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Three Reasons Shopping Malls Are Struggling

Posted on in Business Law

Arlington Heights business law attorneyOver the last several years, a number of retailers have announced and begun executing plans to close a substantial number of stores. Some have been struggling for quite some time, such as JC Penney, Sears,  and Toys R Us, while others—including Macy’s—have surprised many consumers with their plans to shutter dozens of locations.

Unfortunately, many of these retailers are “anchor stores” in shopping malls across the country. As anchor stores, they once served as the most stable tenants of a shopping center, with a customer base that drove the bulk of the mall’s traffic. The struggles of such stores have translated into big problems for the shopping centers themselves, and while e-commerce is part of the issue, it is not the only reason that malls are hurting nationwide.

Reason #1: Online Shopping Is Here to Stay

It has never been easier to buy exactly what you want and have it delivered to your home in a matter of days. Amazon, Overstock, and other internet retailers have led the way but companies with brick and mortar stores have made marked improvements to their online shopping experiences. Online shopping began with simple items like books and home goods, but the largest category today is clothing. Shopper-friendly return policies and easy-to-use interfaces have had a tremendous impact on traditional department and clothing stores.

Reason #2: Too Many Shopping Centers

Shopping malls and centers came to prominence in the post-World War II United States as suburban areas sprung up around major cities. For several decades afterward, malls continued to dominate the shopping habits of suburban families, and more and more centers were built nationwide. The U.S. quickly outpaced other developed countries, and as recently as 2015, America has 40 percent more shopping space per capita than Canada and more than five times that of the United Kingdom.

Truth be told, Americans simply had too many places to shop, and when the recession of the late 2000s hit, retail outlets felt its sting. They have never really recovered.

Reason #3: Spending in Other Places

The American economy has bounced back following the Great Recession, but spending habits have largely changed. Americans are spending less on clothes, jewelry, and luxury items and more on travel and dining. Restaurants have experienced a strong resurgence in the last few years. In fact, the change is so dramatic that Americans spent more at restaurants and bars than they did at grocery stores for the first time ever last year.

Another factor that impacts consumer spending at malls and shopping centers is social media appeal. While it may sound outrageous, more and more people base their spending decisions—at least in part—on what will make a good Facebook or Instagram post. Photos from a trendy bistro will likely gather more “likes” than a post documenting a shopper’s purchases at Macy’s or Crate & Barrel.

Facing Tough Business Decisions?

If you own a business that leases space in a mall or shopping center, the future of your location may be uncertain. An experienced Arlington Heights business law attorney can help you explore your available options. Call 847-749-4182 for a confidential consultation with a member our team today.

 

Sources:

https://venturebeat.com/2017/03/23/j-c-penney-store-closings-latest-sign-that-ecommerce-may-finally-be-devastating-bricks-and-mortar-retail/

https://www.theatlantic.com/business/archive/2017/04/retail-meltdown-of-2017/522384/

https://broadly.vice.com/en_us/article/ypa7jj/the-rise-and-fall-of-the-american-shopping-mall

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