Here a store, there a store—everywhere a store. That’s the picture painted by the International Council of Shopping Centers for U.S. merchants. According to the trade group, the U.S. has 23 square feet of retail space per person.
In contrast, the U.K. and France each have five square feet per person. Now some of this can be explained by the big box store effect that adds mega-space to the retail footprint. Closest to the U.S. number would be Canada which has 17 square feet per person.
The oversupply of retail space continues to lead to store closings, which are also impacted by rising e-commerce as well. Mall operators are not standing pat, and they are diversifying the mix of mall tenants to include not only more dining and entertainment options, but also to add food stores and healthcare delivery to the properties.
Residential and office space are also being built where feasible. Foot traffic remains the life-blood of mall business and a diversity of the product and service offerings will attract a steady, morning, noon, and night stream of customers.
A Barron’s article, excerpted below, covers more on this topic:
Don’t call this a retail apocalypse. U.S. sales could grow 3.5% this year to $3.7 trillion, after rising 4.3% last year. Rarely has unemployment been lower or consumer confidence higher. The good old days for shopping? Those are happening right now. And yet, U.S. retailers have already announced 7,567 store closings this year, or 4,512 after subtracting for openings, according to industry watcher Coresight Research. That compares with 2,606 net closings for all of last year.
But there is also a simpler force at work: “The suburbs are overstored and undershopped, and experts say only the top 20% of malls are thriving.” That was a report from Women’s Wear Daily some 22 years ago. There has been little improvement since. If Japan in the 1990s was home to zombie banks, the U.S. today is a nation of zombie stores.
There are about 1,350 enclosed malls in the U.S., but only 200 to 400 are needed, says Randal Konik, an analyst with Jefferies. At malls and beyond, the U.S. had 23 square feet of store space per person as of last year, by far the most in the world, according to the International Council of Shopping Centers. The United Kingdom had five; Spain, four; and Germany, two.
Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group