The Atlanta Journal-Constitution
Macy’s retreat means more pain for malls
Retailer hasn’t said if it will close stores in metro Atlanta.
The plan by Macy’s to close 100 more department stores across the nation could be a disaster for malls already struggling to compete, including some in metro Atlanta, some retail experts say.
For many malls, Macy’s, the nation’s largest department store chain, is a marquee destination and losing it could signal a shopping center in decline. The Cincinnati-based retailer has not yet said what stores it will close.
Some struggling malls have tried to de-emphasize big anchor stores, but a closed department store can be hard to camouflage or repurpose.
“When a mall loses an anchor like Macy’s it really needs to find an equal replacement to keep the mall relevant,” said Greg Charleston, senior managing director in the Atlanta regional office of turnaround firm Conway MacKenzie. “There’s not many retailers waiting in the wings to take over that role as anchor tenant in a mall.”
That’s been especially true in metro Atlanta, home to 12 Macy’s locations. Experts say the area has long had too many malls and that competition from online shopping and alternative mixed-use developments such as Avalon and The Shops Buckhead Atlanta is accelerating area malls’ troubles.
Already, once thriving malls such as Greenbriar Mall, Gwinnett Place Mall and Southlake Mall have had to reinvent themselves after big box retailers such as JCPenney, Sears and Parisian closed stores.
Each mall still counts Macy’s
as an anchor, but has signed non-traditional tenants such as call centers, colleges and doctor’s offices to fill other spaces to avoid becoming “ghost” shopping centers.
Other malls such as Cumberland Mall in Cobb County, which also has a Macy’s, have torn down empty anchor space and added restaurant chains such as The Cheesecake Factory and Maggiano’s Little Italy.
And Macy’s was the last holdout among traditional big box retailers at North DeKalb Mall in Decatur before closing its doors earlier this year. (North DeKalb’s owners have said they plan to renovate the mall as a mixed-use development).
In some cases malls may have to lower rents for tenants if their leases are contingent on Macy’s as a mall anchor, the experts said.
A general malaise
“I feel for the small mall retailers that are depending on all the people coming to Macy’s,” said Chris Lemley, a marketing professor at Georgia State University. “If they close, those people aren’t going to be there anymore.”
Exacerbating the challenge is the general malaise among big box mall retailers.
Sears, once a titan of the industry, has been slipping as a destination for years and closing stores around the country. Kohl’s, which had begun making the leap from shopping centers to malls, has had to shutter locations, including one at Northlake Mall, as it deals with its own struggles.
And JCPenney, headed by former Home Depot executive vice president of stores Marvin Ellison, has been improving its performance as of late by narrowing its quarterly losses in a turnaround bid. Ellison told CNBC last week he thinks the brand will benefit from the closing Macy’s in malls both call home.
“Our historical trends tell us that it is a net positive to JCPenney,” he told the business channel. “When we share a mall with Sears and they close, we gain market share. So it’s a net positive for sales growth. When Macy’s closes in a mall, historically, it’s been a net positive.”
Not all the news for malls is dire. Lemley said stores such as Apple or H&M are increasingly becoming the new destinations. Malls such as Perimeter Mall have upped the ante by securing popular eateries such as Shake Shack, which opens at the Dunwoody shopping center later this year, to mix up their offerings.
Entertainment value
“In the ’80s going to the mall was the No. 1 form of entertainment,” Lemley said. “That hasn’t been the way people shop for a while now.”
But some experts think mall brands will have to cut much deeper before they can have a healthy balance sheet, which could mean more pain for malls here and elsewhere.
Green Street Advisors said recently that to return to 2006 sales levels, JCPenney would have to close 320 stores, Sears 300, Macy’s 70, Dillard’s 60 and Nordstrom 30.
The rise of mixed use developments as a retail force also makes Macy’s critical to Atlanta malls because the developments don’t include big box stores. Instead they define themselves by smallscale, outdoor shopping marked by parks, walkable communities and outdoor concert space instead of sterile, air-conditioned behemoths.
Today it’s about the whole shopping experience,” said Emory University marketing professor Doug Bowman. “People will drive for that, not just a regular runof-the-mill mall.”