from Ikea,” Johnson said.

If you think about it, the price points at Ikea and Big Lots are similar, but the difference in what kind of shopper comes in the door depends on the marketing.  Ikea, with its suave, nordic-chic coolness attracts a wide variety of upmarket shoppers who aren’t the typical bargain-hunter – just go to an Ikea any weekend and count the number of BMWs, Lexuses, and Land Rovers all waiting to drive away some oddly-named household item.  In contrast, Big Lots’ marketing has – until now – been directed at a lower-income demographic, with handmade-looking and outdated signage and decor.  In addition, Big Lots stores are unabashedly dowdy – most of them are in reclaimed deadbox spaces, and much of the time all Big Lots did to renovate them was to move in their merchandise and flip on the power switch. 

This type of marketing is especially prescient given the gloomy economy.  Now more than ever it’s especially approprate for dollar stores and discounters to appeal to a wider demographic spread, since even the upper middle class is in need of a bargain today.  Entering into mass market appeal also means entering into anchor spaces in malls, which I think is great for malls in a time when diversification may be the key to staying afloat.  Malls across the country are thinking of creative ways to fill large junior-anchor and anchor spaces in a time when a gigantic store in this space is outmoded and obsolete as an efficient, profitable business model.  We’ve seen stores like Forever 21, Steve & Barrys, entertainment, and other boxes take these spaces with wildly varying amounts of success.   

What do you think about stores like Big Lots, box Dollar stores, and other extreme-discounters entering into junior and anchor spaces in malls?