MALLED TO DEATH
Shopping centres facing tough times
It’s the “godawful” sidewalks around 81-year-old Jack Herzberger’s Douglas Park home that bring him to the Victoria Square Shopping Centre.
Worried about his wife falling, the couple takes their morning walks in the east Regina mall instead.
Despite being one of the older members of the mall walkers club, he gets called the “young one” as he breezes past other walkers before finishing at the modest food court for coffee and toast.
His long, lean figure might have something to do with that.
Other walkers still could be seen making their rounds or grabbing their coats to leave as Herzberger, white-haired and with bright blue eyes, kept chatting. A little before 9 a.m. on a Wednesday, the group of older men and women were pretty much the only people in the mall.
“Personally, I love it that people ... go and have a coffee with their friends because it gives you a reason to get up in the morning,” he said.
A small polystyrene cup of whitened coffee in hand, Herzberger recalled regular meetings with a group at the Zellers diner for breakfast — something they haven’t been able to do since that store closed in 2013.
“It was a really nice place to go to, but after Zellers left, the whole mall changed,” Herzberger said.
The couple has been going to Victoria Square mall since 1990. When asked what it was like back then, he was quick to answer.
“It was much busier ... All the stores were full,” he said. “The way it looks like right now, to me it’s a dying thing.”
The small mall is relatively quiet these days, with around seven vacant stores at any given time, according to Herzberger and other mall walkers. Perhaps it’s the cost of renting space or the lack of foot traffic that pushes retailers out, he mused. Even the already small food court has two boarded up spaces, leaving only a handful of options for mall-goers.
“They’re here for a few months and the next thing you know, they’re closed again,” Herzberger said. “There’s really no variety and now the bank is gone, too.”
Regardless of the reason, Herzberger doesn’t hold out much hope for Victoria Square mall — which, he said, doesn’t even compare to other malls in the city that appear to be doing a better job of keeping their heads above the water.
“I wouldn’t shed any tears if this one closed,” he said. “It’s a dead mall.”
THE CHANGING FACE OF MALLS IN SASKATCHEWAN
Victoria Square Shopping Centre may appear to be taking the brunt of the changing and challenging retail landscape, but it certainly isn’t suffering alone.
“We’re all impacted by low commodity prices. We are impacted by high household debt and it’s taking its toll on shopping,” said Mitchell Cohen, CEO of Westdale
Properties, which owns Northgate Mall, an anchor on Regina’s Albert Street North. “It’s taking its toll on families.”
In the industry since 1981, Cohen has seen the continuous ups and downs of the retail game. When asked why retail seems to be struggling in 2020, he said the answer is simple.
“When I got into the business there was no internet. There was no online shopping,” he said from Westdale’s Ontario office. “A Sears catalogue was the only competition.”
It’s a very different story today as consumer habits change and national retail chains struggle.
Northgate Mall is set to lose Lowe’s by the middle of February, as well as Things Engraved, La Senza and Gifts Etc. by the end of the month.
In January, Cornwall Centre announced the impending closure of three stores — Eddie Bauer, Bentley and Volcom.
They follow on the loss of Roots, The Gap, Gap Kids and Payless Shoes in the past year.
Over in Saskatoon, Midtown mall shoppers pass by a closeddown Watch it! and a shell where a Payless used to be. Bench also is set to close.
Lots of empty stores dot Market Mall in the city’s southeast, with Carlton Cards set to add to the vacant spaces in the next month or two. Entire wings remain empty.
“When we brought in H&M we made some changes,” said Doug Bailey, the retail manager for Cornwall Centre in Regina. “We’ve seen the reduction of smaller stores and gone from about 90 stores down to 80... That’s been a change that visually you can see over the last few years.”
Cornwall also lost Sears in 2017 and the 125,000 square feet of space has been sitting empty since. The vacancy has caused some growing (or shrinking) pains for the mall because it limited access to the pedestrian connection to the Delta Hotel and Casino Regina that is located in the space.
“Trying to keep that open has been a struggle and the times that we’ve had to close it, you could see a change in our traffic habits,” Bailey said.
“Less and less people are using the malls other than your eye doctors, your dentist, insurance companies,” said John Marchuk, another Victoria Square Shopping Centre walker. “Other than that I don’t know how some of these places survive.”
The biggest problem for Marchuk, who’s been going to Victoria Square mall for 35 years, is the lack of selection for men.
“There’s really not too much here for men other than Mark’s (Work Warehouse), so it’s limited for me,” he said. “One comes in, the other one closes ... It’s just a revolving door for some of these people that just can’t make a go of it.”
Marchuk wishes traffic would pick up, but when asked what he sees the future of the mall to be, he said it’s hard to predict what’s going to happen.
“It’s not what we want for the future of our tenants and the community,” Cohen said of Northgate’s vacancy rate. “We’re not the only ones suffering in Regina, you talk to any of my friendly competitors and it’s bad.”
Ryan Babey, associate vice-president for Colliers International, has been in commercial real estate for 15 years. When he first started, Saskatchewan wasn’t a very popular market for popular retailers to set up shop. About 10 years ago that started to change, but brands still tend to open fewer locations in Regina than they do in other centres, he said.
“All the stories nationally you see retailers, certain ones, closing and whatnot,” he said. “I’d say there’s a lot more cautiousness to what they’re doing.”
With national retail chains exercising more caution, that leaves local and regional businesses looking into whether or not an interior mall is the place for them. But they often are shocked at the cost, Babey said.
“At the end of the day I really think it’s an economic decision,” he said. “The dollars and cents are really where people are going to decide if they’re going to go into the mall.”
