Why Malls Are Getting Mauled

[carrington]

Why Malls Are Getting Mauled by Jeff Jordan predicts a bleak future for large brick-and-mortar retailers and - in turn - for commercial real estate. The article includes tables and charts that illustrate sluggish retail growth among the top 100 retailers of 2012. (Who knew that Game Stop has more stores than Wal-Mart?)

Read the article here: http://allthingsd.com/20121221/why-malls-are-getting-mauled/

How do we think that this will affect radio? Does it mean more ads for online business? Does it mean fewer ads from local, direct merchants? Or, is there another opportunity here?

 

[landtuna]

My market may be bucking the national trend because, by all accounts, the malls here in Central Arizona are mobbed almost year round. I think I know some of the reasons.

In the "old days" we had downtowns. That was where all the major stores were and also the theaters, restaurants and other places of shopping and entertainment.

Today we have malls which accomplish the same fundamental purpose. Malls are a one stop place to shop, see a movie, eat dinner (or lunch or anything in between) and for the younger set, just hang out with friends. None of that can be replaced by online except for shopping and then only partly.

Stores that deal in "boxed items" like books, appliances, electronics etc., are at risk because those items can be compared and bought, usually for less, online. Stores that offer special services (Nordstrom), clothing, housewares and the like are better equipped because they offer a "browsing experience" that does not exist online.

I'm just touching the tip of the iceberg here but I think it is a pretty good summary of how shopping is changing. In short, malls offer more than shopping and online does a better job of offering items that are not emotional buys (like clothing).

I don't think I have ever heard a radio ad for an online service and not many for malls. They may exist in other markets but not apparently here - of course I don't listen to a lot of radio either and when I do it has been the HD2's which don't tend to carry lots of commercials. Most of the mall advertising tends to be on TV, not radio.

 

[davideduardo]

How do we think that this will affect radio? Does it mean more ads for online business? Does it mean fewer ads from local, direct merchants? Or, is there another opportunity here?

Online tends to use online advertising. They know their consumer shops online, so why waste money on spillage reaching non-buyers? It's more advantageous to pay for search positioning or headers, targeted advertising on portals and other sites, etc., because it is the equivalent of point-of-purchase.

What this really says is that unless a "station" is also online with a definite mobile footprint, sticky content and added enhancements, it will miss out on the direction advertising is taking today.

 

[davideduardo]

My market may be bucking the national trend because, by all accounts, the malls here in Central Arizona are mobbed almost year round.

Many malls serve as year round recreational centers... in AZ, there are even "health hints" online about going to the mall and walking in air conditioned comfort during the summer months. Kids hang around them, just as they hung around the legendary "malt shop" 60 years ago.

Mall traffic is not an indication of sales. In fact, many people go to malls and big box stores to check out items which they will then order for much less online.

Just to the north of you, there's a big mall in Prescott. A third of the stores are vacant and a number have been taken by things like a mini-Public Library and a storefront for one of those online universities. You could drive a steamroller through the mall and not hurt anyone on most days... and that's in a market of nearly 200,000 persons.

As to the comment that clothing is not an emotional purchase... except for some menswear, that just ain't so.

 

[landtuna]

Many malls serve as year round recreational centers... in AZ, there are even "health hints" online about going to the mall and walking in air conditioned comfort during the summer months. Kids hang around them, just as they hung around the legendary "malt shop" 60 years ago.

Malls have the advantage of being largely indoor facilities. They are cool in summer in AZ and warm in winter in MN and dry all year round in VA. Parking is free and plentiful and none of the hasstles of shopping in the old "downtowns".

BTW, I hung out 60 years ago but it wasn't in the "malt shops" of Ozzie and Harriet. It was at the drive-in - one of which was at either end of town and the kids with cars (and those who knew them and could get a ride) would circle from one to the other seeing and being seen. Just like they do at malls now days (except where the cops have chased them off).

Mall traffic is not an indication of sales. In fact, many people go to malls and big box stores to check out items which they will then order for much less online.

And this is why the previously referenced article said some Big Box stores are in trouble. Because the same items you can buy there are also available on the cheap online.

But the stores I was referencing are usually in the malls and not in outdoor strip shopping centers. And although there are a ton of kids who don't buy anything there are tons who do. Just check out any food court.

Just to the north of you, there's a big mall in Prescott. A third of the stores are vacant and a number have been taken by things like a mini-Public Library and a storefront for one of those online universities. You could drive a steamroller through the mall and not hurt anyone on most days... and that's in a market of nearly 200,000 persons.

