Here’s a key factor that could predict if a company won’t survive 2017: Is it located in a mall?
That’s because Americans aren’t visiting malls as much anymore; they’re shopping online instead, which makes it hard for traditional mall stores—both big and small—to turn a profit.
In 2010, malls visits totaled 35 million, but three years later, that foot traffic fell by half, according to ShopperTrak. Earlier this year, retail analyst Jan Kniffen said he expects one out of three American malls to shutter in the coming years. Green Street Advisors is a little more optimistic, estimating that one in seven U.S. malls will be turned into non-retail space or will fail over the next decade.
But before the malls disappear, the stores that populate them are vanishing. Macy’s, Ralph Lauren, JC Penny and many more announced store closings across the country this year. Sports Authority finally went out of business this year. It’s a trend that gained steam during the Great Recession when mall staples like Walden Books, KB Toys, and Sharper Image all shuttered for good.
Some stores found a second life online. Both DEB and Delia’s, for instance, closed their physical stores in the last two years only to come back as online-only retailers.
This year, two of the largest mall operators—Simon Property Group and General Growth Properties—purchased the failing fashion retailer Aeropostale for $243 million, saving it from surefire bankruptcy. The result? The mall operators were able to keep 400 Aeropostale locations opened after giving rent concessions to 171 stores.
It’s an interesting survival strategy for the mall owners, but it’s unclear if it’s a just temporary salve. That’s because they would have to buy out many other struggling retailers to keep their doors open, including six of the nine companies that The Fiscal Times predict could vanish next year.