There’s a pall over the mall. The decline of shopping malls is a trend we forecast in 1997 when we warned that in the coming decades the mall culture would degenerate, and dying Main Street would be reborn. Now is the time for innovative OnTrendpreneurs™ to seize widening market gaps left by the decline of malls.
Regional malls serving middle-class communities have been pelted with closings of stores, especially big-box anchors, since 2010. Among the key factors for the downward spiral: Online shopping, shifting demographics, a stagnant economy, those shuttered big-box stores and an overbuilt retail sector created decades ago for a thriving middle class that has dramatically shrunk.
Moreover, mergers and acquisitions have narrowed choice and uniqueness in product lines for consumers.
“After years of consolidation, product choice has been sharply limited throughout the broad business spectrum… retail, manufacturing, service, communications, etc. With economies slowing and profit margins shrinking, products with small margins and thin returns don’t make it to market. From food to clothing, from digital to stationery and hardware, if they’re not selling big, the product lines are abandoned by the majors.” (Trends Journal, Winter 2016.)
With traditional anchors such as Sears, J.C. Penney, Macy’s and other chains closing in regional malls throughout the country, shopping centers are struggling to stay open. Upscale retailers in high-income suburban areas are doing well, but smaller retailers no longer benefit from the foot traffic largely created by the bigger stores and the town-center appeal that malls once had.
In fact, data from real-estate marketers Cushman & Wakefield report that mall visits dropped 50 percent, from 35 million to about 17 million visits, between just 2010 and 2013. And, according to Jan Rogers Kniffen, CEO of retail consulting firm J. Rogers Kniffen Worldwide Enterprises, a third of regional malls catering to middle-class needs could close by year’s end.
Those that don’t shutter will redefine themselves and reach out to untraditional tenants, ranging from community groups to medical-services operations.
BRINGING BACK MAIN STREET
In the 1980s and ’90s, many Main Street mom-and-pop stores were put out of business by malls, which became community gathering places for shopping, fun and dining.
Today, that trend has reversed: The decline of malls will give rise to businesses on Main Street, especially in small towns.
With malls in middle-class communities shuttering or transforming into more multipurpose operations with fewer retail businesses, the door has been flung open for local shop owners and restaurateurs on Main Street. The entertainment-based experience that malls once promised is shifting back to the true heart of the community, neighborhoods.
“If you look at consumer surveys, just about everyone would rather shop at a local business if it has the right products available at the right prices,” said business expert Mike Glauser, author of Main Street Entrepreneur. “We’re rebalancing from high tech toward ‘high touch.’ There’s a very strong preference for supporting local business owners who know you and give you personal service, and there’s also a backlash against big boxes.”
Opportunities on a local level abound, especially among millennials starting and maintaining small businesses at historically low rates. That’s particularly true in the expanding sharing economy that this generation organically is a part of. It includes health and well-being, farm-to-table and locally made product initiatives.
“This group of aspiring business leaders are learning how to use their digital, tech and social-media skills to augment business ventures that emphasize community connection, authenticity and a human touch. They are building businesses — from small high-tech operations to farm-to-table markets to clubs and restaurants — that place a premium on tying core values to profit.” (Trends Journal, Summer 2016.)
With mall closings accelerating in 2017, the opportunity for local OnTrendpreneurs™ across all generations — who know their customers, offer personalized interaction with consumers, and customize products and services to community tastes — will excel. TJ