And the bottom line is it’s expensive to run an interior mall, which means it’s going to be expensive to rent space in one. That could be another factor in retailers opting for something other than an interior mall to house their business, explained Babey.
But internet shopping and high rental costs are just two of many factors highlighted by local mall owners and real estate experts like Babey in the decline of the urban shopping centre. Recently, The Bay reduced its hours at Cornwall Centre, something Bailey said negatively affects the number of people coming in for morning coffee, usually entering the mall by The Bay doors.
On the flip side, exterior access for large stores such as Sport Chek in Southland Mall or Safeway in Northgate Mall can hurt interior tenants.
“Back 20 to 25 years ago with retail, when you looked at the big box that was in the centre, the Zellers or Walmart or whatever it was, they didn’t get exterior access,” Babey said. “The reason being that the mall wanted to force you in through a common entry point so that you needed to walk by all the retailers to get to the big-box draw.”
Cohen said it’s something Northgate will have to consider as it works to adapt to the changing retail landscape.
“I’m fighting the headwind of changing consumer habits, i.e. shopping online, and my second headwind is the economy in Saskatchewan, and in many parts of Canada, is bad,” he said.
“It’s not just a hit to the community, it’s a hit to our company personally. This is not good for us. That’s why we’re turning our full attention to this shopping centre.”
But the question remains — what is the key to a sustainable mall model in 2020?
LIFE AFTER LOWE’S
“The typical shopping mall model is somewhat broken and we need to find a fix,” Cohen said. “I’m not sure exactly what the fix is, but we’re going to start by looking at other retailers”.
At the end of January, representatives from Westdale Properties attended an international shopping convention in Whistler, B.C. Cohen said it is canvassing the market to find out what would be good not just in Regina, but in the Northgate Mall specifically.
Cohen expressed confidence that despite the growing pains of the industry, malls will adapt and that “there’s life after Lowe’s.”
“We’re hoping that the tide has been stemmed and we’re going to move on with bigger and better items,” he said, adding they have a whole list of alternatives being considering right now, including diversifying tenants to include community-based services, more entertainment venues and restaurants.
Northgate also is in the process of building a stand-alone Sobey’s liquor store on the property, which Cohen is sure will draw more people to the mall.
Northgate isn’t the only site working hard to adapt. Over the years, Golden Mile Shopping Centre has evolved from an unenclosed shopping centre, to an enclosed one and was recently redeveloped again to form more of an outdoor power centre with the addition of Goodlife Fitness and Superstore.
Midtown’s account director Caitie Reid said the Saskatoon mall is “always exploring new opportunities” to keep the mall an attractive destination, which could include local, national and international retailers or facilities with entertainment or restaurants.
Like the others, she said, Midtown’s focus is on creating an “exciting destination” in downtown Saskatoon.
“I think you see retail evolving quite a bit to being more experience-based and malls are definitely embracing that,” Babey said. “On a smaller scale you see in the common areas in some malls, they’ve included the ride around plush toys and things to enhance the shopping experience.”
In Regina, the focus is shifting, he said, from the usual set of retail tenants to the addition of services like medical offices, theatres and family fun spaces — things that used to be a last resort are now becoming great options to draw people back into shopping centres.
The Cornwall Centre has focused on marketing programs to up traffic and updated the look of the mall in 2019 with new floors, ceilings, railings, lighting and an updated food court that allows for another 100 seats compared to the old layout. That, along with a focus on growing the Cornwall as an experience-based shopping centre, seems to be working, Bailey said.
“Our traffic numbers, they’re staying fairly constant from what we’re seeing over the last year. I think the more creative we get and the ability to take options and ideas from other centres or other areas we work with may just kind of build on some of that growth,” he said.
“Over the next few years, especially in Western Canada you’re going to see shopping centres get a little bit more sales and more traffic and rebound."
But Cornwall is in a unique situation due to its location downtown, and as a result has been somewhat cushioned from the challenges other malls face.
“Cornwall will always have that downtown dominant presence where you’ve got all income levels … and that lunch traffic generating it to be a popular mall,” Babey said.
Last month, Cornwall announced that four new stores are set to open in the spring of 2020 — Urban Planet, Ardene, Eclipse and Gong Cha Bubble Tea.
Urban Planet will fill 45,000 square feet and Ardene will take up 15,000 square feet on the second level of the former Sears space.
Similar regrowth isn’t there for a mall such the Victoria Square Shopping Centre, which is quite small compared to other interior malls, Babey said.
“It’s like it’s too big for the little guys and too small for the big guys and there’s just other options out there,” he said. “That’s a big problem for it.”
Babey said the malls that have done well are the ones that adapted, but there’s not a lot of a desire for a “traditional fashion mall” outside of the downtown core.
Even if malls know how they might need to adapt to the current market demands, it’s easier said than done.
“There’s a large cost to making these adaptations to focus on what consumers want and I don’t think there’s a proven method yet,” Babey said.
“To get someone in Regina to make the first step on a multimillion-dollar-type renovation may be a little bit tough.”
Despite the challenges, those in the business are convinced malls are here to stay, even if their form continues to change.
“Since the first general store located on the prairies retail has continued to change and Northgate Mall has changed for 50 years,” Cohen said.
“Just look at the history of the Lowe’s space. It’s gone through five different users. If that’s not a signal that retail continues to change and Northgate Mall continues to adapt, I don’t know what better example there is.
“It’s darkest before the dawn.” With files from Angela Hill
There’s a large cost to making these adaptations to focus on what consumers want and I don’t think there’s a proven method yet.