9.10.13: Decline of Enclosed Mall Appears Permanent

The demise of many big-box and department-store retailers has led to a decline in large enclosed malls that won’t reverse itself any time soon — if ever – according to panelists of the International Council of Shopping Center’s (ICSC) Western Division Conference in San Diego, CA yesterday. Speakers opined that the days of the department store-anchored mall are gone, but many retail models are emerging to replace it.

One of those trends is outlet centers, according to Speaker Michael Marino, executive vice president and division manager for Wells Fargo Bank; he said his firm has financed two or three, even during recent difficult financial times. Another trend is Hispanic grocery-anchored local centers; Mark Schurgin, president of the Festival Cos., said his firm is currently developing eight. And speaking of grocery stores, trends in this area abound, from Internet-ordered groceries via Amazon.com, according to Terry Evans, vice president of the Kroger Co., to retailers like Target adding grocery aisles to their floor plans.

“The Internet use of grocery is one of the biggest trends we’re seeing,” said Evans. “It’s a trend we’re studying and continuing to look at.” The trend is a concern to grocery retailers like Kroger, who don’t want to see their market share eaten up by former non-grocery retailers.

Also growing is the size and number of grocery stores, according to Evans. Kroger’s stores now range from 75,000 square feet to 125,000 square feet, and Evans expects to add 150-175 new major projects over the next three years. He also said that consolidation is not over in the grocery business, and we will hear about other deals taking place over the next couple of years.

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