Friday, Sep 20, 2024

The rise and fall of the American shopping mall

Shuttered stores at Schuylkill Mall in Pennsylvania in 2017.
  • When the first malls opened in the 1950s they were such an achievement that they inspired even Walt Disney.
  • By the 1980s, the mall had become the center of American social life and accounted for the bulk of all retail sales.
  • But a shrinking middle class, the rise of online shopping, and the fact that there were simply too many malls contributed to the decline of the American mall.
The nation's first fully enclosed indoor mall opened on October 8, 1956. Called Southdale Center, the shopping center was located in the suburbs of Minneapolis, Minnesota, and contained shops, fountains, art installations, a courtyard, and a bird sanctuary.

View of Southdale Mall, the first mall in America, in 1986
Southdale Mall in 1986.

Source: Insider

The mall was designed by Victor Gruen, an architect known up until that point for designing boutiques and storefronts. Gruen's mall was met with rave reviews, with some going as far as to compare it to Disneyland — incidentally, Walt Disney later cited Gruen's work as one of the inspirations for his Epcot theme park.

Victor Gruen stands between two women while pointing at an architectural rendering
Architect Victor Gruen, middle, in 1956. Gruen designed the first enclosed indoor mall in the US.

Source: Insider

The middle of the century was uniquely primed for the advent of the shopping mall. The birth of the interstate highway system meant the suburbs were growing at warp speed, and people had more money to spend post-World War II.

shopping mall 1960s
Interior of a shopping mall in the 1960s.

Source: Smithsonian Magazine

Not only that, but changing tax laws made it lucrative to invest in commercial real estate, leading to shopping centers springing up across the country. For example, six new shopping plazas were built in or near downtown Cortland, New York, between 1950 and 1970 even though the population had hardly budged.

Shoppers walk amid decorated Christmas trees inside shopping mall in the 1960s
A Denver shopping mall in 1968.

Source: Smithsonian Magazine

By 1960, there were 4,500 large shopping complexes in the US, meaning an average of at least three new shopping centers had opened every day since 1956.

Interior shot of a shopping mall in 1974 with shoppers walking around and sitting on benches
A Seattle shopping mall in 1974.

Source: Insider

The 1970s brought about another new invention: the food court. The first food court opened in New Jersey's Paramus Park Mall in 1974, with the hope that it would be a place for teenagers to safely socialize — and a way for mall owners to make more money.

Shoppers walk around in a mall in Chicago in the 1970s
Water Tower Place shopping mall in Chicago in 1976.

Source: Federal Reserve Bank of Richmond

By the mid-1970s, 33% of all US retail sales happened at a mall or shopping center — a decade later, that number had grown to 52%.

Shoppers ride escalators inside shopping mall in Chicago in the 1970s
Water Tower Place shopping mall in Chicago in 1976.

Source: Insider, The New York Times

By 1986, there were 25,000 shopping malls nationwide, and they'd become de facto town squares. The mall was where teens hung out and where single people met for dates. Music and movies glamorized and skewered the mall in equal measure, while Consumer Reports named it one of the top 50 inventions that had revolutionized consumer life - alongside innovations like antibiotics and birth control pills.

Shoppers walk on upper and lower levels of shopping mall decorated for Christmas
The Galleria shopping mall in Houston, Texas, in 1986.

Source: The New York Times, Vice

Mall culture reached a fever pitch in 1992 upon the opening of the Mall of America outside Minneapolis. The 5.6 million-square-foot megamall housed over 500 stores, a theme park complete with roller coasters, a full-size aquarium, a wedding chapel, and a movie theater. These days, the mall has its own comedy club and escape room.

Aerial view of the Mall of America in 1992
An aerial view of the Mall of America in 1992.

Source: Insider, Federal Reserve Bank of Richmond

For a while, megamalls were wildly popular — and profitable. A decade after Mall of America opened, it was drawing 43 million visitors every year and reporting about $900 million in annual sales.

mall of america 90s
Mall of America in 1992.

Source: Los Angeles Times

But American shopping habits had begun to change. Department stores had lost their cachet, replaced by one-stop shops like Walmart. Consumers started buying things from catalogs and TV shopping channels rather than strolling through the mall for pleasure.

Four men hold shopping bags and wait to pay at counter in store inside shopping mall in 1997
Shoppers wait in line at a perfume store in the Ontario Mills shopping center in California on Christmas Eve 1997.

Source: The New York Times

Plus, malls that had been around for 20 or 30 years were starting to look dated and rundown ...

Empty hallway in shopping mall in California in 2002
The Mountain Gate Plaza mall in California sitting mostly empty in 2002.

Source: Smithsonian Magazine

... and the department stores, known as "anchor tenants," were frequently poached by the newer, more popular megamalls nearby, leaving older malls to slowly wither and die.

