Charming Charlie store front

Charming Charlie's store front at the University Mall in Orem is pictured on Thursday, July 11, 2019.

With big box stores like Payless Shoe Source, Sears, Gymboree, Charming Charlie and more declaring bankruptcy and closing nearly all of their stores, it’s easy to think the end of retail as we know it is near, and places like malls will soon become relics of yesterday.

However, according to IHL Group, a research and advisory firm specializing in retail and hospitality industries, things aren’t as bad as they seem — in fact, while 2018 was a year of store closings, 2019 so far is a year of growth for most retailers.

Health of national malls

According to a research study by IHL Group, since January 2017 the U.S. retail industry has increased sales by $565.7 billion and 8,575 stores. In their research, IHL reviewed 1,660 retail chains in the U.S. market with over 50 stores; 64% of chains reported increases in stores. Just 20 companies represent 75% of all net closings in the report for 2019, the report states.

Overall, the report found that for every chain with a net closing of stores, roughly five chains open stores.

“The health of retail is widespread, those retailers that are sick are limited to a focused group of retailers,” the report states. “In general, we see company-specific issues in the companies that are closing stores or are going bankrupt, not a systemic overall retail issue.”

According to the report, grocery, drug and mass merchant retail continues to perform well, while department stores, sports/hobby/book stores and electronics/appliance stores have been in decline. In line with this, the report noted there could still be trouble ahead for malls that have relied on department stores like Macy’s and J.C. Penney to “anchor” them. The report states some analysts have predicted one in four malls may close by 2022.

IHL included suggestions for how mall owners could improve on their end to ensure the stores still occupying the space can thrive. Tips include driving traffic by using non-traditional anchor replacements, including some kind of fitness and healthcare offering since those are key drivers currently, and upgrading infrastructure.

Non-traditional anchors could include grocery or drug stores, or even restaurants.

“Consumers come to stores for expertise and experience,” the report states. “Malls must transition to help drive more traffic for these purposes.”

How are local malls adjusting?

University Place in Orem started making the transition to be more than just a mall years before large national chains began closing. After 100 years in business, Sr. VP of Development and Acquisitions Jeff Woodbury said the Woodbury Corp. has experienced a lot of changes in the business and real estate environment, and so the company constantly works to adjust their investment models and be able to adapt to changing landscapes.

One of the key things Jeff Woodbury said has changed is how retail centers are designed — from being a one-stop shop people drive to, to becoming more of a central gathering place. In recent years, University Place has expanded beyond retail and restaurants to include apartment buildings, a park and more, encouraging people to not only shop there, but spend hours at a time or even live there; there are even plans to break ground for a hotel next year.

“The key to retail success is customers. And so the more customers that you have, the better those retail businesses will do,” Woodbury said. “So how do you increase the amount of people at the space?”

Woodbury believes walkable centers will become more and more desirable and common.

“If you’re going to quit driving, you have to live there, where you want to be entertained, where you want to shop, where you want to eat,” he said. “We’re trying to look at all our retail properties, look at our communities, and have those become living centers.”

Walking around the Provo Towne Centre mall, there are several vacant storefronts — but it’s clear the mall is working to incorporate more non-traditional retail, housing things like the Neighborhood Art Center, an escape room and more. Both Towne Centre and University Place also have emphasized housing local businesses over national chains; Towne Centre has local businesses like MySpine and Eborn Books, and University Place houses a Mr. Mac.

“Malls have always been a place for commerce in general, whether that’s a local concept or a national concept,” said Scott Bowles, Provo Towne Centre manager, in regards to the mall’s future as it pertains to national chains.

Woodbury said local businesses have always been a focus for the company, and often lead to better outcomes in economic downturns.

“We feel like local businesses, because they have the local attention, have a tendency to do better than the businesses that are being managed from a remote place,” Woodbury said. “Our lifeblood ... (is) basically local businesses ... businesses that have personal attention generally do better.”

Woodbury said it comes down to continually coming up with ideas and opportunities to bring to University Place, and in his opinion if property owners aren’t continually looking for new ideas and opportunities, they’ll likely be hit harder when trends change.

In short — malls aren’t going away. But in the next five, 10, 20 years, they might look a lot different.

“The class of the enclosed regional mall will change and will continue to change,” Bowles said. “It’s infrastructure. It can change.”

Carley Porter covers northern Utah County and business for the Daily Herald. She can be reached at cporter@heraldextra.com.

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