It’s hard to believe that malls aren’t cool anymore. From the ’80s to the early ’00s, malls were the place to shop, hang out with friends, and wander aimlessly. Whether you were buying a CD, looking for a pair of Jnco jeans, or trying to impress a romantic interest, everything happened at the mall.
These days, malls are the least cool place to be. Sure, they have Apple Stores and sweet discounts on suit shirts. Yet in a world filled with online stores that deliver products in a day or less, you don’t need to go to a mall to buy anything. Heck, you don’t even need to leave your home.
Changing consumer habits and the ease of online shopping is driving popular mall shops to shutter in droves. No longer can you shop for children’s at the Limited, because the company no longer exists. If Macy’s, Sears, and JCPenney keep losing money and customers, they might soon follow suit. Worst of all, if a recent prediction from Credit Suisse comes true, you might not be able to visit your local mall at all.
Twenty-five percent of all malls could close in the next five years.
Anywhere from 220 to 275 out of the 1,100 existing malls could close up shop in the U.S. between now and 2022, according to Credit Suisse. The Swiss financial giant predicts these malls will close up shop as the American retail market continues to decline. After all, if stores keep closing, who’s going to pay the mall owner rent?
Say what about the retail market?
The American retail sector is currently in the midst of a serious decline. Everyone from Abercrombie to Zara is seeing a drop in store sales and in-store shoppers. The big dip in revenue is forcing some retailers to shutter tens, if not hundreds of stores at a time, laying off thousands of workers in the process. This affects everyone from big box stores like Target to mall stores like the now-defunct Bebe. While online shopping and different spending attitudes have a major impact on this decline, some experts believe there are simply too many stores to begin with.
What does this mean for malls?
The average customer shopping for clothes no longer cares about malls. They care about getting the best deal for the lowest price. Online stores and discount retailers like Burlington and H&M offer fashionable outfits for significantly lower prices than your average mall store. According to Credit Suisse, this change in spending will cause 8,640 mall shops to close in 2017 alone, the highest number of closures since 1999. With no stores around to woo customers or pay rent, what purpose will a mall serve other than taking up space?
Should you invest in retail?
Not all retailers are facing a decline. Companies like Home Depot ($HD) and Best Buy ($BBY) are doing rather well in sales and on the stock market, unlike department and clothing stores. These stores, however, exist outside of malls, and might actually take business away from them.
If you really want to invest in the retail market right now, be sure to consult our guide on high-performing retail stocks. You should also do your research on the retail industry before you even think of investing. Otherwise, you might want to wait to see how the industry performs in the current months. Chances are that a handful of retail companies — including several mall mainstays — might not be here by the year’s end.