IN A dangerous sign for the future of Australia — an American icon is dying. American malls are going broke fast and so are the big department stores they sheltered, in a mutually destructive downward spiral.

Big name department stores are crumbling. You’ve probably heard of Macy’s, JC Penney and Sears, but at the rate they are closing their doors, the next generation may have no idea what those names mean.

According to investment bank Credit Suisse the rate of number of retail business failures expected in 2017 is the highest on record and 20 per cent of American malls will be dead by 2022.

The phenomenon has left malls empty all over America. You can see some of them on deadmalls.com and the impression they leave is scary. These malls represents thousands of jobs lost as America abandons its old ways of shopping.

COULD AUSTRALIA FOLLOW?

The business environment in Australia is often just a few years behind America, be it in internet use, media, automotive or retail.

We have been following America since the very beginning of the mall phenomenon. (Except, of course, we call them “shopping centres” here.) Melbourne’s Chadstone was set up after local retailers decided they wanted to apply the lessons of America, and with the booming success of the centre Melburnians call “Chaddy”, Australia’s infatuation with shopping centres began.

Chadstone is now the biggest centre in the southern hemisphere, worth billions of dollars. It has kept its half-owner — John Gandel — on the rich list for years.

It is worth saying this: Australia’s shopping centres seem to be going okay for now. The big listed operators — Scentre (39 shopping centres, owns Westfield in Australia) and Vicinity Group (75 centres, including Chadstone) are both reporting billion dollar profits. But Vicinity Group has shrunk the number of centres it owns as both big operators try to make sure they only own centres with a strong chance of success.

If Australia does follow America, it is likely that big shopping centres like Chadstone will survive. In America, it is the small to medium size local malls that are bleeding out.

SMALL MALLS PALL

That would hurt. Those small centres may be daggy but to me they represent a glimpse of real Australia. I had my first job at a small shopping centre, clearing away dirty dishes at a cafe that sold the classic mix of sandwiches and hot food from bain maries.

Big shopping centres get all the attention but our cities are still dotted with small ones. Several small centres I can think of already have dark corners that seem unloved and empty. If that lonely, empty vibe spreads, it can kill a mall and if that happens in enough places it could turn into a problem like America’s.

The most surprising thing about the disease eating away at America’s iconic malls is that America’s economy is actually quite good. Unemployment has hit an amazingly low 4.3 per cent. So America’s mall problem cannot be explained by tough economic times.

More than anything, analysts say that the reason for the decline of malls is the rise of online shopping. There is a reason Amazon’s revenue has blasted by $100 billion in revenue a year with no sign of stopping.

THE WOW FACTOR

Amazon is coming to Australia any moment — what can Australian shopping centres do to avoid falling into the awful abyss?

Number one is probably to reduce their reliance on risky “anchor tenants”. Coles, Woolies, Target and Big W are shopping centre stalwarts, but none of them is certain to still be succeeding in a decade’s time. One or all of them could find the going a lot tougher in a world where Amazon is trying to win over our wallets.

The next big idea for shopping centres is to offer experiences not just goods. Amazon sells stuff you can get delivered to your door. But experiences — haircuts, manicures and massages; meals, coffees and movies — are still things people want to meet in person for.

Australians are spending more and more on services. Casino complexes may be the closest thing in Australia to pure malls for services — they offer gambling, restaurants, movies and nightclubs. The more shopping centres can turn themselves into destinations like that — and note that I’m not suggesting shopping centres literally open roulette wheels — the better off they will be.

Jason Murphy is an economist. He publishes the blog Thomas The Thinkengine. Follow Jason on Twitter @Jasemurphy