Some shopping malls may be in deeper trouble than you think

By Sarah Mulholland Bloomberg

The damage inflicted on U.S. malls by the rise of e-commerce may be worse than it appears.

As embattled retailers announce store closures at a record pace, some tenants are shrinking their footprints more quietly by choosing not to renew expiring leases, according to a report from property-research firm Green Street Advisors. Of 2,468 in-line stores that closed in 2017 — a category that excludes department stores — 979 weren’t announced.

More than two-thirds of U.S. malls saw a decrease in national retailers, including chains such as Wet Seal, Bebe and Rue 21, which announced a combined 427 store closings last year, Green Street data show. Companies that closed stores without making public statements include Stride Rite and Hallmark.

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RETAILERS’ EMAILS ARE MISFIRES FOR MANY HOLIDAY SHOPPERS

Holiday email offers often go unopened, an expert says, because ‘most retailers haven’t done the unsexy work of understanding how to use the data’

By Suzanne Kapner

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Retailers have their work cut out for them when it comes to customizing and personalizing their email offers, an area where many have fallen behind compared with online rivals, analysts and industry executives say.

Such digital efforts are crucial during the holiday season, particularly on Cyber Monday, which Adobe Systems Inc. predicted would set an online spending record of $6.6 billion, a 17% increase from the same day a year earlier.

Traditional retailers were once pioneers of using data to zero in on what customers want. But as the importance of their catalogs and mailings have been overtaken by email and other online media, they have struggled—sometimes to the frustration of their customers.

Sari Rogers browsed Lord & Taylor’s website earlier this month, looking for a pair of tall black boots, but left without making a purchase. A day later, the retailer emailed her, but instead of beckoning her back with a boot promo, it advertised 25% off dresses.

“It’s kind of annoying,” said the 47-year-old Fanwood, N.J., resident, who is the parish coordinator at a local church. “They focus on products I’m not interested in.”

A spokeswoman for Lord & Taylor said the retailer has increased one-to-one communication with shoppers in recent months, including sending abandoned-cart reminders, in-stock and price-reduction alerts as well as post-purchase recommendations for other items customers might like.

But according to Brendan Witcher, a principal analyst at Forrester Research Inc., while retailers say they are customizing their emails, consumers don’t see it that way.

“Nearly 90% of organizations say they are focused on personalizing customer experiences, yet only 40% of shoppers say that information they get from retailers is relevant to their tastes and interests,” he said. “The ugly truth is that most retailers haven’t done the unsexy work of understanding how to use the data.”

At no time is that more evident than during the year-end shopping bonanza, when retailers deluge customers with messages. During last year’s holiday season, retail emails increased 15% compared with the rest of the year, but shoppers opened 15% fewer of them, according to a study of eight billion messages by marketing-services firm Yes Lifecycle Marketing.

Analysts say retailers can improve so-called open rates by including targeted offers, based on data collected from purchasing and web-browsing behavior.

Even something as simple as varying the times when emails are sent can result in gains. First-time purchases increased 40% at JustFab after it began customizing delivery times in 2015, according to Monica Deretich, the online retailer’s vice president of marketing and customer-relationship management.

“If you tend to open our emails around noon, that’s when you’ll get them,” she said. While retailers are making strides, they are still falling short when it comes to customizing the shopping experience, according to an analysis of 100 retailers by Sailthru, a personalization technology company. Two-thirds of companies examined by Sailthru received a score of 50 or less out of 100 based on their ability to personalize their sites, emails, mobile apps, social media and loyalty programs.

Gap Inc., with a score of 40, sent emails featuring women’s clothes to one of Sailthru’s researchers, even though he had created an online profile indicating he was a man and that he was most interested in items for men and babies. A Gap spokeswoman declined to comment.

Kohl’s Corp., which scored a 45, segments its emails based on gender, income, geography and other metrics, which is different from personalizing messages for a single shopper.

Segmentation, while effective, can miss nuances of consumer behavior, said Jason Grunberg, Sailthru’s vice president of marketing. “Ozzy Osbourne and Prince Charles are both British men in their late 60s, but they aren’t necessarily interested in buying the same things,” he said.

Greg Revelle, Kohl’s chief marketing officer, said the company does send some personalized messages, such as on a shopper’s birthday, and that segmentation can have a direct impact on sales.

