Sears And The Future Of American Malls
MARY LOUISE KELLY, HOST:
News this week that Sears has filed for bankruptcy has prompted much wringing of hands over the bleak future of the American mall. But while some malls are emptying out, others are bustling. According to the International Council of Shopping Centers, over the last five years, more malls have opened than closed.
Mark Cohen is a former CEO of Sears Canada. He now teaches at Columbia Business School. He told me some malls will actually benefit from all those Sears stores shutting down.
MARK COHEN: There are triple-As, or super regionals as they're referred to, who are booming, who are receiving the news of Sears' demise or near demise with glee because if Sears is still doing business in their facility, they're happy to take the space back. These are malls with 4, 5, 6 anchors in some cases that are fully tenanted, and their only limitation is available parking.
KELLY: So they're losing one anchor store, but they've got others. And they can - what would they do with the Sears space?
COHEN: Well, they're likely to break it up and turn it into other specialty retail or add to their experiential opportunity in the form of added food offerings, things of that sort.
COHEN: And then there are B and C malls, and these are smaller. These tend to be older. In many cases, they've already lost a Sears. And the prognosis for these Bs and Cs is grim.
KELLY: Why can't they do the same thing as the top-tier malls? Why can't they reimagine the space and add a food court or something?
COHEN: They can do it on paper, but they can't manage it financially because the mall's volume has declined to the extent that there's no financial viability left.
KELLY: When you talk about the triple-A malls that are thriving, are those congregated in a certain part of the country? Is there a certain type store or type layout that is working for them? Just paint me a little bit more of a picture of what those look like.
COHEN: They're dispersed throughout the United States. They straddle urban population center and heavily populated, affluent, suburban communities. So they're typically the biggest, shiniest penny in the marketplace. In virtually every major population center throughout the United States, there is one and in some cases two of these triple-A centers that are doing fine. They're fully tenanted. They've got lots of footsteps. They're still sought out as destinations by customers.
KELLY: It sounds as though you're describing a landscape in which some malls are disappearing, some malls are thriving, but all of them are being reimagined. In what ways? I mean, will an anchor store be as important as it was a generation ago? Are people rethinking outdoor versus indoor spaces? What trends are you seeing?
COHEN: Well, the anchor store was typically a department store. And I think the department store genre is for the most part on its way out. But now several things have happened. First of all, the apparel and accessory trends have declined. Customers are spending an enormous amount of disposable income on tech and on experiential opportunities rather than on amassing wardrobes of clothes. And the whole idea that an over-large box will act as the draw for a mall is probably outmoded as well. And many of the triple-A malls, so to speak, the anchor tenant is someone like the Apple Store...
COHEN: ...Which doesn't occupy a traditional anchor space but draws an enormous amount of traffic into the center.
KELLY: Do you go to shopping malls regularly?
COHEN: When I was gainfully employed in the business, I did that two and three times a week everywhere in the United States and in Canada. But frankly, they're less and less attractive. They offer less and less appeal. And I've gravitated, like millions and millions of other folks, to the Internet, which is much more convenient obviously and much more likely to be successful.
KELLY: That's Mark Cohen at Columbia Business School. He was former CEO of Sears Canada. Mr. Cohen, thanks very much.
COHEN: You bet. Thank you. Transcript provided by NPR, Copyright NPR.