Between 20 and 25 percent of America’s shopping malls may close in the next five years, according to a new report from Credit Suisse.
Online commerce activities continue pushing people away from traditional brick and mortar retail. While the percentage may seem staggering, some on Wall Street think that Credit Suisse is being conservative in its prediction.
“There are a lot of malls that know they are in big trouble,” Ron Friedman, a retail expert at Marcum, told the Los Angeles Times. “It’s more in the 30 percent range.”
Brick and mortar stores are competing with online retail, and the internet is winning. Store-closing announcements are made almost daily, with Michael Kors announcing Wednesday that it may close as many as 125 of its stores.
J.C. Penney, Sears, and Macy’s have all announced store closings in recent months as they struggle to keep up with evolving consumer habits.
Stores that are doing well are ones that are not usually located inside a mall. Ulta Beauty, T.J. Maxx and The Home Depot are the fastest growing retailers, but they are not stores that subscribe to the old model of a fixed location where stores come together under one roof.
Low end malls are set to bare the brunt of the closures, although demand for high end shopping inside physical stores is also experiencing a slump.
Consumers now shop online for products, using e-commerce websites like Amazon. As e-commerce sites speed up their delivery time, brick and mortar retailers continue to suffer.
While there were 5,000 malls in the United States at the height of mall culture, only 1,100 malls exist today, with another 400 expected to close.
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