Department stores are losing out on retail’s wins, teeing them up for owners to rethink or redevelop the large sites.
Once considered a retail necessity to attract shoppers to sprawling malls, the locations are being left behind in favor of other brick-and-mortar formats, the Wall Street Journal reported.
Department stores have been dying a slow death over the years, being converted to offices, libraries and schools over the past several years as landlords try to make use of the space. Kushner Companies is demolishing Monmouth Mall in New Jersey with plans to convert it to residential housing.
But Prism Places and its partners, owners of the Legacy West shopping center in Plano, Texas, opted for a lavish food hall to attract customers to the development — and it worked. Within a few years of its 2017 opening, it was drawing 30,000 visitors a week, according to the outlet.
Its success attracted a Louis Vuitton store, soon followed by Tiffany, Gucci, and other luxury brands, some of them even leaving a nearby Neiman Marcus in favor of Legacy West.
Major department stores take up less than half of all anchor spaces at enclosed shopping malls, according to the real estate firm Green Street, who spoke to the Journal. Macy’s is one example, with plans to shut down 150 underperforming stores over the next three years.
Department store sales tumbled during the pandemic. They bounced back somewhat in 2021 and 2022, but have never returned to pre-pandemic levels. Sales fell flat again last year and were still flat in 2024 through at least May, the outlet reported based on US Census data.
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Macy’s isn’t giving up yet. Its new chief executive Tony Spring told the Journal he is focused on improving the customer experience in areas like the shoe department, where initial investments at 50 locations have boosted sales.
On the other end of strategic repositioning, mall owner Brookfield spent $126 million redeveloping a former Macy’s at the Tysons Galleria mall near Washington, D.C. with home furnishings and entertainment retailers. The new model is generating more than $100 million in sales, reportedly four times that of the former department store.
— Christina Previte