“The anchors are dying! The anchors are dying!”
Who among us in the retail real estate biz has not felt that pang of fear after reading an article containing a similar Chicken Little-like mantra? The mall world is challenging today with dying anchors and others with tepid sales. When you start to think about this your palms begin to sweat; your heart skips a beat; and all of the sudden that fantastic lunch you ate an hour ago isn’t feeling so fantastic. What do you do? The way I see it is you have two options: (1) You can continue about your day ignoring the all-but-consuming anchor panic, or (2) you can begin to develop an anchor strategy that works
for your center.
Unfortunately, too many malls are sitting still and choosing Option 1. As a glass-half-full guy, I’m always going to choose Option #2. Why? Because (1) it is never a good idea to stick your head in the sand, and (2) anchors are not dying. The traditional mall model is simply changing and this evolution is healthy for retail. Yes, the anchor landscape in the future is going to look different, perhaps with 1 or 2 anchors versus the current 3 to 4, but the change doesn’t have to be panic ensuing. There are solutions to your anchor woes. Here are just a few:
- WHEN IN DOUBT, REACH OUT. Don’t just assume you know what is going on with your anchors. We hear rumors of what’s going on with Macy’s, JCPenney, Sears, Belk and others, but real estate is local. Your anchor may not be mirroring their corporate trend. Ask! Ask what you can do to help bring business through their doors. Work with them. Don’t let thinking thoughts such as an anchor being hesitant to share sensitive information stop you from trying. Both the mall owner and the anchor have a vested interest and each want the mall to succeed.
- CONSIDER UNORTHODOX PROSPECTS. I wrote a blog a while back in which I suggested that
future malls will be “alls.” I still believe this to be the case and highly recommend courting unconventional anchors such as gyms, colleges and entertainment providers. By courting these types of unorthodox anchors, you will in turn be courting the Millennials who do not shop at conventional anchor stores. Too many mall owners today are reluctant to go this route and are sticking to the traditional model. Some of these slow-poke owners are afraid if their mall morphs into more of a hybrid center that their valuation will be hampered upon exit or re-fi. Valid concern, but I would argue that a center is better off with non-traditional anchors than trying to maintain the status quo.
- CONSIDER SHOPPING CENTER ANCHORS. It used to be that there were anchors for malls and others for shopping centers. That line has been blurred or maybe now even obliterated. Think T.J.Maxx, Party City, HomeGoods, Marshall’s, DSW, Michael’s and Ulta. These stores generate traffic, so consider adding stores like these to your lineup. You will see an increase in traffic and a jump in gross volume. The combination could be a win-win for both parties.
- KNOCK-DOWN & REDEVELOP Yes, redevelopment can be scary and redeveloping your center or de-malling your property doesn’t come without risk. However, what should be even more frightening is owning a mall with zero value, having let the opportunity to redevelop pass you by. The new mall model includes pivoting more toward mixed-use with public spaces. Those mixed-uses could include multi-family, hotel and medical offices and other historically non-mall retailers like grocers and service providers such as spas, wellness centers and fitness clubs. Trying to edge your sales per square foot up in the hope of stabilizing your mall doesn’t work. As an industry we are too focused on sales per square foot. The focus should be on gross volume and creating a center with a powerful gross volume, which happens with the right mixed-use formula.
I like to think that when it comes to change, whether you are young or close to departing from this earth, one concept remains true – IGNORANCE IS NOT BLISS. Know your options and above all, take action. The Chicken Little’s of this world can continue to shout their “malls-are-dying” mantras ‘til their little hearts are content, but you don’t have to listen to them. Sure, the mall model is evolving, but your property can be positioned for future success. Trust me, when your old school mall begins to die, you will regret not making changes and taking action.