FILE PHOTO: A dismantled sign sits leaning outside a Sears department store one day after it closed as part of multiple store closures by Sears Holdings Corp in the United States in Nanuet, New York, U.S., January 7, 2019. REUTERS/Mike Segar
A dismantled sign sits leaning outside a Sears department store in Nanuet, New York.

Source: Insider

Then the 2008 Recession hit, sending tenants' sales plummeting and mall vacancy rates soaring. By the end of 2009, there were dozens of so-called "dead malls" across the country.

Empty shopping mall in Palm Beach, Florida
A vacant shopping mall in Palm Beach, Florida, in 2009.

Source: The Wall Street Journal

The 2010s marked a painful decade in shopping-mall history. Between 2010 and 2013, visits to malls during the holiday shopping season had dropped by 50%. By 2014, a fifth of the malls had "troubling" vacancy rates, while 3% had such high vacancy rates, they were considered to be dying.

Closed stores inside darkened shopping mall in Pennsylvania in 2017
Shuttered stores dominate the interior of the Schuylkill Mall in Pennsylvania in 2017.

Source: Time, The New York Times

In 2017, 7,000 retailers — many of them department stores — closed their doors. Anchor tenants like Sears and JCPenney left behind massive, empty shells at malls across the country that mall owners struggled to fill.

Empty shopping racks and mannequins at JCPenney store liquidation
Empty shopping racks and mannequins being sold at discount prices at a closing JCPenney at the Columbia Mall in 2017 in Bloomsburg, Pennsylvania.

Source: Federal Reserve Bank of Richmond, Insider

Why did malls fall so hard, so fast? For one, there were simply too many of them, to the point that malls in close proximity would cannibalize each others' sales. For another, they were less necessary than they once were, thanks to the rise of online shopping.

Cracked parking lot in front of vacant shopping center
A vacant shopping center in El Centro, California.

Source: Federal Reserve Bank of Richmond, Insider

Plus, the middle class wasn't as resilient as it once was. Middle-income shoppers had shifted their spending toward cheaper retailers like Target, Walmart, and Dollar General, leaving department stores behind.

walmart store

Source: Racked, Federal Reserve Bank of Richmond, Insider

Innovative developers are turning those empty malls into everything from medical centers to Amazon fulfillment centers. In some malls, abandoned stores are being turned into aquariums, haunted houses, and escape rooms.

View of a large warehouse interior with rows and rows of sorting machinery.
Employees select and dispatch items in an Amazon warehouse.

Source: Fast Company, NBC News

But the shopping mall isn't dead yet. In 2019, American Dream, a 3 million-square-foot megamall, opened its doors in East Rutherford, New Jersey. It's the nation's second-largest mall after Mall of America.

Inside American Dream — Visiting American Dream 2021
Inside the American Dream mall in East Rutherford, New Jersey.

Source: Insider

American Dream contains its own amusement park, water park, indoor ski hill, and ice-skating rink — not to mention room for hundreds of stores.

Inside American Dream — Visiting American Dream 2021
Inside the American Dream mall in East Rutherford, New Jersey.

Source: Insider

But American Dream was a victim of bad timing: less than six months after its grand opening, the pandemic hit, and the mall was forced to close its doors. While the mall was hailed as the second coming of the Mall of America, that popularity never materialized, and American Dream has struggled financially since it opened, losing $60 million in 2021 alone and missing an $8.8 million debt payment in 2022.

Inside American Dream — Visiting American Dream 2021
Inside the American Dream mall in East Rutherford, New Jersey.

Source: Retail Dive

Still, American Dream — and the 1,100 other malls nationwide — are hanging on, and in some cases, showing signs of growth. Ahead of the 2022 holiday season, foot-traffic data indicated that shoppers were returning to malls for their holiday shopping and that the bulk of sales would happen in person.

Shoppers in crowded mall during holidays 2022
Holiday shoppers at a crowded Roosevelt Field Mall on November 25, 2022, in Garden City, New York.

Source: Insider Intelligence

The country's largest mall owner, Simon Property Group, said in August 2022 that a mix of factors, including people moving during the pandemic and e-commerce brands looking to open brick-and-mortar spaces, were helping mall occupancy rates to rise nearly 2% compared to 2021.

Woman carries armloads of shopping bags while walking through mall

Source: CNBC

In November, the company shared that it's on track to reach pre-pandemic occupancy rates in 2023. It's a sign that while struggling, malls may still have a future.

Luxury mall
The luxury goods retailer Michael Kors at a mall in lower Manhattan.

Source: Footwear News

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By: [email protected] (Avery Hartmans)
Title: The rise and fall of the American shopping mall
Sourced From: www.businessinsider.com/shopping-mall-rise-fall-timeline-1950s-to-today-2023-1
Published Date: Fri, 06 Jan 2023 10:00:00 +0000