Rural malls hit hard times, leaving shoppers adrift as more stores close (2024)

Rural malls hit hard times, leaving shoppers adrift as more stores close (1)

OTTUMWA, Iowa -- This city's Target store is gone.

So is Kmart, MC Sports, JCPenney, Vanity and soon Herberger's, a department store.

"The mall is pretty sad," says Amanda Cain, a teacher and mother. "Once Herberger's closes, we'll have no anchors."

About two-thirds of Ottumwa's Quincy Place Mall will be empty with Herberger's loss.

Bon-Ton Stores, of which Herberger's was a part; Toys R Us; MC Sports and others are bankrupt. JCPenney, Kmart and other department stores are closing unprofitable stores in their struggle to survive against growing online competition.

National retail distress is emptying rural regional malls, experts say. But long-term economic deterioration is driving their inability to bounce back: Fewer jobs and fewer people mean less money spent on TVs, couches and clothes.

Ottumwa and most other small Iowa cities have failed to recover the jobs lost in the recession, said David Swenson, an Iowa State University economist.

Wapello County, where Ottumwa is the biggest city, with 24,450 people, had 3% fewer jobs last year than in 2008. Even with mostly steady employment over the past two years, the city's retail sales have tumbled 6.8%.

Buying power follows workers, who are moving to metro areas for jobs.

"They're going where the economies are stronger and they can make more money," Swenson said. "The only alternative left in many of these rural areas is Walmart."

Cain, who's not a Walmart fan, does most of her shopping at Kohl's in Ottumwa.

"Whenever we can, we'll do an out-of-town shopping trip, spend a Saturday and do our shopping in Des Moines. ... We make it a fun outing," Cain said, whose family hits Jordan Creek and Valley West malls, TJ Maxx and other Des Moines-area stores she wishes were closer.

"It would be nice just to run to the mall whenever we want and find the stores we like," she said.

A mall shakeout is coming

Many small urban centers are suffering, said Liesl Eathington, an ISU economist.

Fort Dodge, Mason City, Clinton, Spencer and Keokuk are among small Iowa cities that posted annual retail sales losses, based on Iowa State University's inflation-adjusted data.

"It’s too soon to say the mall is dead," Eathington said. "But we may see a shakeout when there are fewer and fewer of them."

Swenson said retail in small cities is likely struggling because manufacturing has suffered, both statewide and in rural Iowa. Plus, more consumers are ordering goods from Internet sites.

Total online sales spiked 16% last year over 2016, while total sales climbed 4.4%, the U.S. Commerce Department reported. Amazon and other e-commerce businesses made up about 9& of total sales, an ever-growing percentage, the data show.

"These are challenging times for retailers. ... There's a clear shift in power from the retailer to the consumer," said Mark Mathews, the National Retail Federation's vice president of research and development.

"When I was younger, when I wanted to buy something, it was a question of what was open within driving distance. Now you can buy anything, anywhere," he said.

New hope for downtown?

There's one bright side of the troubles facing rural malls. It's giving new hope to struggling downtown shopping districts.

Even though it has a ways to go, downtown Ottumwa is moving from blighted to revitalized.

Ottumwa has snagged about $10 million in state and federal grants to change it, mostly over the past three years, said Fred Zesiger, the city's Main Street director.

They'll have about 100 apartments when the work is completed. "People thought these buildings were worth saving, and they were right," Zesiger said.

Redevelopment of downtown gives Ottumwa leaders some opportunity to boost shopping, when most of the control lies with large corporations, said Holly Berg, an Ottumwa council member.

"This is something we can take into our own hands, instead of being at the mercy of national chains," Berg said.

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Tough to find replacements

Replacing big retailers becomes more difficult in smaller communities, said Scot Snitker, national portfolio manager at Lexington International Realty, the New Jersey company that owns the Ottumwa mall.

His company is looking to attorneys, doctors and other service providers to help fill space. And it's recruiting entertainment providers — mini golf in Ottumwa, paintball in a Minnesota mall and a hockey rink in a South Dakota mall.

"There are plenty of retailers that are expanding. But they require a bigger population base, higher earnings," Snitker said. "So we just have to get more creative" in smaller markets.

Cain said she believes "the community is trying very hard" to attract new retailers. "It's just a little frustrating and disheartening to see another business go."

