As The Recession Deepens, The Mall Of America Says It's Doing Fine
The New York Times says there are about 1,500 malls in the US and many of them are in trouble. They're being converted to office buildings or closing their doors for good. And yet, Minnesota's Mall of America is allegedly doing fine.
“We’re more promotional now than we’ve ever been,” as Ms. Bausch puts it.
Sitting in her office in the basement, she is explaining how it’s possible that total sales at the mall were up 2 percent in 2008. Even she seems a little amazed by the number, in part because a major highway nearby was shut down during some crucial days in the holiday shopping season.
Yes, 11 stores closed in 2008, including Hot Dog on a Stick, a clothing retailer named Big Dog, and Wilsons Leather. But 31 new stores opened, among them American Apparel, True Religion and Best Buy, which brought in New Kids on the Block, the reunited boy band, for what the store billed as an “exclusive Best Buy opening performance and autograph signing!”
Tourist dollars helped. There are 71 Mall of America package tours from 32 countries. And there are special events, like the “Spirit of America” cheerleading competition, which unleashes a couple of thousand cheerleaders in the mall on the weekend we visit.
Of course, some retailers don't believe it. The article goes on to interview the owner of Just Dogs! Gourmet, who complains that people are returning things more than ever before.
“You’d be amazed at how many people are returning things now,” Mr. Classen adds. “I’m going to have to start enforcing my return policy because — well, look at this.”
He reaches under the counter and retrieves a pair of pink dog shoes called Cozy Boots, size “xxsmall,” which are in a custom-made plastic zip bag.
“A woman just brought these back,” he says. “The zipper is broken. The cotton in the booties is gone. I can’t sell these again. This keeps happening. Today, every time I got past $300 in sales, somebody brought something back and I was back under $300. Back and forth all day.”
Our Love Affair With Malls Is on the Rocks [NYT]
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Comments:
Hot dog on a stick is closed? Nooooo.
I hope the cereal museum is still there.
Working where I do, we see a lot of news on shopping centers in development and those that are closing.
Malls have been losing favor with retailers for almost a decade, with many choosing to move to open-air centers (not enclosed like malls) and power centers (a grouping of category-killers/anchors with very few, if any, small shops). While the recession is certainly helping move things along, malls were dying long before the economy was.
Also, to the lady struggling with customers returning designer dog apparel: HONESTLY! If you're selling dog shoes in XXS, you're selling them to people who are likely toting the dog around like a handbag. If the shoes aren't holding up to what little wear and tear they're being subjected to, maybe it's time to buy/make a better product.
@cynical_bastard: Actually they're a good idea if your dog is in Phoenix. If you try to walk them during the summer if they can't wait until dark, the pavement is way too hot for their pads.
However, they don't need designer ones, Pets Mart sells a basic "bootie" that I think was just leather or suede that velcroed at the top.
well, what do expect the Mall to say? "We are dying" and give them an air of desperation? They probably hope to smile and lie their way through the recession.
I live up the road from the first "shopping center" in the US. (a bunch of stores around a parking lot, meant as an alternative to having to get all pretty to go downtown to shop) It's interesting to watch what's going on there. Some marginal retailers have definitely folded, but the space is still turning over pretty quickly. The restaurants are all still there. There's a big empty space right now being made over for a grocery store (forget which one) ... I'm waiting to see if that goes in or if they panic and break the contract.
Mostly what I've seen is that as some marginal retailers have failed or closed, the retailers in the outbuildings have often snagged their space (lower rates than before?), and the outbuildings have gone pretty quickly to new businesses, sometimes smaller local ones.
Most of the changes I've seen have been for the better -- replaces places I wasn't interested in or thought were low quality with places I'd shop or go for services -- but I don't know how long that'll keep up, and if "falling rental rates" are the reason for it, I don't know if that's good? Someone who knows about the economy tell me. :)
Our older mall is actually really vibrant right now, while the newer, much nicer mall has more holes. I'm guessing the same reason applies -- the older mall is closer into the city, has smaller spaces, and lower rental rates.
If I were going to make a guess as to which market segments would best weather a recession, I don't think dog apparel or hand-made dog biscuit vendors would be on my list. This guy's experience may not be representative of the mall as a whole.
I like the "allegedly" in the description. Not value-laden at all.
@B: Sadly, you've missed your chance to go to crazy cereal promotion land by about five years. [www.bizjournals.com]
@Eyebrows McGee: Aww. I use dog boots here in CT. When it's really cold or icy or snowy, my dog's little paws ice up and she starts limping. She also gets salt chunks in her paws, and that causes limping too. Granted, I use super-cheap dog boots, but they do have a purpose. I'd rather spend the money on them than the vet bill for cut or frozen paws.
I do think this post of mine sounds ridiculous, but it's true!
The MOA is probably doing better for a couple of reasons. They are on the light rail line one stop from the airport. If you have a long layover it isn't a big deal to hop the light rail and go shopping rather than stare at the airport for three hours.
It is also a destination for everyone living in nowheresville. They actually have a decent variety of stores. MN also has no sales tax on clothing.
I have become so disgusted with the local offerings that we either buy online or stash away money towards going to Mpls to go shopping.
Of course they would say that...But lets look at some facts.
Most companies that own and manage retail space (shopping centers,malls and such) are trading in the public markets near their lows for the last several years. Many commercial loans that were floated to finance even more uneeded shopping strip malls and speculative retail space are in or near default (Source -Wall Street Journal) and General Growth Properties is basically a zombie compnay that is living on debt extensions.
