Changing retail landscape leaves some area malls battling to stay viable
The battle for your dollars on the retail landscape these days is a fierce one.
And much of the time we hear how the battle lines are drawn between brick and mortar stores and online retailers. But it’s hardly that simple. There’s also a divide among brick and mortar locations – one that can be seen playing out here in the First State.
It involves a long time was retail mainstay – the shopping mall.
Some, like Christiana Mall, are thriving. Others, like Concord and Dover Malls, seem to be fading.
Contributor Eileen Dallabrida looks at what’s behind the increasing gap between these “haves” and “have nots.”
Two years ago, boosters of Dover Mall promoted a public-private partnership that would fund construction of an access road from Route 1, rolling out a concrete carpet motorists would follow to the shopping center. The developer showcased plans for a 50,000-plus square-foot addition to the mall and a new adjoining power center.
Around the same time, the owners of Concord Mall in North Wilmington announced a massive makeover that would transform the traditional mall on Route 202 into a lifestyle center buzzing with boutiques, restaurants and entertainment.
Both plans are becalmed without a single spade of soil being turned. And in a rapidly shifting retail landscape, Dover, Concord and other mid-size malls across the country are struggling while Class A properties like Christiana Mall solidify their status as regional retail powerhouses.
Julia Bayak, an associate professor of marketing at the University of Delaware, says there’s been a significant shift in shoppers’ sensibilities. Consumers are looking for added value, such as classes at the Apple Store on how to use your new iPad and free nibbles of cheese at Costco. Shoppers aren’t finding that in the department stores that anchor traditional shopping malls.
“Consumers are focusing on the experiential aspect of shopping. People don’t browse like they used to,” she says. “If JCPenney and Macy’s aren’t doing well it’s because they aren’t differentiating themselves.”
20 percent of malls reap 75 percent of sales
Class-A malls that attract marquee retailers, restaurants and entertainment venues are better positioned to deliver those goods and experiences. Green Street Advisors, a real estate research firm, reports that nearly 75 percent of mall revenue nationwide is generated by the top 20 percent of malls. That leaves 80 percent of malls with a meager 25-percent slice of the pie.
In a volatile retail climate, not all malls will survive. Credit Suisse forecasts that 20-25 percent of U.S. malls will close by 2022. Currently, the roster of American malls stands at about 1,100, with an average of 75 malls closing each year.
Representatives from Simon Property Group, owner of Dover Mall, and Allied Retail Properties, owner of Concord Mall, did not respond to requests for an update on plans for the shopping centers. Simon’s website notes that the company is promoting the mall through a partnership with the Delaware Tourism Office, Kent County Tourism and Conventions Bureau, and Dover Downs Hotel and Casino on a savings passport with special discounts that is being distributed to hotel guests, group tours and business organizations.
At 947,000 square feet, Dover’s anchors include JCPenney and Macy’s, which both are struggling as visits to department stores declined 10.8 percent in 2018, according to a Deloitte report. On the plus side, it’s the only mall in its market. But there are fewer shoppers to attract from neighboring Dover Downs and Dover International Speedway because those venues also are facing challenges.
In the past year, Dover has lost its Sears anchor, part of a spate of closings by the fading giant. Hobbytown, Jeweler’s Loupe and Fast Feet Shoe Repair relocated to larger spaces with lower rents.
Brenda Foehrkolb lives in Chestertown, Maryland, which does not have ready access to large shopping centers. So she makes a day of it and heads to Dover Mall when she needs to cross items off her shopping list.
“I like the selection of stores and I usually combine shopping and lunch,” she says.
Adrift in a sea of choices
But most of the Mid-Atlantic has too many stores, according to the International Council of Shopping Centers (ICSC), a Washington, D.C.-based trade group, meaning disposable dollars are diluted in an ocean of retail options. The accounting consultancy PwC calculates there are approximately 24 square feet of retail space for every person in the United States. That’s 50 percent more per person than in Canada. It’s six times as much retail per person than in the United Kingdom.
At the same time, the closures of a number of retailers is opening up space. Gymboree, PayLess Shoes and Dress Barn have gone out of business in the past year. Forever 21 recently filed for protection from creditors under Chapter 11 of the U.S. bankruptcy code.
That’s resulted in a glut of space, meaning retailers who are opening stores often have their pick of locations. Increasingly, merchants are turning away from malls and toward strip and lifestyle centers.
Malls have lost their sparkle for Signet, the world’s largest jewelry retailer. The parent company of Zales, Kay and Jared jewelers is in the process of closing 150 mall-based stores. All new locations will be in non-mall settings. And the company is focused on getting a better deal on rent at its remaining mall stores.
"Signet is too highly exposed to lower performing malls, so we are being highly disciplined in evaluating our store performance and decisions on which stores to close will be economically driven and based on the profitability and potential of each store including our ability to renegotiate leases at favorable rates," the company said in a statement.
‘A depressing environment’
When Lisa Popper Harris, who lives in New York, was in Wilmington visiting relatives she dropped by Concord Mall because it was the closest. Like many days, Boscov’s was humming and business was going swimmingly at Bonefish Grill, but the mall was otherwise quiet.
“I needed a watch battery replaced and my mom told me about a kiosk that can replace it while you wait,” she says.
Harris also bought a pair of shoes in Boscov's and makeup at the MAC counter in Macy's. While she didn’t enjoy the shopping experience, she did save some money.
“The mall was dismal, nearly empty of people shopping, stores to shop and the floor slopes and is in disrepair,” she says. “It's a very depressing environment but saving the 8.765-percent New York sales tax that I've become used to was wonderful.”
Less than 15 miles to the south, business is brisk at Christiana Mall. Recent openings include Box Lunch, a pop-culture inspired gift shop, North Face, an outdoor recreation outfitter, and Balsam Hill, a purveyor of holiday décor, says Steve Chambliss, the mall’s general manager. Helzberg Diamonds will open in time for holiday shopping.
As a regional powerhouse, 1.27 million-square-foot Christiana is in the enviable position of having a waiting list for space.
“We have plenty of qualified prospects for replacement stores as space becomes available,” Chambliss says. “It’s a matter of fitting all the puzzle pieces together of the right merchandise in the right size and the right location.”
The turning point
A decade ago, Christiana was struggling. Its Lord & Taylor anchor had gone dark and the mall was dated and dotted with empty storefronts. General Growth Properties, then the mall owner, launched an ambitious turnaround, adding Target and Nordstrom, replacing tired finishes, and luring a string of popular tenants, including Cabela’s, Urban Outfitters, Cheesecake Factory and the nation’s highest-volume Apple Store. GGP was acquired by Brookfield Properties in 2018.
Ed Weirauch, who hosts a popular AirBNB in Wilmington’s Cool Spring neighborhood, has guests from as far afield as Germany and Argentina who make Christiana Mall part of their travel itinerary.
“It’s not unusual for me to have guests five times a year who come just to shop tax free at Christiana,” he says. “The most recent was a young Turkish woman who came from Washington D.C.”
So why not shop online instead of making the trip to Delaware? Despite strides in e-commerce, nearly 90 percent of retail sales are transacted in brick-and-mortar stores, according to the U.S. Commerce Department.
Online sales are about 10 percent, still a tick below the zenith achieved in the early 1990s by catalogs, which commanded 11.5 percent of sales.