Prescott is not in Central Arizona (more specifically the Phoenix metro area to which I referenced). Secondly, some areas have been seriously overbuilt with malls when the Great Recession hit. The same thing affected the Phoenix area but it has bounced back a lot quicker because of the improving economy and population. Developers are still opening up new malls evidenced by the grand opening of the Tanger Mall on the west side near Cardinal stadium.

As to the comment that clothing is not an emotional purchase... except for some menswear, that just ain't so.

I meant to suggest that clothing, among other purchases, tends to be very emotional, especially for women. My bad.

 

[TheBigA]

Years ago, people predicted the death of movie theaters. Who needs to go out to the theater when you have a home theater? The answer is that people like to go out. To theaters, to stores, to restaurants, and other places that can be duplicated at home.

 

[landtuna]

Years ago, people predicted the death of movie theaters. Who needs to go out to the theater when you have a home theater? The answer is that people like to go out. To theaters, to stores, to restaurants, and other places that can be duplicated at home.

The attendance of movies has changed quite a bit from those of youth when adults made up the vast majority of non-Saturday morning attendance. Now the big draws are parents taking their kids to see cartoons and Disney movies and teens and 20-somethings.

Personally, I won't attend a theater showing again. Rude people on their cell phones, high ticket prices, uncomfortable seats, volume too loud and the inability to interrupt the movie for *ahem* other functions (popcorn, what else were you thinking?) mean I will watch movies on my home theater. Much more enjoyable.

 

[TheBigA]

It seems to be a trend world wide and we may be the laggards.

Depends on the city...one of my favorites is in Santa Monica CA. Not uncommon for various NYC streets to be blocked for various street festivals. Then there's Times Square on New Year's Eve.

 

[ChiefOperator]

Perhaps a bit off topic, but a real threat (already seen) to local radio sales is the rise of chains and the decline of local businesses. The local businesses will buy local. And when there are many local businesses offering the same services, the owners look to radio for advertising. But as the chains move in, they buy national and really don't look at the local stations.

A few months ago, I had to move from a town that had a "formula business" ban (yes, the concept is legal according to the courts). Basically, there was only a certain number of chains that were grandfathered. Any new businesses could not be part of a chain unless one of the other chains closed; thus, most new businesses were locally owned. So, unlike most other similiar size towns with five Starbucks, this town had only one and about four or so local coffee houses. The ratio was similiar for the other businesses. Besides being a great place to live, the local radio station there did quite well because the local businesses were in true competition and made a lot of local buys for a competitive edge. In addition, because the local retail businesses used local attorneys, local accountants and so forth, those folks advertised as well. Another plus for local radio was that the local businesses had more of a "Buy Local" mentality and were willing to support local radio.

It comes down to this: Anyone getting into local (small) radio really needs to look at the retail landscape. If it's dominated by chains, you're in for a tough haul I would think.

PS: DavidEduardo: your website is very cool. Thanks for the link!

 

[TheBigA]

A few months ago, I had to move from a town that had a "formula business" ban (yes, the concept is legal according to the courts). Basically, there was only a certain number of chains that were grandfathered.

I've read about these...very interesting from an urban planning POV. Surprised there haven't been more of these. Instead, it seems most communities fight to attract Wal Marts and other chains for the jobs and tax revenues they bring.

Inner cities were first killed by riots in the 60s and the move of the middle class to the suburbs. Then the rise of retail chains. All of that had an effect on radio, but it's often overlooked because it happened around the same time as other regulatory and organizational changes in radio. Put it all together, and it can be devastating to small local radio, and ultimately led to the need for radio companies to look beyond traditional local advertisers for revenue. Just one of the reasons why radio changed during the past 25 years.

 

[adma]

Inner cities were first killed by riots in the 60s and the move of the middle class to the suburbs. Then the rise of retail chains. All of that had an effect on radio, but it's often overlooked because it happened around the same time as other regulatory and organizational changes in radio. Put it all together, and it can be devastating to small local radio, and ultimately led to the need for radio companies to look beyond traditional local advertisers for revenue. Just one of the reasons why radio changed during the past 25 years.

Though if you're up on more recent trends, they involve the middle class moving back into the inner cities. But it's the kind of "middle class" that's not terribly likely to be within traditional commercial radio's orbit--which happens to be another of those reasons why radio changed during the past 25 years.

 

[TheBigA]

Though if you're up on more recent trends, they involve the middle class moving back into the inner cities. But it's the kind of "middle class" that's not terribly likely to be within traditional commercial radio's orbit--which happens to be another of those reasons why radio changed during the past 25 years.

I'm actually one of those who moved back into the city. The problem I'm finding is I have to travel to the suburbs to do my shopping. The stores and services are all still out there.