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Mall Anchors: A Destination or a Dead End?

In 1980, roughly 30 million people tuned into find out who shot JR. The mystery helped the season premiere of the prime time drama Dallas make history and helped popularize the term ‘cliffhanger.’ It was a cultural phenomenon that solidified the show as an anchor for the CBS Friday night lineup.

These days, shows with that drawing power are in short supply thanks to a myriad of cable options, Youtube channels and streaming services broadcasting a dizzying array of programming.

Today, NCIS, the network’s top ranked drama only scored 14.8 million viewers, its best performance this season, with the exit of a favorite character, according to Variety.

Television is now a fractured landscape, one that mirrors the state of American malls, according to William Taubman.

The chief operating officer of Taubman Centers, which operates 21 shopping centers in the U.S., including the Beverly Center in Los Angeles and The Mall at Short Hills in New Jersey, recently made the analogy in an interview with The Wall Street Journal.

The mall executive said like traditional networks, anchors are less of a draw. “In the ’60s and ’70s, the three television networks—ABC, NBC and CBS—had like a 90 percent market share. Today, they probably have a 20 percent market share or a 15 percent market share, but they represent the cultural consensus of America. As opposed to cable, which is narrowcast,” he told the publication. “Retailing has shifted like cable. There is still a function for the [traditional networks]—it’s just not the function it was.”

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What anchors had historically been known for was generating foot traffic. That’s why if they were tenants and didn’t own their own boxes, they paid little to nothing in rent. It’s also why specialty stores insisted on co-tenancy clauses that said if the majors left, they could also pull up stakes since they thought there’d be no business left for them.

Well, increasingly, the big guys are leaving. And depending on the health of the mall, they’re either creating a vacuum or an opportunity.

Since the so-called retail apocalypse narrative began, department stores have been contracting at a rapid clip with J.C. Penney closing 138 stores, Macy’s shuttering 100 and Sears Holdings pulling the plug on more than 400 locations between Sears and Kmart. Add to that bankruptcies and you have more than 250 Bon-Ton doors closed.

Each closure is leaving big shoes to fill, and mall owners are getting creative with how they’re going about it.

In November, Brixmor Properties CEO James Taylor says the closures are “an opportunity to replace some of these anchors with more relevant uses to the center.” And what does he deem relevant? Not apparel, apparently. The executive listed restaurants, fitness, home, value and specialty grocers as possible replacements.

At Taubman, a former Saks location in Short Hills will also be a clothing free zone with books replacing apparel in an “experiential” format that president and CEO Robert Taubman said is highly desirable and an example of the new anchor.

Mark Hunter, CBRE’s managing director of retail asset services for the Americas, sees how these different businesses can fulfill the purpose of the traditional department stores in a mall setting.

“The definition of an anchor today is much different than it was 20 years ago,” he said. “It can be department stores in certain markets and anchors can also be theaters or food and beverage or big boxes like TJ Maxx and Costco or grocery stores, which were in malls 50 years ago now coming back to malls.”

On the other hand, Mark Cohen, director of retail studies at Columbia Business School and former CEO and chairman of Sears Canada, says Taubman is making a “false equivalence.” “The cable universe doesn’t rely on, and hasn’t relied on, legacy television channels,” he said.

For malls, anchors were a lifeline, and they still are in the best malls, he said.

“When mall guys try to make the case that everything is fine, it’s in the triple A malls. The rest are dead,” Cohen said, adding property owners are attempting to resuscitate them through redevelopment. But no matter how many entertainment businesses, medical complexes and eateries they bring in, he said, those places will never do for malls what anchors once did. “They’re not the same kind of economic draw,” he said. “They’re tenants but they don’t necessarily draw traffic that wants to shop.”

While Hunter concedes there can be drawbacks to some of the new anchor types—grocery shoppers aren’t likely to let their ice cream melt in the trunk while they dress shop, for instance—he sees hope for department stores and malls that can embrace change and learn how to adapt to new consumer demands.

“They want a different shopping experience and different brands. You see department stores adding food and entertainment and community events as in the mall space so there’s a convergence between the department store, retail space and the consumers,” he said. “Those developers and department stores that can meet the needs of millennials will be well rewarded.”

Hunter said the Apple store is the best example of “a premier omnichannel retailer” that fits this bill. He said the technology store is sought after because of its sales volume but also because it attracts all consumer demographics.

While Cohen doesn’t dispute Apple’s drawing power—in fact he calls it a “force of nature unto itself,” he said anchor or not, a store of its caliber isn’t the answer for flailing malls. “Apple isn’t interested in going into anything other than triple A malls,” he said.

Like the once vibrant downtown shopping districts that long ago shuttered and never recovered, Cohen said redevelopment won’t save most malls. “The whole idea of the great American shopping mall is on the cusp of an enormous change, and it has to change,” he said. “Fifteen percent moving toward 20 percent of general merchandise sales are moving online.”