"I Am In A Mall That Is Dying": Is this The Future For Independent Retailers
“I am in a mall that is dying. For the last couple of years my sales have been ok but it is time to move on.”
That was the first thing that my client Mark told me when I asked him about his situation.
What he shared with me did not surprise me one bit.
As a matter of fact I get calls daily from independent retailers asking about retail store liquidations and how I can help them with the process.
JUST IMAGINE…YOUR STORE LOOKING LIKE THIS…
WITH LONG LINES OF CUSTOMERS AND MINIMAL DISCOUNTS…
AND LOOKING LIKE THIS AFTER YOUR BIG SALE IS OVER…
The retail market is something that has been an intimate part of my life since I was a teenager, even though I may not have realized it at the time.
I was just a kid when my Dad decided to leave his job working for Sam Walton (founder of Walmart) and go out on his own.
He opened his first store after he and my mother saved up every extra penny they could to buy their first store. So you could say I have been involved in retail for decades and have learned from the absolute best.
Ironically it was the same Walmart stores that years later were the reason that my dad had to close his stores. The competition from the larger stores that could offer much lower prices among other services, started to wipe my dad out of any profit.
That was the first time I had to witness the process of a store closing and also the first time I ever saw my dad cry.
The process was not a friendly one for store owners emotionally or financially and I decided then and there that I could do it better and really help the people that needed it most.
Today Walmart is still tirelessly working to keep up with Amazon and Target in perfecting their systems and processes to be able to compete.
They are way beyond seeing any kind of independent store as competition. And that is the bottom line: independent retail stores simply can not compete with all these goliaths have to offer.
The independent retail store owner that is situated in a mall thought that they would be able to insulate themselves from the fallout from online stores and as well as the Walmarts of the area.
Unfortunately they are actually the ones that are suffering the most in this current retail climate.
These retailers are the ones that are facing the one two punch of online dominance and the demise of the mall around the country.
Gone are the days of relying on the anchor stores in the mall, like Sears, Lord and Taylor and JC Penny to bring in the foot traffic to buy products.
Malls used to be a mecca of customers just looking for ways to spend their money.
They are now being termed “zombie zones” likening them to areas where an apocalypse has taken place. Many retailers in the malls go entire days without seeing one customer enter their store.
The landscape has changed into something that has never occurred before as retailers have signaled that there are plans in the works to close upwards of 10,600 stores across the country in the coming months.
That is over double the amount that was closed last year according to the accounting of the research firm Costar.
Currently mall vacancies are at a 9 year high with no end in sight and independent business owners are feeling the impact the most because they lack the deep pockets and bargaining power of larger retail corporations.
That is exactly the situation my client Mark was experiencing and it scared him. He had been in business for 23 years doing a nice business selling sports equipment in his area.
He was the go to guy in his town for years for any sports related item. Then things began to change and before he knew it, his business, or lack of business was keeping him up at night.
“You keep thinking it’s gonna get better, it’s gonna get better. And it just isn’t getting any better”, he confided in me. “We have been 15 -20% for years and it does not generate any business”, Mark concluded.
That was when he decided that while he was still able to make a decision, instead of being forced to make a decision, he would look at options for closing his store.
Mark said, “One of my biggest concerns was, was my store even big enough to pay someone to close it out?” He had the nagging question, “If this didn’t work what am I going to do with the retail stuff that is left over?”
He lived in a small town and was also really concerned about his reputation in the community and how he was going to be able to afford to pay all his vendors.
These were important questions that independent retailers like Mark need the answers to and be able feel confident in these answers. This is what I was able to do for Mark.
He shared with me, “The biggest thing that I will ever remember from you Travis is that Retail Sales PRO will run the numbers (the sale), you (Mark) will run the business. I will let you know what to do on a daily basis.
To me that was the biggest relief. I just sat back and said that’s the way I want to do it.”
Many retailers confide in me that fear is their number one issue they are dealing with when they begin to see their business struggling.
Fear is also something that is adding even more fuel to the demise of the mall landscape in the shape of the current threat of the coronavirus.
This is one factor that I don’t think anyone saw coming and it is positioned to be the death blow to bring down the mall empire.
Why do I think that? The threat of the virus is causing major events, conferences and offices to shut down with the huge push to keep large amounts of people to gather in an area. Shopping malls have the same distinction.
