Looking to the future: What shopping looks like without anchor stores,

In the U.S., a new round of retail shutdowns has sparked concerns that malls with anchor tenants are dinosaurs threatened with extinction.

Sears has closed 152 mall stores since 2007. JCPenney closed 40 locations in 2015. Macy’s plans to close up to 40 stores early this year.

“People are shopping off the malls, at Walmart, Dollar General, Target, T.J. Maxx, Ross, Burlington Coat,” said Howard Davidowitz, a retail consultant in New York. “Those are the guys doing the business.”

Discount operators such as T.J. Maxx are racking up stronger profits than traditional U.S. department stores, and in some cases department stores are adopting discount strategies to compete.

“Macy’s, Neiman Marcus, Lord and Taylor, among others, are adding stores that are not on the mall,” said Davidowitz. “They are all going in the off-price (direction) because T.J. Maxx and Ross stores are killing them.”

Davidowitz said U.S. department stores are too big and located in “inefficient and dumpy malls.”

That’s not the case in Canada, says Don Gregor, vice-president at Aurora Realty Consultants, a retail realestate brokerage and consulting services firm.

Most major malls in Canada that are larger than a million square feet (93,000 square metres) — including CF Toronto Eaton Centre and Square One — have undergone major renovations in the past two to five years, he points out.

“Landlords in Canada do not sit back on their laurels. They are constantly trying to reinvent the wheel. Our malls are healthy,” says Gregor.

While it’s true that there are fewer Sears anchor stores in Canada than there were five years ago, they have been replaced by new tenants, including Seattle department store retailer Nordstrom and Quebec retailer Simons.

In some cases, landlords have been able to increase the rents in the spac- es vacated by recently departed Target Canada, says Gregor.

John Crombie, Canadian senior vice president of retail leasing for commercial real-estate investment and management company Triovest, says some economies of scale are lost when landlords split up the space left vacant by an anchor like Target.

But he agrees Canadian landlords are being innovative in their approach to filling malls, seeking out restaurants and pop-up shops to add freshness to the retail mix. “I think it’s a draw,” says Crombie. It’s the smaller, C-class malls that suffer most when an anchor vacates, says Michael Penalosa, managing principal at retail development strategists Thomas Consultants Inc. “It can trigger a downward spiral,” he says, adding that he has seen malls fill spaces in creative ways, with fitness centres, call centres and in, some cases, churches.

And food. A decade ago, 8 per cent of retailers in a conventional mall were food retailers, he says. Today, the figure is closer to 20 per cent, as malls try to find ways to bring people out for more than just shopping.

“It’s about becoming a multi-purpose leisure destination,” says Penalosa.

The real winner in all this change in retail?

“Change creates construction. The only guys happy are the construction trades,” says Gregor. With files from Star news services