A Mall Story: Surviving in the Internet Age

Jul 12th, 2017 | By | Category: Featured

MallPicBy Sarah Glenn/For the Journal

CHUBBUCK – In malls across America on a chilly April day, metal gates slowly began rattling down at defunct JC Penny stores. That spring, 21 other mall-based retailers announced closures.

Retail analysts went wild but in Southeast Idaho, hardly anyone noticed. The JC Penny at the Pine Ridge Mall wasn’t on the list of locations the company was going to close. Neither was the Payless Shoe Source. Or the rue21 – each companies that announced sweeping closures.

In an age of when retail is slowly dying, a small, old mall in quiet Southeast Idaho has managed to grow its occupancy rate by almost 10 percent in the past two years. About 90 percent of the Pine Ridge Mall is now leased. The former Sears location is still being leased by Sears, although it remains unoccupied.

The phenomenon is strange. Across America, occupancy rates at the average American mall are flat, if they aren’t slightly decreasing. Real estate analytics firm Reis reported that the vacancy rate for regional malls (on the scale of Grand Teton or Mall of America) was 7.9 percent in Q1 2017, up from 7.8 percent in Q4, and up from 7.8 percent in Q1 2016. This is down from a cycle peak of 9.4 percent in Q3 2011.

“The Pine Ridge Mall is able to be successful in this economy by redefining what a shopping mall is; by offering alternative uses such as C-A-L Ranch, Level Up, Jump In, Grace Church and others, we provide relevant services, experiences, and entertainment that can’t be purchased online,” said Drake Taylor, the mall’s general manager. “These alternative uses, in turn, contribute to our success in bringing more customers to our traditional retail merchants.”

Growth at the property has been extensive over the past year. From 2016 to now, the mall has leased more than 32,000 square feet of inside retail space, Taylor said. In addition, Deseret Book and clothing retailer rue21 expanded into empty, neighboring storefronts. Shoe retailer Shoe Dept. Encore plans to do the same when it opens later this year, taking up six formerly empty spaces.

Here is a list of the JC Penny stores that are closing across the U.S.

Outparcels on the sprawling 73 acres that Pine Ridge owns also added profitable square footage to the mall’s books. These additions included Hobby Lobby (60,000 square feet), Discount Tire and a small office strip that includes FedEx, SuperCuts and Aspen Dental.

While the Pine Ridge Mall might be filling it’s space and bucking a national trend, local consumers are still generally unimpressed.

In an unscientific Facebook poll, Journal readers overwhelmingly wanted a book store and children’s retailer in the mall.

“I would spend more time at the mall if there were a bookstore,” said Bobi Dixon. “I have to go to Idaho Falls to go to one, and just do the rest of my shopping there since I’ve already made the trip.”

“We do not have any children’s clothing,” Krystle Vollmer added. “That is why I mainly go to Idaho Falls and do all my shopping. We need a Target, Old Navy, Kohl’s, Carter’s, Children’s Place …. just something!”

Retail analysts agree that experience-centered shopping and stores where people can meander increase foot traffic. However, the retailers themselves are falling on hard times. Children’s retailer The Children’s Place is closing 300 stores by 2020 and refocusing on growing e commerce sales.

Read the Forbes article on retail closings

Betty Chen, managing director of Mizuho Securities, told Forbes that looking ahead, “Alternative sales channels may become more critical in the future. The Children’s Place continues to grow the wholesale business with the rollout of a replenishment program with Amazon.”

Mall management shares the woes and wants of local shoppers.

“While we cannot comment on negotiations before a deal is done, you can be assured that if you know the name of the retailers, we have approached them with aggressive deals to get them back to this market,” Taylor said. “Many times, the national tenants are not expanding or will not return to a market they have left .”

Survival in an age of changing retail habits

Today, in the age of e-commerce and in-app smartphone shopping, the mall experience has changed. Shoppers who used to wander the fluorescent-lit halls of a mall now get the same experience from the comfort of their own couch – without having to move more than a finger on their smart phone. A host of online reviews and coupon comparing has given brick-and-mortar retail a run for its money.

Two stores at the Pine Ridge Mall recently announced opening dates, and a third is remodeling. Discount Tire, top, will open on Oct. 1. And Pro Image Sports, bottom right, will move into the former Aeropostale location on Sept. 15. Further, rue21 is adding 2,600-square-feet of space, as well as a plus-size line as part of a major remodel. (Submitted Photo)

Two stores at the Pine Ridge Mall recently announced opening dates, and a third is remodeling. Discount Tire, top, will open on Oct. 1. And Pro Image Sports, bottom right, will move into the former Aeropostale location on Sept. 15. Further, rue21 is adding 2,600-square-feet of space, as well as a plus-size line as part of a major remodel. (Submitted Photo)

According to Greenstreet Advisor’s 2017 Retail Sector Outlook report, e-commerce market share gains and anchor obsolescence remain the key risks for malls in the coming years. In addition, apparel, a category that was long thought to be immune to e-commerce, has been one of the fastest growing online businesses over the past few years and the pace of growth is expected to continue.