As a matter of fact the first incident of a patient who tested positive for the new virus was identified at the North Star Mall in San Antonio Texas.
The entire mall was closed for a day and reopened but in my opinion the damage was already done.
The fear has already been planted in people’s minds that the mall is not a good place to go if you don’t want to be exposed to getting sick.
Even if the length of the outbreak of the virus only lasts a few months, people will have already found other ways to get the things they need from other places.
Most likely, if they haven’t already they will buy from Amazon or other retailers that have online access to limit their exposure.
Once this behavior change has happened they are unlikely to go back to their “old way” of shopping at the mall.
They have already experienced a new way of getting the products they are looking for and in most cases got it delivered to their door for less than they paid in person.
If they do return to the mall, it will be to see a product in person and then order it from their phone to be delivered to their door that same day.
That exact behavior was what prompted my client Mark to hire me to help him with closing his store.
I have been conducting retail store liquidations for over 20 years and have helped independent retailers close their stores with a profit their head held high in every niche imaginable.
Mark is a straight talker and said, “Travis you’re actually a little more expensive than everyone else.” I told him point blank, “Mark I am. But you will see the results.”
I always love having my client’s share their success stories with me. Mark’s was especially moving because of all the fear he had been experiencing before we started to work together.
He called me after his first day of the sale and shared this with me:
“When the sale started at eight o’clock and I opened up the gate there was not a person out there.
Travis I want you to know, 5 minutes later YOU COULDN’T GET ANOTHER PERSON IN THE STORE. It was so busy that we tried taking pictures and they were all blurry.”
For the next three days we had so many people in the store, it was unbelievable! They were buying everything and at the same markdown as we would normally be doing at a 15 – 20% sale that meant nothing before.”
Independent retailers have to really face the reality that the model of the mall that was thriving in the last 30 years is not going to be making a comeback.
Trying to compete with Amazon and other large retailers with slick shopping Apps and same day delivery is not going to happen.
Some malls are still trying to make the concept work and are dumping tons of money into trying to reshape them into entertainment zones with indoor ski slopes, water parks and aquariums.
These cases are few and far between and the tenants are mostly high end luxury brands that appeal to higher earners.
Tenants like Nordstrom, Apple, Lululemon and Pelotan help to anchor the malls that are trying to hold their own by recreating themselves with higher end restaurants and experiences like spas and speciality gyms.
If you happen to be situated in one of these grades of malls, your independent retail business might be holding its own.
However, even these malls will become more of the exception than the rule as the virus fears and supply chain issues start to impact merchandise acquisition and consequently sales.
High end shoppers want the newest and the best of current merchandise and they won’t settle for less.
Apple, one of these prestigious tenants is already announcing that parts for their new phones made in China will be backed up for months because of the shut down due to the virus outbreak.
The same issues will be had by retail shops that get their clothing supply or other parts resourced out of China.
Buyers will be frequenting these malls much less if the merchandise is not being supplied. These malls will begin the downward slide within a few months.
All these factors are why I wish I could sit down and speak with every independent retailer, especially those situated within a mall, and tell them they need to start looking at their exit strategy now, before they are forced to do it.
Every business has a life cycle but many retail owners never consider it.
The reality is, is that every retail business will close at some time and an exit plan, whether it is retirement or rent increases, is a necessary part of that business.
Bottom line is that when huge corporate retailers can not make it in this climate with their deep pockets then the independent retailer needs to seriously take notice.
Fear thoughts are the first indicator that a change needs to happen and you need to take action.
That is exactly what my client Mark did and I applaud him for taking that first step and reaching out to me.
Mark and I worked together and I was able to help me liquidate his business to the bare walls.
Even months later he said that he still can not believe how easy the process was and how he was able to regain his peace of mind.
He told me when he began looking for help he couldn’t imagine the outcome being better than it was with my help.
“Everything you said throughout the sale was right. Everyday when I went home at night I could sleep again because I knew this (Retail Sales Pro) program was working.
There is nothing left in the store. We actually turned a profit. My accounts payable are zero. That’s what I am most impressed about. I am completely satisfied”, Mark shared.
I want every independent retailer that has had the thought that they need to close their store feel the way Mark does now.
He went from his business languishing in a dying mall with fear thoughts keeping him up at night, to walking away profitably with his head held high.
He had one shot to get it right and he did just that.