Thursday, April 16, 2009

Gotta go through it

So the American consumer bought way too much stuff with money that wasn't really theirs in the malls that have appeared everywhere across our landscape. And now the bill is due, consumers aren't spending, and those malls dotting the landscape aren't looking so pretty any more.

How ironic that General Growth Properties who bought way too many malls with money that wasn't really theirs is now having problems of the Chapter 11 variety. You have to give them credit (perhaps a bad word choice in light of the circumstances), but they had done everything possible to work out something with their bondholders to get through this without having to file.

So what happens now? Well, this isn't liquidation, it's just restructuring. General Growth will continue to operate their more than 200 malls... until they can sell some of them off. It's considered likely that Simon Properties will be able to pick up some of the properties at literally fire sale prices.

I'm fairly certain that more than a couple of the nation's malls need to go dark. In fact I talked about that for an hour in October with NPR. Here in the Seattle metropolitan area we have eight malls for 3.2 million people. Sounds like a lot of potential shoppers, but the malls are just too close together. We could easily cull three or more of those from the herd and improve the local gene pool.

So now it gets interesting. It's now not just the retailers but the property owners that are having issues. And the consumer isn't at a point they should be spending like drunken sailors again. Call me funny, but I'm not seeing how the current stimulus plans fix this. It's like that song we used to sing at camp where a refrain went something like: "can't go under it, can't go around it, gotta go through it."


Missty said...

Matt and I were saying the same thing. Some stores are just going to have to die. Sad but true. And many shouldn't have opened long ago in the first place. Who knows, well you do ;o) If Kohls is doing well, But we have 4 of them within 10-15 minutes drive. I don't shop there, but it seems everywhere I go there is one. And three of them are more like 10 minutes away. Crazy!

I want you to know I am trying my very hardest to keep my favorite stores in business. lol

The Crazy Coxes said...

I totally agree with you that we over word there! Too many brands and too many Gaps, Targets, Kohls, etc built too close together. There will have to be some sloughing of nonproducing stores/malls. The public will cream that they will have to drive 3 miles further...but what can you do. If the government is willing to let the retail industry suffer for the sins of the past, why aren't they willing to let the auto industry suffer fo their mistakes?

Thanks for the post on the mall bankruptcies!

lmauzy said...

Oh, I agree with the saturation disease. Many will have to close this year to better match demand.

I had to get an Ipod charger this morning at Bellevue Square and the mall was so completely dead that it made me sad, but not sad enough to purchase anything other than what I went there to buy. Apple store was fine, but as empty as I've seen it, which means I didn't have to wait to be served.

Emotions play a huge role in shopping and no one is going to want to shop in a ghost town. Target is a happier place.

KelliSue Kolz said...

Reading your blog tonight I realized I haven't been to more than 2 malls in 8 years. I moved to Chicago and worked too much to ever shop (except online and on Michigan Ave. where I worked). Then I married FarmBoy and live an hour to the nearest mall.

I think it would be eerie to go to Southcenter and Bellevue Square and see them quiet. I was a mallrat from 1985-2000.

We don't need so much conspicuous consumption. I just didn't realize I was part of it, until I managed to go some 8 years without stepping inside a mall.