Macy’s recent announcement to close nearly a third of its stores has raised questions about the future of malls and communities across the United States. While the closures may catch shoppers by surprise, they are a necessary step for the retailer to adapt to the changing landscape of consumer preferences and the rise of online shopping.
The company plans to invest more in its remaining namesake stores and focus on the growth of its higher-end department store Bloomingdale’s and beauty chain Bluemercury. The closures, however, will put pressure on malls to evolve and find new ways to attract customers.
According to Chris Wimmer, senior director at Fitch Ratings, Macy’s closures will be a positive change for many malls and customers. It will give healthier malls the opportunity to revitalize and bring new life to their shopping centers. Mall owners with stronger balance sheets are eager to take over Macy’s spaces and free up prime real estate.
Macy’s owns the majority of its namesake stores, a practice that dates back to when mall owners would give department stores space in exchange for drawing shoppers and charging rent to other retailers. The closures will also pave the way for real estate developments that align with the changing demographics and economy of their surroundings, such as medical buildings, retirement communities, or grocery stores.
However, there are concerns that some closed Macy’s locations may be difficult to sell and could lead to the deterioration of the mall itself. If the mall is in a bad location or lacks the funds to demolish the vacant store, it could become an eyesore.
Macy’s closures are part of a larger trend of downsizing department stores and shrinking malls. Other anchor stores like Sears, Lord & Taylor, and JCPenney have also downsized or disappeared from malls. The number of shopping malls classified as Class A and B has decreased, while Class C and D malls have seen an even sharper decline.
Anand Kumar, associate director of research for Coresight, explains that the United States doesn’t need as many malls as consumers increasingly shop online. Many growing retailers, such as Dollar General, Five Below, and T.J. Maxx, prefer suburban strip centers over traditional malls. To attract more traffic, mall owners are diversifying their tenant mix by adding medical buildings, co-working spaces, nail salons, and restaurants.
Former Macy’s locations have the potential to be transformed into various developments that align with the needs of the community. For example, Brookfield Properties has retrofitted over 100 anchor boxes, investing more than $2 billion in capital. The Stonestown Galleria in San Francisco now houses a Whole Foods, a movie theater, a sporting goods store, and a healthcare facility in the former Macy’s space.
Brookfield also used the closure of Macy’s at Tysons Galleria in Washington, D.C., as an opportunity to add a new wing with entertainment offerings, home furnishing stores, and dining options. These projects require time and investment but provide mall owners with the flexibility to adapt and respond to changing trends and community needs.
In some cases, former Macy’s locations have been repurposed for unique purposes. For example, a former Macy’s near Salt Lake City will become the training and practice facility for the NHL’s Utah Hockey Club, complete with ice skating rinks and corporate offices. Additionally, Amazon has converted former mall sites into fulfillment centers, reflecting the shift from in-person shopping to online retail.
In conclusion, Macy’s closures will undoubtedly have a significant impact on malls and communities across the United States. However, they present an opportunity for healthier malls to revitalize and adapt to changing consumer preferences. Through diversifying tenant mix, repurposing spaces, and embracing new developments, malls can remain relevant and attract customers in the evolving retail landscape.
