I've written the phrase "it's been a tough year for retail" more times than I can remember.
Not to sound redundant, but yeah, it's been a very tough year for retail. And it's only April.
Retail jobs fell by 30,000 in March, more than any other industry sector, according to the most recent U.S. jobs report by the Bureau of Labor Statistics. Macy's announced it would close more stores, including the one that recently shuttered at University Mall in Tampa. The Sears department store closed at Tyrone Square Mall after nearly 50 years of operating there to make room for a future Lucky's Market and Dick's Sporting Goods. And with debt piling up, the future of what was once a household brand name, Sears, is as uncertain as ever.
Nine retailers have filed for bankruptcy so far this year — as many as in all of 2016. Sports Authority, Payless Shoe Source, hhgregg, The Limited and Wet Seal, are among those we saw disappear in Tampa Bay. Even the analysts, who have mostly been upbeat about the evolution of retail at least in the six years I've been writing about it in Florida, seem grim about the future.
"It's different this year. It just seems as though we have never seen this many store closings announced so soon in the year. It's a lot of big boxes and square footage," said Jeff Green, a retail analyst based in Phoenix. "It's surprising, but I think some of them might actually go away for good."
In a lot of cases, including for Macy's, retailers have been "overstored" or had more locations in a market than made financial sense. For example, sleepy Sarasota clearly didn't need three Macy's department stores.
"More and more of these big box retailers just want to get out of their leases," said Britt Beemer, chairman and CEO of America's Research Group. "Malls are struggling and fewer people are going to them. Back in the day when business was good, retailers like Macy's were forced to open stores in mediocre markets in order to get into the malls they really wanted to be in. That pressure came from the mall owners and developers. But there's not enough profit dollars these days to carry the bad stores anymore."
So with major anchors pulling out, real estate developers have had to get creative over the years to find new uses for big empty spaces at the mall. We've seen the subtle changes in bay area malls as new brands that aren't department stores have taken over anchor spaces. Sears leased part of its anchor space at Westfield Countryside in Clearwater to a Whole Foods Market grocery store. Another grocery store is taking the Sears space at Tyrone. A Costco Wholesale opened in a former Dillard's spot at a Westfield mall in Sarasota.
In 2014, an upscale spa and health club called Life Time Athletic opened next to Nordstrom in International Plaza. It filled a space left vacant by furniture retailer Robb & Stucky. University Mall is making room for a 37,000-square-foot "health club" as part of an overhaul of the 41-year-old property near the University of South Florida. It's replacing a JCPenney department store.
"Malls have generally been reinventing themselves over the years," said Roger Hirschhorn, chief operating officer with RD Management, the owner of University Mall. The developer has added two new restaurants to the mall and will add apartments in the future. Dillard's announced this week that it would move into the former Macy's space at the Tampa mall to take advantage of its better visibility along Fowler Avenue. "As a company, we are in the process of doing several mixed-use centers and yes, we think University Mall is well poised to be redeveloped into a mixed use center."
Furniture stores, bowling alleys, restaurants, even Target stores and Dave & Buster's entertainment centers have filled empty big-box spaces in shopping centers around the country. It's a move that is supposed to give shoppers more reasons to visit a mall again and again, but analysts say relying on entertainment alone might not be enough to save these hulking, aging pieces of prime real estate.
"They're still trying to see what works," said Beemer. "It's not going to be pretty for a while. It will be the end of department stores that aren't profitable."
So the experimentation will continue. Discount retailer TJ Maxx opened a store inside the struggling Gulfview Square Mall in New Port Richey. Macy's may begin moving its Backstage concept, a separate store brand aimed to be a stand alone outlet store, into the department store, Green said. Sears spun off a separate real estate company called Seritage Growth Properties which is listing Sears department store spaces for rent, sale and redevelopment across the country. So far the real estate business has been lucrative, analysts say.
"For Macy's, it's a way for them to shrink the square footage," Green said. "We will see some change, for sure. But malls are still some of the best real estate in the country. They do have longterm viability, but it's going to require multiple solutions and there's no fix right now."
Contact Justine Griffin at [email protected] or (727) 893-8467. Follow @SunBizGriffin.