Once upon a time, not so long ago, when you shopped for
non-food items, you went to a mall. Malls were everywhere, often just a few
miles apart, and your basic shopping decision was which mall to go to. Now, if you haven’t noticed, things are
different. You buy things on-line – not
everything, because that would trigger panic in the retail community, and there
are no signs of panic. But the trend is
clear.
In Biddeford, a small city near here, a new mall opened a
few years ago. It was the worst possible time to open a new mall, compounded by
the fact that the mall was hopelessly misdesigned, with traffic patterns that
defy motorists to choose the correct lanes to drive in.
So, in a breathtakingly short time, stores began failing.
Lowe’s and a Best Buy, both large stores, were among the first to fold, but
they were not the only casualties. Several restaurants closed or were
sold to new franchisees. A Market Basket
supermarket replaced Lowe’s, undaunted by the existence of three supermarkets
nearby – including a Super Wal-Mart and a Shaw’s within a half mile. A Target
store still stands hopefully in the mall, next to the vacant Best Buy, but few
people expect it to become a mecca for shoppers.
I’m not picking on Biddeford Crossing. The same thing is
happening across America.
There is a sea change underway in consumer shopping
patterns. The old, brick-and-mortar stores are under siege, and it’s hard to
see anything that can change the trend.
Those stores that have successfully added an on-line shopping option
will do better, but the question remains: What will become of all that brick
and mortar?
The effects of the demalling of America will be felt in many
quarters, including employment (that new Market Basket, it is reported, employs
450 workers!) and investment. Best Buy and Target, notwithstanding recent
bounces, sell for about 15 times earnings, while Amazon stock sells for 75
times 2015 earnings estimates!
What will become of all that brick and mortar? Stores will
fail, and malls will disappear. The process will be painful for many employees
and investors, but it is inevitable. Technological change is often painful, but
those who play it wisely will do well.
