Retail

Could Macy's Trouble Kill One-Third Of America's Malls?

Macy's cratering retail performance has at least one analyst concerned that as many as one-third of America's malls could be in danger of closing over it.

The current predictions from mall performance are less than stellar — of the 1,100 or so malls left in the United States, conservative experts are calling for 33 percent failing, while alarmists out there are predicting bigger figures in the 50-percent range.

Malls are continually trying to re-invent and redefine the mall concept, but at this point most malls (particularly smaller, regional ones) are incredibly dependent on anchor stores to drive foot traffic and Macy's, America's most common anchor store, is looking to thin its herd.

Holiday sales were in the gutter for Macy's, prompting the announcement of 40 stores closing. The picture did not get any better with the latest earnings figures out of Macy's — and now the iconic American firm is predicting declines of 3.5 percent to 4.5 percent in their sales this year.

And this, according to retail analyst Jan Kniffen, is some bad news for malls, because ultimately Macy's only needs 500 of its 800 locations. Which means lots of malls that rely on Macy's are about to close.

“On an apples-to-apples basis, we have twice as much per-capita retail space as any other place in the world. The U.K. is second. They’re half of what we are. So, yes, we are the most over-stored place in the world,” Kniffen said.

Adding to the trouble, notes Kniffen, is the fact that Macy's is not the only brick-and-mortar retailer looking around and realizing they need a lot fewer bricks-and-mortar trowels.

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