In 2005, there were about 1,500 malls in the United States. Since then, we’ve lost more than a quarter of them, and much of that precipitous decline took place in the last couple of years. Another quarter of malls are expected to shutter within the next five years. Meanwhile, in 2018, $862,000 was spent every minute online. In 2019, it’s now $1,000,000 a minute, and we know to whom, a significant share of that money is going.

According to Presidential candidate Andrew Yang’s new book, The War on Normal People, Credit Suisse expected that the retail square footage lost in 2017 would equal 147 million sq. feet. That’s the equivalent of 52 Mall of Americas, the nation’s largest mall, which is so massive that it has its own zip code.

Malls across the nation are distressed. We are in the midst of a retail apocalypse so it makes sense. Malls are made up of stores, and 75,000 stores are projected to close by 2026. More stores have closed through the first third of 2019, than all of last year. Many store closings aren’t even publicly announced, making it more a more difficult task to track. None of this is good news for malls.

Amazon is taking advantage of the distress sales. The company is snatching up properties like the infamous abandoned Rolling Acres Mall in Akron, Ohio. The “Ghost mall” hosted squatters, thieves, and a dead body. It seems Amazon is planning to build on top of the retail graveyard. The undertaking is called Project Carney after the Obama official who joined the tech giant. Mr. Carney helps Amazon craft a D.C. friendly message for the company’s various initiatives.

Malls will not disappear

Are malls going to disappear altogether like the dinosaurs? No way! Malls are not going away anytime soon. Many of the Class A and B malls are still doing really well. Right now, Gen Z loves stores and going to the mall, but they also rely on their parent’s money and don’t have real responsibilities, yet so we’ll see how they feel in a few years. Regardless, every new generation of kids seems to want to visit malls to the annoyance of their parents.

There are various factors contributing to the decline of malls. Historical anchor stores such as Sears and JC Penny have been severely hampered by competition from Walmart, Amazon, and Costco. These department stores also face stiff competition from the likes of Home Depot and Lowes, which now both sell more appliances than Sears. Many of these retailers have deeper assortment than Sears or J.C. Penny and meet or beat their prices.

Some businesses are doing well in malls such as restaurants. In addition, entertainment businesses such as escape rooms are pretty safe. Many of the other types of retail businesses in malls are facing headwinds.

One of the struggling retail categories is electronics. Many electronic stores have been detrimentally impacted by product digitalization, technological convergence, and e-commerce. They also face stiff competition from discounters such as Costco and Walmart for the electronic products that are left to sell. In addition, manufacturers of the technological products that have disrupted the electronics category such as Microsoft and Apple have forward integrated and opened their own stores. As a result of these various trends, 10,000 electronic stores are expected to close by 2026.

Malls are also full of apparel stores and clothing retailers, which are also in trouble. 21,000 stores, which is about 17% of all clothing stores are predicted to close by 2026. Part of the reason for that is that consumers are spending less of their household income on apparel. Bloomberg reports that consumers spent 6.1% of their income back in the late 70s and in 2016, it was only 3.1%.

Consumers are increasingly shopping at bargain fast-fashion retailers and online. Part of the reduction in spending is the result of the rise of discounting, price transparency from e-commerce, but it’s also a result of sociological changes in consumer behavior. People are dressing more casually at work. This hurts suit retailers like Jos A Bank. Workers don’t need as big a wardrobe since they can wear casual clothes to work. Another sociological change: Millennials are not marrying or are marrying later. This has caused retailers such as David’s Bridal to file for Bankruptcy.

Consumers are consolidating their purchases for convenience

At Walmart, you can pick up some pampers, milk, and a toy for your child. There’s no need to make multiple trips and go to Macy’s or the Gap. As a matter of fact, the top apparel retailers in the United States today are Walmart and Amazon. They are also the top toy retailers. Until Apple surpassed it, Walmart was the #1 music retailer in the United States. Walmart, not Best Buy, is the biggest seller of televisions. It sells nearly half of the TVs purchased in the United States.

People want low prices and convenience. They get both at Amazon and Walmart. That’s why these two companies are the top retailers of many categories that actually have specialized retailers dedicated to selling them. Consumers are consolidating their shopping, and it’s causing retail industry consolidation. It’s had a devastating effect on certain specialty retailers that inhabit malls. Payless ShoeSource, for example, announced in February 2019 that it planned to close all of its 2,000+ stores. It was a Valentine’s Day retail massacre.

Malls contribute meaningful economic value as well as social value, serving as a social network or town square for communities. Therefore, when a mall closes down, it has a detrimental impact on the social and economic fabric of a community. There are various reasons that many of them are in decline. These include e-commerce, changes in consumer preferences and behavior, smartphones, longer workweeks, and changes in demographics. Many of the economic opportunities and growth have shifted to the coastal areas of the country and benefitted malls in those areas. If you care about malls, visit your local mall this week and support those businesses. The good news is that resourceful mall operators are coming up with creative ways to bring you in whether it’s through movie theaters, doctor’s offices, virtual reality experiences or children’s entertainment.

If you would like to learn more about malls and what’s happening in the retail industry, be sure to check out my book, “Retail Apocalypse: The Death of Malls, Retailers & Jobs.”