If malls want to survive, they are going to have to get creative, the report says.

“Better quality malls are adapting and introducing ‘internet resistant’ concepts such as restaurants, entertainment and services,” said Green Street managing director DJ Busch. “Mall landlords have been working diligently to diversify merchandise mixes and reduce exposure to the apparel category. Non-traditional mall tenants are opening across the quality spectrum.”

At Pine Ridge an entire wing is leased by Level Up, a suite of entertainment and experience-based businesses.

Steve Brown, left, and son Brandon started a new play place at the Pine Ridge Mall in Chubbuck called Jump In. It has an area with several bouncing toy structures and a place where youths can work on climbing skills. (Photo by Doug Lindley/Idaho State Journal)

Steve Brown, left, and son Brandon started a new play place at the Pine Ridge Mall in Chubbuck called Jump In. It has an area with several bouncing toy structures and a place where youths can work on climbing skills. (Photo by Doug Lindley/Idaho State Journal)

“Most people believe, based on what they see in the media, that Amazon and online purchases are ‘killing’ shopping centers and bricks and mortar retail outlets,” Taylor said. “Total online purchases equate to about 12 percent of retail purchases. While this is a significant amount, there are other factors that have impacted many shopping malls and the retailers that have traditionally leased space in them. One major influence in the shopping environment is the off -mall retailers that have grown significantly in the last 15 years. Ross and TJMaxx are good examples. Ross has grown to more than 1,500 stores and TJ’s parent company TLX now operates over 3,800 stores. Much of this business was at the expense of mall stores and anchors who did not adjust to changing shopping patterns. There are many more options available today to shoppers.”

So what do mall owners do?

At Pine Ridge Mall, ownership has transitioned to a more hands-on role in the past years. In November 2013, General Growth Properties sold the mall to Farmer Holding Co. for $9.05 Million. Today, the mall is still owned by Farmer’s Holding Co. and its management group is Capital Real Estate Services.

“When it comes down to it, the mall is making leaps and strides toward becoming what Pocatello really needs,” said Debbie Spoja, owner of Laneige, a bridal and formalwear store inside the mall. “The new owners are amazing to work with and they are making great changes to bring in bigger name companies.”

LaNeige Bridal

LaNeige Bridal

Laneige bought out the Tuxedos Now business that was just inside the mall’s northeast entrance in early 2016. In August 2016, they expanded and remodeled.

“In most locations, malls are sitting on the best real estate in their markets,” Taylor said. “This gives us the opportunity to adjust to changing customer habits and create environments that are relevant and attract customers to our centers today. Much of the growth since the great recession has been in fast food and fast casual dining. Additionally, centers have adjusted by adding alternative uses, such as service and entertainment as well as retailers that would not have been a part of the traditional anchor line up previously. C-A-L Ranch is a good example of this.”

Can Pocatello support a thriving mall?

While many across the area long for a booming retail oasis, others more practical know that business is driven by demand.

“I think we need to look at the bigger picture,” Anita Aguilar said on Facebook. “Pocatello doesn’t have the economy to support a nicer mall. … Pocatello needs to focus on bringing in higher paying jobs, then look at the mall situation.”

Idaho Population Growth Rates by CountyA new forecasting model produced by the Idaho Department of Labor projects that the statewide population will increase by 15.3 percent from 2015 to 2025. This projection estimates that the state population will reach approximately 1,907,000 in 2025. Annual total population growth in Idaho is now projected at 1.4 percent — almost three times as high as the national growth rate.

population-growthHowever, the Southeast Idaho area is projected to grow at an annualized rate of 0.7 percent through 2025. The statewide annualized total is 1.4 percent.

“We are not yet where we want to be at Pine Ridge Mall, but there has been significant investment and progress toward the goal of offering a first-class shopping experience

to the Chubbuck/Pocatello market,” Taylor said. “Our friends in the market can contribute by shopping locally for what is available locally. We understand that if a product is not available locally, customers will go to Idaho Falls. However, we frequently get comments about options not being available here that are, in fact, available in the Chubbuck/Pocatello market.”

Some have noticed the changes the mall has made.

“I actually think the mall is kinda nice,” Samantha Williams said on Facebook. “It’s not overly crowded so you can take a relaxing trip there. I do agree the lighting needs to be updated, bathrooms need updating, food court is pretty much non-existent, and of course it’d be nice if we could get some more people renting space with stores like Victoria Secret,a bookstore like B&N where they have kids section and most the time some type of toys they can play with while

you read or take a break, kids clothing store, and maybe an Old Navy-type of store.”

According to Taylor, Pine Ridge Mall will continue to try.

Here is an op-ed from mall management detailing a few upcoming changes and evolutions at Pine Ridge.

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