As the retail landscape continues to change, mall owners are finding that they must evolve as well in order to remain relevant with today’s consumer. According to MarketWatch, that’s leading many to realize that their reliance on department stores as a means to drive foot traffic is a theory that’s best left in the past.
Take the case of the CoolSprings Galleria in Franklin, TN. A once thriving Sears store has been shuttered, and rather than replacing it with another big box retailer, the space has been divvied up into smaller sections. The former Sears space now houses a Cheesecake Factory, as well as retailers American Girl and H&M.
“The definition of an anchor has changed. Cheesecake Factory does as much business as Sears used to do,” says Stephen Lebovitz, chief executive of mall owner CBL & Associates Properties.
CBL & Associates isn’t alone in its thinking among mall owners. General Growth Properties has shifted its anchor strategy over the past five years, and has actually taken back space from 65 department stores across its properties. The former department store space is now occupied by tenants that include Wegmans Food Markets, 24 Hour Fitness and Dave & Buster’s.
“The dependence of malls on department stores isn’t what it was 25 years ago,” said Sandeep Mathrani, General Growth Properties CEO.
Mall giant Simon Property Group has been in front of the trend as well. The mall owner has replaced 50 department stores over the past 15 years, and now houses tenants such as Target, Forever 21, and Primark in their place.
Simon’s Florida Mall in Orlando, FL offers an interesting case study in the company’s reducing reliance on department stores. The company tore down both a Nordstrom and a Saks Fifth Avenue, and went in a different direction entirely. The space that Nordstrom used to occupy now houses a Dick’s Sporting Goods and a family geared attraction called the Crayola Experience. Saks has given way to a dining pavilion that houses nearly two dozen restaurants.
Despite the increase in the trend overall, mall owners are facing roadblocks in certain circumstances, as Green Street senior analyst DJ Busch explains.
“Landlords have tried to be more active in buying back space, but there is a big gap in what they are willing to pay and what department stores are asking,” he says.
