Will Macy’s Store Closures Kill Off More Malls?

As Macy’s deals with the fallout from their recent announcement of poor sales and store closures, the ripples moved throughout the retail industry with news of the giant’s suddenly unstable footing. Not only did pundits light the blogs abuzz, but a forgotten subset of retail workers began wondering just what a world without Macy’s might look like.

For those mall owners and property managers, Howard Davidowitz, chairman of retail consulting firm Davidowitz & Associates, explained to CNN Money how difficult the closure of 40 Macy’s stores will be. Instead of shuttering a kiosk or a small shop, closing entire wings of shopping centers that Macy’s usually occupies could be an irreplaceable loss for most malls in a slowing brick-and-mortar economy.

“How difficult is it to replace Macy’s?” Davidowitz said. “It’s almost impossible. The department store business, it’s the worst segment in retailing. It’s the highest cost operator, they’re not growing, and they’re in a world where the customer is looking for a great deal.”

It’s not as if malls can blame Macy’s for standing back and accepting its fate – the retailer tried everything from store redesigns and backlot outletting to boost sales. However, nothing did seem to increase traffic enough, even through the holiday season, and 40 stores are the primary casualties.

Davidowitz did offer some suggestions on what desperate malls might try to do with their suddenly vacant post-Macy’s space. Since department stores on the upswing and looking to expand aren’t growing on trees, Davidowitz said that some property owners might look into converting the space into commercial offices, condos or even community health clinics given the adaptable floor plans.

However, malls then run the risk of having lengthy and unsightly construction occurring on the premises while customers shop – not exactly the kind of experience failing malls want to start giving off.


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