Traditional mall anchors fading

PHILADELPHIA — The American middle class is disappearing, and with it, the mall anchor store.

The middle-of-the-road shopper, neither low-end nor high-end, who in recent years has become elusive for shopping malls — is the reason why Macy’s, Sears, and J.C. Penney are shutting stores.

• The number of households living below the poverty level has doubled since 2008, according to the U.S. Department of Agriculture’s Food Stamp Program. With that, disposable income has decreased.

• Off-price chain retailers such as Ross Dress for Less, Marshalls and T.J. Maxx, and high-volume, low-price, trendy upstarts such as H&M, Forever 21 are growing.

• Department stores that are the traditional mall anchors tend to have higher prices, and shoppers are looking for the best deals at the lowest prices.

• The enclosed shopping mall, as we know it, also is at a crisis point, what with those challenges and increasing online competition.

“The structural pressures facing malls should show no signs of abating,” said retail analyst Simeon Siegel, of Nomura Securities International. That doesn’t mean all department-store anchors should close.

“Stores provide an experience that e-commerce cannot, so the challenge becomes figuring out the right balance,” Siegel said. “But generally speaking, I believe the growth of e-commerce is going to reduce profitability. For better or worse, it is the new norm.”

That new norm has been nothing less than brutal on the former mall stars, whose glow continues to dim nationwide.

Sears has closed 152 mall stores since 2007. JCPenney closed 40 locations in 2015 alone.

Macy’s plans to close up to 40 stores early this year.

“This is a continuation of a struggle,” said Keith Jelinek, senior managing director for the retail and consumer division at FTI Consulting. “And what we’re going to see in 2016 is a strong market for integration with mergers, especially in the regional markets.”

Fifteen years ago, Jelinek said, there were 20 department-store brands anchoring U.S. malls; now, there are eight. That’s the result of industry consolidation. Macy’s (then Federated Department Stores) merged with May Co. in 2005, meaning the end of the Strawbridge’s and John Wanamaker chains.

“Macy’s, Neiman Marcus, Lord and Taylor, among others, are adding stores that are not on the mall,” said retail consultant Howard Davidowitz. “They are all going in the off-price (direction) because T.J. Maxx and Ross stores are killing them.”

Howard Riefs, a spokesman for parent company Sears Holdings, cited other examples over the past five years in which Sears has rented out space to retailers and restaurants, including Whole Foods, Dick’s Sporting Goods, Nordstrom Rack, Forever 21, and Aldi.