Tuesday, November 18, 2014

Both Shoes Drop Today for Malls

Update 5/9/16:  Both malls are now officially in foreclosure.

This is about as official as it gets.

Today's Dallas Morning News is reporting that two large regional malls here in north Texas will soon "revert to lender" in a grim reality check for America's bricks-and-mortar retail industry.

Can we finally say with all certainty that the era of the Great American Mall is now over?

So long, carpeted hallways and seating areas lined with potted palm trees.  So long, glassy skylights, mirrored escalators, and cheesy Muzak.  Not every mall is going to disappear from the American landscape, of course, but today's news means that the Foot Lockers, Abercrombies, and Spencers' of generic mall-dom are facing a paradigm shift when it comes to staying relevant for consumers.

Malls have been dying and closing all over the United States.  But Dallas is the city that made shopping a sport.  Its most successful enclosed mall, NorthPark, has been a profit machine since it opened in 1965, and is one of the world's most successful even today.  But in all of Dallas, only one other viable mall remains - the Galleria - and the city's suburbs have seen fortunes turn for their malls as well.

Granted, some of those malls were located in places they never should have been to begin with, but others simply couldn't keep up with the frenetic pace of commercial development over the past fifty years in this booming part of the country.

But of all the malls to face the ignominy of falling into receivership, these two particular malls here in north Texas had so much going for them.  Collin Creek Mall opened in 1981 in Plano, and Vista Ridge Mall opened in 1989 in Lewisville.  Both Plano and Lewisville are even more prosperous today than they were back when these malls opened.  Each mall is situated at a crossroads of two major freeways, near major corporate business campuses and desirable residential subdivisions.  Neither Plano nor Lewisville have the poverty, racial discord, crime, and municipal dysfunction that Dallas has, and that could discourage retailers.  Each city boasts a decent mix of races and ethnicities (at least for suburban Texas), reputable public schools, well-paved streets, and robust outlooks for future civic success.

Of the two cities, Plano is the more affluent, since its location closer to north Dallas has enhanced its ability to siphon off a lot of choice spillover from Big D's economic success.  Indeed, Toyota recently announced that it's moving its North American headquarters to Plano, practically confirming the city as the best place in the country to relocate a Fortune 100 company.

Nevertheless, being more of a middle-class city hasn't diminished Lewisville's livability index.  Chase Bank, for example, has been funneling back-office jobs from the Northeast to Lewisville for years.

Any way you look at it, if you're searching for poster children to depict the Lone Star State's economic vitality, both Plano and Lewisville fill the bill.

So what does it say that each city has a mall about to meet the equivalent fate as foreclosure?

In the case of Collin Creek Mall, its owners have not kept their property competitive with newer, more stylish, and more exclusive shopping centers.  The name of the game in retailing is being better than one's competitors, and Collin Creek has languished on its dated laurels for most of its existence.  Luxury shoppers are always on the move to whatever's more prestigious, and Collin Creek seemed to take its demographic for granted.  As Plano has continued to evolve as one of this region's wealthiest cities, it seems as though Collin Creek's owners figured its high-profile, convenient location was all the marketing it needed.

It wasn't.

In the case of Vista Ridge Mall, the plethora of Walmarts and other big-box retailers who all viciously compete for middle-income shopping dollars likely doomed it.  Whereas enclosed, climate-controlled shopping should be a no-brainer in an extreme weather state like Texas, it's hard to beat drive-up shopping and the Internet.  Whereas not keeping itself trendy enough likely crippled Collin Creek's profitability, Vista Ridge's downfall probably represents the more universal scenario for the average mall.  And it's a scenario the retail industry knows all too well by now:  the combination of big-box stores and the Internet is a one-two punch for bricks-and-mortar establishments.

No amount of trendy remodeling and upscale boutiques can save the average mall if shoppers are convinced they save more money in a big-box environment.  And it's hard for any physical store to beat the convenience of shopping online.

So it looks like both shoes have dropped today.  Bleak has now become the default outlook for malls on both the luxury and mainstream sectors of the enclosed regional mall phenomenon.

I remember my first visit to a mall, back in the mid-1970's, in suburban Syracuse, New York.  The mall was built onto the back of a stand-alone Sears department store, and was called Penn-Can Mall.  Even as a kid, I was in awe of its practicality - particularly in snowy Syracuse - and what I thought was its luxury:  It had its very own toy store!  Not just a toy department, like Sears had.

Penn-Can went defunct in the 1990's, mostly due to the collapsing local economy in upstate New York.  What's left of it is now a car dealership.

Considering the prime real estate upon which both Collin Creek and Vista Ridge malls sit, if they do end up closing, there will likely be no shortage of options to replace their empty stores and enclosed hallways.

In many ways, the American consumer has already moved on, which is why malls across the country are facing a similar fate.

But at least one mall invention will continue to flourish not only in America, but around the world:  the food court!  You can find food courts today in airports, office buildings, schools, and even megachurches.

Shopping tastes may change, but eating tastes still require a personal, physical, in-your-face experience.

Let's hope nobody ever figures out how to Instagram dinner.

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