Surviving the Retail Shift: Part 5 of a 5 Part Series - Looking Ahead; Lessons Learned from the Retail Shift
The retail industry has faced significant challenges this year. In 2017, more than 5,000 retail stores closed their doors, many of them portfolio-wide closures by well-known department-store chains who were synonymous with the traditional shopping mall. Toys R Us recently joined a growing list of more than 35 retailers that filed for bankruptcy in 2017, according to S&P Global Market Intelligence. Even more unsettling, Bankruptcydata.com reports that the Toys R Us bankruptcy is the third largest retail bankruptcy of all time.
That said, as Mark Twain quipped, “The reports of my death are greatly exaggerated”, so too is the reported retail “apocalypse” and “death” of the shopping center. In fact, U.S. retailers opened 1,326 more locations in 2017 than they closed, according to IHL Group’s report titled, Debunking the Retail Apocalypse. When restaurants are added to the mix, there were a total of 4,080 new openings in 2017 and another 5,050 openings planned in 2018. Simply put, there are 4,000 more stores and restaurants in 2017 than there were in 2016.
The headlines of the retail apocalypse tend to be focused on a very small number of retailers and segments that are concentrated in shopping malls, and they ignore the growth on the discount end of the retail spectrum. These numbers – and the imbalance toward discount and restaurant openings – reflect a shift in consumer behavior and are compelling an evolution of the traditional shopping center.
Most change does not come without some degree of pain, however, and the current retail shift is no different. Shopping center owners and managers are faced with increased vacancies and fewer traditional options for dark spaces. These trying times are perhaps the best teacher, and the take-away for shopping center owners and managers should be to evaluate your present practices and procedures and identify areas where modifications, as discussed in more detail below, should be made.
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