Quintessential mall stores from Macy’s Inc. to Kay Jewellers to Gap Inc. are plotting out a post-Covid future — and traditional shopping centres won’t play as much of a role in it.
Signet Jewellers Ltd., which owns chains such as Kay and Zales, said this past week it will expand in off-mall locations while continuing to pull back from the old-school gallerias where it has long had a major presence. The company also plans to add more kiosks in underserved markets.
The move brings “an opportunity for a better economic model,” Joan Hilson, Signet’s chief financial officer, said in an interview. “The foot traffic for off-mall locations is better than what we’re seeing in the mall, certainly in this time. It’s really important, and we see that shift continuing.”
Retailers are abandoning enclosed malls in growing numbers as the rise of online shopping transforms the industry — a trend that has accelerated during the coronavirus pandemic. Almost a third of retail CFOs are planning to scale back their mall presence, according to a recent survey from consulting firm BDO USA.
That’s throwing into question the future of hundreds of traditional malls, already financially struggling before the pandemic, as they grapple with expensive real estate and fewer tenants who want to be there.
“Even the ones that haven’t been distressed are being hurt by the lack of foot traffic in the mall,” said David Berliner, head of the restructuring and turnaround practice at BDO. Some are talking about relocating stores from malls to nearby centres anchored by merchants like Walmart Inc. “because they’re going to get more foot traffic than they’re getting at the mall now.”
Signet exemplifies that kind of shift. The company closed 395 stores last year, mostly in malls, and plans to shutter another 100 this year. At the same time, it has shifted 33 mall stores to off-mall locations. Some of its outlet stores, primarily Zales locations, are now in so-called lifestyle centres — open-air markets with dining and other activities — and in locations next to popular stores like Ross Dress for Less. Signet’s Kay bridal business, in particular, is doing better in off-mall locations than the enclosed shopping centres.
