Times are tough for ru­ral malls

An­chors go­ing away as e-re­tail takes big­ger slice

USA TODAY Weekend Extra - - MONEY - Don­nelle Eller

OTTUMWA, Iowa – This city’s Tar­get store is gone.

So are Kmart, MC Sports, JCPen­ney, Van­ity and soon Her­berger’s, a de­part­ment store.

“The mall is pretty sad,” says Amanda Cain, a teacher and mother. “Once Her­berger’s closes, we’ll have no an­chors.”

About two-thirds of Ottumwa’s Quincy Place Mall will be empty with Her­berger’s loss.

Bon-Ton Stores, of which Her­berger’s was a part, and oth­ers in­clud­ing Toys R Us and MC Sports are bank­rupt. JCPen­ney, Kmart and other de­part­ment stores are clos­ing un­prof­itable stores in their strug­gle to sur­vive against grow­ing on­line com­pe­ti­tion.

Na­tional re­tail dis­tress is emp­ty­ing ru­ral re­gional malls, ex­perts say. But long-term eco­nomic de­te­ri­o­ra­tion is driv­ing their in­abil­ity to bounce back: Fewer jobs and fewer peo­ple mean less money spent on TVs, couches and clothes.

Ottumwa and most other small Iowa cities have failed to re­cover the jobs lost in the re­ces­sion, said David Swen­son, an Iowa State Univer­sity econ­o­mist.

Wapello County, where Ottumwa is the big­gest city, with 24,450 peo­ple, had 3% fewer jobs last year than in 2008. Even with mostly steady em­ploy­ment over the past two years, the city’s re­tail sales have tum­bled 6.8%.

Buy­ing power fol­lows work­ers, who are mov­ing to metro ar­eas for jobs.

“They’re go­ing where the economies are stronger and they can make more money,” Swen­son said. “The only al­ter­na­tive left in many of these ru­ral ar­eas is Wal­mart.”

Cain, not a Wal­mart fan, does most of her shop­ping at Kohl’s in Ottumwa.

“When­ever we can, we’ll do an outof-town shop­ping trip, spend a Satur­day and do our shop­ping in Des Moines. ... We make it a fun out­ing,” Cain said. But “it would be nice just to run to the mall when­ever we want and find the stores we like.”

A mall shake­out is com­ing

Many small ur­ban cen­ters are suf­fer­ing, said Liesl Eathing­ton, an ISU econ­o­mist.

“It’s too soon to say the mall is dead,” Eathing­ton said. “But we may see a shake­out when there are fewer and fewer of them.”

Swen­son said re­tail in small Iowa cities is likely strug­gling be­cause man­u­fac­tur­ing has suf­fered, both statewide and in ru­ral Iowa. Plus, more con­sumers are or­der­ing goods from In­ter­net sites.

To­tal on­line sales spiked 16% last year over 2016, while to­tal sales climbed 4.4%, the U.S. Com­merce De­part­ment re­ported. Ama­zon and other e-com­merce busi­nesses made up about 9% of to­tal sales, an ever-grow­ing per­cent­age, the data show.

“These are chal­leng­ing times for re­tail­ers . ... There’s a clear shift in power from the re­tailer to the con­sumer,” said Mark Mathews, the Na­tional Re­tail Fed­er­a­tion’s vice pres­i­dent of re­search and de­vel­op­ment.

New hope for down­town?

There’s one bright side of the troubles fac­ing ru­ral malls: They’re giv­ing new hope to strug­gling down­town shop­ping dis­tricts.

Even though it has a ways to go, down­town Ottumwa is mov­ing from blighted to re­vi­tal­ized.

Ottumwa has snagged about $10 mil­lion in state and fed­eral grants to change it, mostly over the past three years, said Fred Ze­siger, the city’s Main Street di­rec­tor. It’ll have about 100 apart­ments when the work is com­pleted.

“Peo­ple thought these build­ings were worth sav­ing, and they were right,” Ze­siger said.

Re­de­vel­op­ment of down­town gives Ottumwa lead­ers some op­por­tu­nity to boost shop­ping, when most of the con­trol lies with big cor­po­ra­tions, said Holly Berg, an Ottumwa coun­cil mem­ber.

“This is some­thing we can take into our own hands, in­stead of be­ing at the mercy of na­tional chains,” Berg said.

Tough to find re­place­ments

Re­plac­ing big re­tail­ers be­comes more dif­fi­cult in smaller com­mu­ni­ties, said Scot Snitker, na­tional port­fo­lio man­ager at Lex­ing­ton In­ter­na­tional Realty, the New Jersey com­pany that owns the Ottumwa mall.

His com­pany is look­ing to at­tor­neys, doc­tors and other ser­vice providers to help fill space. And it’s re­cruit­ing en­ter­tain­ment providers — mini golf in Ottumwa, paint­ball in a Min­nesota mall and a hockey rink in South Dakota.

“There are plenty of re­tail­ers that are ex­pand­ing. But they re­quire a big­ger pop­u­la­tion base, higher earn­ings,” Snitker said. “So we just have to get more cre­ative” in smaller mar­kets.

Cain said she be­lieves “the com­mu­nity is try­ing very hard” to attract re­tail­ers. “It’s just a lit­tle frus­trat­ing and dis­heart­en­ing to see an­other busi­ness go.”


Amanda and Wes Cain and chil­dren Ly­dia Rol­ing, 12, and Kay­den Cain, 8, visit Ottumwa, Iowa’s Quincy Place Mall. As its stores close, the fam­ily is mak­ing more shop­ping trips to Des Moines in­stead.

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