So. Are we to believe that there has been a tsunami wash over the shore upon which MOA is built and it is the only thing that didn't get wet ? Don't get me wrong - I hope that they make it through in good shape (for their employees sake) , but all of this sugarcoated happy talk about how great business is strikes me as being in deep denial.
When I had small children and no money, I used to take them to the local mall for entertainment--play on the playground, buy a pretzel for a treat, look at the toys and books, etc. I wonder if anyone uses the mall for low cost entertainment now, or if the temptation to buy is too strong. I wish my kids still had that kind of restraint!
Why are so many of the stores (or past stores) in that mall dog-themed?
I used to work in the Mall of America when I was a college student. I miss that mall, and the no sales tax on clothing.
@bohemian:
People probably forgo shopping at other malls just to shop at that one. I work at a "premier" mall in Michigan and we aren't feeling the crunch like other malls are. (We're actually a "collection", not a mall.) It's amazing what covered parking can do for sales on a snowy day.
@Karita: Not at all! I did the same thing for my dog when he was alive. We live in Maryland and although it's not as bad as the northeast, the winters here can be pretty harsh on a dog's exposed skin.
oh god... not HOT DOG ON A STICK ?!?!?!
it's a sad day when you can't enjoy a hot dog on a stick at the mall after window shopping.
@Karita: I did say the twee ones. :) I know dogs who wear boots -- and dogs who wear sweaters -- for the cold up here.
But having read the whole article, I got the impression that these were ballerina princess dog accessories. :)
No hate here for your poor puppy's cold-weather feet protection!
How about this for a double whammy?
The developer of the Natick (MA) Mall, in conjunction with a huge renovation and addition to the mall that is just being completed, decided to add high rise luxury condominiums to the mall. So now they have empty housing to go along with the empty stores. The condos have wonderful views of the mall parking lots and surrounding highways and strip malls.
They also changed the name to the "Natick Collection". Hows that for hoity-toity?
@bohemian: I agree. MOA is totally destination shopping. I remember my friends and I would go a couple times a year when I was in high school even though it was a two hour drive. Now, when I'm flying home after visiting my parents, I try to book an afternoon flight so I can get some good deals at MOA in the morning before heading to the airport.
Walked through a Nordstrom last week. Saw a colorful blouse that looked like a gourmet dish rag. Figured it was worth, what, about $15.00. No. The price tag said $525.00. LOL. I am sure it is a big seller.
Converting malls into Offices? That would be a neat place to work
@scoosdad: YES! I was thinking about the "Collection" when I read this article. I remember when it was just the Natick Mall and it was considered "fancy" and now there are a bunch of empty storefronts inside this behemoth of a mall.
I don't understand why they thought those condos would sell well- that part of Natick is so packed with shopping centers it is ugly!
In my one day visit to the Mall of America about 10 years ago, I have learned one thing... it is damn easy to get lost in that place. Odds are 50% of the people in there, especially senior citizens, have probably been stuck in that place since the summer of 2007... they don't even know we're in a recession.
The fact that there are about 3 of every major store also helps to drive home those "must-buy" deals
I went to the MOA just this weekend to watch Taken (I'm just a lightrail's ride away...lucky me), and it was as packed as ever. There's never a shortage of people in there, even in Nickelodeon Universe. Food court is packed...Gamestop is packed...even Nordstrom Rack was busy. I don't doubt this story one bit.
So I realized I recognized when that picture was taken because of the house in the middle of the mall. I don't even go there that often!
@lonestarbl: "Odds are 50% of the people in there, especially senior citizens, have probably been stuck in that place since the summer of 2007... they don't even know we're in a recession."
LOL! :)
There's a mall called Pittsburgh Mills outside of the city that opened up a few years ago and it's the worst disaster of a mall I've ever seen. The area is already saturated with malls and they placed it in a really terrible area. To make things worse, the rent they charge for retailers is so ridiculously high, no one wants anything to do with them. I can't imagine that it'll survive in this economic climate.
There's also that mall in Syracuse that they're trying to develop and expand into the largest mall in the nation. I'm wondering how that'll turn out.
@qcgallus: I went on a business trip to Minneapolis and went to MOA twice. It was the highlight of the entire trip! The absolute best part was Nordstrom Rack. I bought so many designer items from that store for almost nothing. I was able to purchase something for everyone in my department at work. My greatest find was a pair of Cole Haan shoes for $30.00! I smile all day when I wear those shoes.
@Eyebrows McGee: "the older mall is closer into the city, has smaller spaces, and lower rental rates."
Probably not lower rental rates per-se, just better ratio of rent to gross income. If rent is even slightly higher in the older mall you reference, stores will still prefer retail space there if it gets much more traffic/more business.
@mrm514: No, American Girl Doll is where Santa used to be, at the east side of the Amusement park. I became familiar with it just before Christmas. I forget what took the place of the Cereal Experience- mini-golf, perhaps? At least they have new rides now, because Charles Schultz' kids pulled the plug on Camp Snoopy.
@Narockstar: Doesn't hurt that there's an Ikea now across the parking lot. I expect they've stopped talking about expanding MOA while the economy is in the crapper. Plans were underway to leap across the street, and build something that would include Ikea and build god-only-knows-what. Maybe a surf beach like they have in the West Edmonton Mall.
@Liz11685: Ah, my native mall! I remember when they first built it (I was in high school across the lake in Cochituate), and I'd go over to the Paperback Booksmith for a read. From what I've seen on Google Maps, the new version is a mess. What's with Shopper's World now? They tore down the Jordan's store, and bulldozed that mall, didn't they?
The Mall is still as packed as ever. The last two times that I have been there, they were holding cheerleading / dance competitions. They must have made a few billion dollars those days.
Wait, dog shoes?