DEMISE OF BRICK AND MORTER SHOPPING

The announcement last year that Macy’s department store would be closing 100 of its sites over the next year signaled the reality that more people are beginning to shop online rather than visiting the mall. Over the years, the early mall facilities that required major overhaul were converted into housing, industrial use and food and entertainment centers. Yet today developers are still anxious to build new shopping malls for retail and entertainment.

A local case study was the proposed development in Carlsbad on the 27-acre site next to the Agua Hedionda Lagoon. Local residents soundly defeated the development in a ballot measure that sought to preserve the open space adjacent to a popular water sport area and to keep the quaint strawberry fields along Highway 5.

My reference to this project illustrates the anxiety of developers to keep building shopping malls that are suffering loss of major retail chains. Of course a shopping mall developer needs to stay in business, so he’s inclined to build another mall within a few miles of an established mall and expect the operator to succeed after he earns his profit from the construction and moves on to the next project.

The particular project in Carlsbad that was defeated is a good example of how much money the developer is willing to put up front. The post-election campaign financing report shows that the Los Angeles developer Rick Caruso spent more than $12 million in less than a year in his effort to get Carlsbad voters and city officials to approve his project.

With that kind of investment, I’m sure Caruso will be back again under more favorable terms with the community.

The crown jewel of San Diego’s downtown redevelopment in the 1980’s was the Horton Plaza Center spread across a shabby area of light industrial sites South of Broadway. At the time of its planning, there was considerable doubt that a major shopping mall could succeed in the heart of the city. During the 1950s and 1960s massive suburban malls became popular shopping destinations. Land was cheap and free parking was provided. It was a new concept at the time that totally destroyed the center of town shopping areas where department stores and specialty shops had always been located.

Horton Plaza did set a new standard to bring retail business back downtown when it was finished in 1985. Today it is suffering the same problem of major retail tenants closing their flagship stores. This is also partially true for the two large shopping centers in Mission Valley which at one time hosted the major department stores and specialty shops. Over the years the Mission Valley Center and Fashion Valley Center have evolved into entertainment venues with large multi-screen movie houses and small specialty shops.

Current consumer reports for the 2016 holiday shopping period confirm that more shopping is done online. Even if a customer goes to the mall, they compare prices with their IPhone to comparable online sources. There was a definite decline in mall foot traffic despite early holiday sales and terrific discounts during the last days of the shopping season.

Marketing consultants refer to this trend as “bricks to clicks.”

Major consumer-product retailers flood the market with catalogs and user-friendly websites. The major shippers like UPS and Fed-Ex had booming business last year with fleets of aircraft and delivery trucks handling the online purchases. With major retail centers like Macy’s and Nordstrom closing stores, malls will be catering to movie fans and places to eat.

Nationally, the age of traditional mall has ended, predicts Ed McMahon at the Urban Land Institute in Washington D.C, No major malls have been built since 2006, 15% have closed and 30% of the remaining have redeveloped into non-retail use, McMahon reports. In urban settings, food halls and beer gardens are gaining popularity.

Westfield, a major mall manager in the San Diego market, is making massive improvements to its properties. Perhaps it’s too late as on-line shopping gains speed. The future of Horton Plaza has issues. The attached Balboa Theatre and the underground Lyceum Theatre belong to the City of San Diego.

Horton Plaza had 27% less shoppers than the average of five other area malls in 2015, reported Roger Showley in The San Diego Union-Tribune. Sales of $116 million compared to $576 at Westfield’s UTC mall in 2016.

When I was a kid growing up in Los Angeles, it was a special treat to board the double-decker Wilshire Boulevard bus and ride to downtown where the major department stores were clustered at the end of Wilshire Boulevard. The big retailers of the day were Bullock’s, Broadway and Robinsons for clothing, Barker Brothers for furniture and of course Sears, Roebuck for general merchandise.

During the Christmas holidays, these stores were elaborately decorated with entire floors of toys with Santa greeting the children with presents. It was a magical world for young persons. Although these stores are now gone except for Sears which is barely hanging in there, I suppose the best description of future consumer shopping is goodbye malls and hello Amazon.

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