Rural malls hit hard times, leaving shoppers adrift as more stores close (2024)

FAQs

What are some of the challenges being faced by malls? ›

The challenges
  • Foot traffic is down. Foot traffic to malls was down in March compared to 2022, according to Placer.ai data.
  • Shopping habits are changing. ...
  • There's a lot of empty real estate. ...
  • Change up the retail mix. ...
  • Master the omnichannel experience. ...
  • The bottom line: Malls aren't dead …
Apr 19, 2023

How did American malls get stuck in a death spiral? ›

Widespread department-store closures beginning in 2018 hastened malls' decline. Large mall anchors like Macy's, Bon-Ton, JCPenney and Sears closed about 875 department stores between 2018 and the end of 2020, according to Green Street, compared with a combined 175 in 2016 and 2017.

Why are shopping malls going out of business? ›

On average, household income has stagnated or declined for middle- and low-income households, who form a major component of mall consumers. Meanwhile, the rise of online shopping has displaced the need for malls in people's lives.

When did malls start to decline? ›

21st-century retailing trends favor open air lifestyle centers; which resemble elements of power centers, big box stores, and strip malls; and (most disruptively for storefronts) online shopping over indoor malls. The massive change led Newsweek to declare the indoor mall format obsolete in 2008.

Why are so many malls abandoned? ›

Abandoned malls tend to materialize in the wake of traditional retailers that are struggling to compete with online businesses being forced to close their mall locations. This then has a knock-on effect, as the presence of vacant stores makes malls less appealing to customers, and so the 'dead mall' cycle continues.

What is leading to the decline of malls around the world? ›

The rise of department stores like Walmart and Target are more likely the cause. Online shopping was just the nail in the coffin. The mall used to be a place where you could get clothes, some electronics, and some food.

What was the last mall in the United States? ›

Have you ever been to The Mall at University Town Center (UTC) in Sarasota, Florida? If not, you might be missing out on a piece of history, because, by most accounts, it just might have been the last new-build enclosed mall constructed in America.

What is the lost in the mall effect? ›

The lost-in-the-mall study by Dr. Elizabeth Loftus concludes that an entire false memory can be implanted by suggestion. It has since been used to discredit abuse survivors' testimony by inferring that false memories for childhood abuse can be implanted by psychotherapists.

What happened to the American shopping mall? ›

Much has been written on the phenomenon of the collapse of the American mall and the reasons for it. The most obvious—the rise of online retail—is undeniably a significant factor, but it also masks a rot that had been spreading before Amazon gutted brick-and-mortar.

What is replacing shopping malls? ›

Although some shopping centers are closing permanently, many others are being reimagined as gathering hubs, gardens, experiential art sites, and more. Now, we're on the cusp of a major shift that will transform declining retail spaces into incubators for innovative consumer experiences.

What state has the biggest mall in the US? ›

Bloomington, Minnesota

What will happen to malls in the future? ›

The future of shopping malls is one of variety where digital experience is at the forefront. Expect to see more pop up shops, mixed use redevelopments, a wide business mix, and more ways to connect online in and out of the mall. To navigate the future, shopping mall owners and tenants are using data.

Why don't people like malls anymore? ›

E-commerce has permanently changed the way consumers shop, and shopping malls are not what they once were. But there is still hope for mall-based and brick-and-mortar retailers. By merging the benefits of online and in-store shopping, you can create a unique experience your customers won't forget.

Are malls fading away? ›

Since the peak of their popularity in the 90s and early 2000s, malls have been facing a slow decline into irrelevancy. "In 2020 alone, the vacancy rate of malls and strip centers reached over six percent, while the number of stores closed by bankrupt mall-based retailers exceeded five thousand."

What are some shopping challenges? ›

Below are a few of my favorites, but I challenge you to be creative and mix and modify these, or create your own.
  • No Shopping Challenge. The No Shopping Challenge is exactly like it sounds. ...
  • Adding Accessories Challenge. ...
  • One In, One Out Challenge. ...
  • A Week Without Challenge. ...
  • The 10x10 Challenge. ...
  • $30 Outfit Challenge.

What are the pros and cons of malls? ›

Malls offer a controlled environment, foot traffic, and shared advertising, making them attractive for businesses. However, high rent costs and competition can be drawbacks. Shopping streets provide a unique, local charm and may have lower overhead costs, but foot traffic can be less predictable.

What will happen to all the shopping malls? ›

Shopping malls are likely to look different in the future. Some malls may be redeveloped or repurposed into a mix of residential, commercial and office use. Smart shopping malls will implement digital experiences, such as VR product visualisation, to improve the customer experience.

What hazard might be encountered in mall? ›

Shopping Mall Dangers

For example, wet floors can cause slip and fall accidents, escalators or elevators may be poorly maintained and get stuck, and heavy items may fall and strike unsuspecting customers.

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