How the Empire Mall is beating mass retail closures and other national threats to shopping centers

Patrick Anderson | Argus Leader

Show Caption Hide Caption Department stores see bigger job loss than coal mines For decades, Americans have loved to shop at malls. But now, the industry as a whole is taking a bit hit.

The empty storefront where Best Buy Mobile used to be is already reserved for a newcomer.

The spot, in a corner of the Empire Mall’s open and sky-lit central court, will eventually host jewelry store Ashcroft & Oak. A candy store is opening down the hall in the spot of an old Footlocker and an escape room is opening in another unused space on the other side of the building.

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Like its counterparts across the country, the Empire Mall is subject to shifts and changes in the retail industry. Movement is a part of life. Closure happens.

But unlike malls in other cities, vacant storefronts are uncommon.

“We continue to see increases,” mall spokeswoman Kirsten Schaffer said.

The Empire Mall seems almost immune to the national trend of struggling malls.

As experts predict dark times ahead for shopping centers across United States, mall leadership in Sioux Falls has worked to make the Empire Mall a destination for surrounding communities, adding to the support it receives from the city’s steadily growing population.

For retail, times are hard

Competition with online retail giants such as Amazon changed the game for brick-and-mortar retailers across South Dakota and the rest of the U.S. Online vendors are often a culprit of City Hall and state lawmakers looking to justify the underperforming sales tax hurting government coffers.

In South Dakota, the weaker-than-expected shopping habits could also be due to the state’s heavy dependence on agriculture. Farmers are still struggling from a drastic decrease in the price of corn and other grains, leaving them and others in the state with less disposable income.

Chains have been some of the most affected, though that’s left an opening for locally owned independent retailers, said Shawn Lyons, executive director of the South Dakota Retailers Association.

“No question, that’s been tough to see some of those national retailers move out,” Lyons said.

Sioux Falls has also suffered from sales tax woes, with two straight years of lackluster performance on the money it collects from local shoppers.

Meanwhile, national retail chains are entering bankruptcy court at an unprecedented rate, and major department stores such as JC Penney are closing locations across the U.S., many of which once served as anchor tenants for malls.

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But at the Empire, staffers are more concerned about the bottleneck effect of construction on Louise Avenue. However, it’s still not enough to keep many shoppers away, and it’s temporary, Schaffer said.

“I would still say we are really strong,” Schaffer said.

Empire Mall a haven for struggling retailers

Mall staff don’t track traffic, but Schaffer believes the number of shoppers has increased in the last few years since a change in ownership and renovation.

That strength is no doubt a draw for national retailers, Lyons said.

“Even if there are struggles of changing of their business model elsewhere, for the time being, Sioux Falls is important to their continued success and growth,” Lyons said.

The Empire Mall is not safe from closures. When a national chain evaporates into nothing, there’s no sparing the local branch.

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Gordman’s announced a liquidation of all of its locations, though its Sioux Falls store remains open. Vanity closed in March after the national chain announced bankruptcy, after departures of Limited, Deb Shops and Wet Seal.

But the mall has managed to remain a haven for other embattled retailers, even as their ranks grow. Aeropostale, Eddie Bauer, American Eagle, GameStop and Rue21 have all experienced financial distress and national closures in recent years. So has Caribou, for that matter, which closed dozens of stores a few years ago after a merger with a California-based chain.

Then there are the anchor stores. JC Penney is shuttering more than 100 stores nationally, but its Empire Mall location remains open in spite of liquidations in Mitchell, Pierre, Watertown and Yankton. Macy’s and Sears have gone through similar painful reductions on a national scale, though their respective locations at the local mall have so far been spared.

Some stores at the Empire Mall are among the top performers in their chain, Schaffer said.

“When you’re walking into the mall, you’re walking into some of the best of the company,” she said.

The Empire Mall gets regular shoppers from a 75-mile radius.

But the mall and other businesses on the Empire-owned campus draw shoppers from as far away as Iowa, Nebraska and Minnesota. The mall’s ability to draw customers is partly due to Sioux Falls’ status as a “regional hub,” Lyons said.

“The Empire Mall has always been one of the biggest tourist attractions in our state,” Lyons said.

The mall’s sprawling campus west of Louise Avenue spans from 41st to 49th streets and includes Hy-Vee, Wendy’s and Burger King. The shopping center and its partner sites are a destination in their own right, but they also benefit from Sioux Falls’ growing health care industry, Schaffer said.

“This is the place where you can bring your whole family,” Schaffer said.

Not only are the city’s hospitals driving the growing workforce by bringing in new nurses and doctors – and their families – they also bring in out-of-town patients for care. Families in town with a loved one will head to the mall to pass time, Schaffer said.

Perhaps a bigger influence on the mall’s success is the population of the metro area that surrounds it. The four-county area adds thousands of people every year, crossing the quarter-million mark last year.

Even given the competition from online retailers, brick-and-mortar stores do well when a community’s population is increasing, said Jason Ball, president and CEO of the Sioux Falls Area Chamber of Commerce.

He’s hearing good things from the Chamber’s real estate partners.

“They continue to see a very strong retail play here because retail follows rooftops,” Ball said.

The big goal: Not just retail, but a destination

>Mall staffers, including ownership group Simon Property Group, have worked to make the shopping center a destination. They’re actively looking for newer business models to offer shoppers an improved experience.

There was also a reinvestment in the space a year after Simon took over in 2012, with the new owners putting money into updating the mall’s interior, including new ceiling materials, new furniture and removing the giant donut-shaped structure that once took up space in the center court.

Built in 1975, the mall has gone through a series of physical transformations. The most recent remodel by Simon helped “modernize” the space and attracted top retailers such as LOFT, Sephora and White House Black Market.

Amy Stockberger picked the mall when it came to finding a new location for her growing escape room business.

Just months after opening Escape 605 behind Target at 3718 S. Westport Ave., Stockberger and the company’s other co-owners were in the process of expanding. They got a call from mall staff as they were looking at adding space.

Stockberger realized an opportunity to take advantage of the mall’s strong customer base. But she also saw a chance for her business to offer something new to the shopping center.

“We knew that trend of malls dying across the United States,” Stockberger said. “Sioux Falls is just the complete opposite.”

The Empire Mall has been working to give shoppers more than a venue to purchase items over the counter. Escape 605 and other businesses coming into the mall offer experiences.

Beginning with the $12 million remodel in 2013 and the addition of a more modern design and features such as the children’s play area, the mall has continued to add features that provide visitors with something to do in addition to something to buy.

It’s a philosophy that better fits the spending habits of the current generation. Market research conducted by Harris Poll in 2014 shows three in four Millennials pick experiences over possessions when it comes to spending money.

This year, the mall brought in two high-tech videogame-like rides that allow visitors a chance to interact with virtual reality movies. The Xtreme 7D Adventure station is in the far western wing of the mall.

Escape 605 is scheduled to open in July, but it’s not the only newcomer. The Candy Clubhouse is opening near the food court, and owner Rob Jaton wants his business to be a place for the whole family to spend time.

Jaton plans to blend in plenty of nostalgia for adults by selling older toys from the 1980s, in addition to hundreds of varieties of soda and masses of sugary treats. A big Jelly Belly display will give visitors a chance to choose between nearly 80 flavors, Jaton said.

He envisions his store as an oasis for mall patrons who might be waiting on other shoppers.

“They want a place to go do something else,” Jaton said. “An easy place to disappear when somebody else is shopping.”