“When we know you’re a kids shopper and we send you kids-focused emails, we see an 8% sales lift” of kids’ merchandise, he said.

THE BLACK FRIDAY FRENZY OFFICIALLY BEGINS TODAY. BUT MANY SAY THE THRILL IS GONE.

By Abha Bhattarai, Washington Post

Shoppers, it seems, are over the frenzied, harried, wait-all-night-in-the-cold madness of Black Friday. They are increasingly shunning the shopping holiday, opting instead to spread out purchases over a course of weeks or months. For the first time, more Americans are preparing to shop online this holiday season than in department stores, according to data from the National Retail Federation.

“Frankly, Black Friday has become meaningless,” said Mark Cohen, director of retail studies at Columbia Business School. “Retailers are desperate — they’re offering discounts weeks in advance, so what more is there to do? There’s no urgency anymore.”

Among those shopping Thanksgiving week, 13 percent are expected to go to a physical store on Thursday, while 28 percent plan to shop online that day, according to data from PwC, the professional services giant.

Over the past decade, big-box chains have slowly moved up doorbuster discounts from Black Friday (the day after Thanksgiving) to the Thanksgiving holiday itself, and even earlier, as they try to lock in sales that might otherwise go to their competitors.

That shift in how Americans shop, analysts say, is creating new problems for retailers. It’s no longer clear exactly when Americans are ready to begin spending — or what will get them to open their wallets.

Customers, too, say they’re facing new challenges: They’re never quite certain when the best deals might take place. A sweater might be marked down 70 percent on Thanksgiving Day — but will the discounts be even deeper on Cyber Monday?

WHY IS NEW YORK FULL
OF EMPTY STORES?

By THE EDITORIAL BOARD, NY Times

In his classic 1949 essay “Here Is New York,” E. B. White described the city as “a composite of tens of thousands of tiny neighborhood units,” each “virtually self-sufficient” with shops that met most residents’ basic needs, from groceries to shoes, from newspapers to haircuts. Every neighborhood was so complete, White wrote, “that many a New Yorker spends a lifetime within the confines of an area smaller than a country village.”

Nearly seven decades later, that observation is still largely valid, but it is being sorely tested by a scourge of store closings that afflicts one section of the city after another, notably in Manhattan and parts of Brooklyn. This plague has been underway for several years, but its familiarity does not diminish the damage inflicted on the economic and the psychic well-being of neighborhoods. One by one, cherished local shops are disappearing, replaced by national chains or, worse, nothing at all. To borrow from Tim Wu, a Columbia University law professor who has examined the issue, “Blight extracts a social cost.”

“For lease” signs all but define every block in some neighborhoods, rich as well as poor. Take the Upper West Side. Its City Council member, Helen Rosenthal, reports that her staff recently surveyed shops along Broadway and Amsterdam and Columbus Avenues, and on some side streets. Of 1,332 storefronts, 161, or 12 percent, were unoccupied. The situation, Ms. Rosenthal correctly says, is a threat to the area’s character, its “sense of community” and even its residents’ sense of safety. While a comparable citywide census of empty storefronts is needed, the Upper West Side is obviously not alone.

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STAKES ARE HIGH, CITY SAYS

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The city of Burnsville pulled no punches in its bid for a major grant to jump-start revitalization of the ailing Burnsville Center.

Jobs, tax revenue and investments are at stake, the city says. If the center closes, the surrounding retail corridor built up over the last 40 years could wither. The whole south metro area would feel the effects.

“If not repositioned in an innovative fashion,” the document said, “the Center could close, which would result in a significant decline in jobs, and risk the demise of the large retail corridor” along County Road 42.

Mayor Elizabeth Kautz, who has insisted the 40-year-old center must not “go dark.”

“Burnsville grew up around the Burnsville Center,” said Burnsville Chamber of Commerce President Jennifer Harmening. “The whole community kind of centers on that. We want that to continue, and we want to help support the mall owners. They’re a part of this, and they’re engaged in figuring out what’s next.”

Stung by national retail bankruptcies and changing consumer habits, the 1.1 million-square-foot center faces problems shared by many shopping malls.

The entire retail area employs about 7,000 over 600 acres, 96 occupied by Burnsville Center, the document said. Unabated vacancies at the mall could force it to close, spinning off closures in the rest of the area, it said. Declining property values and sales would depress property tax collections and state sales tax collections, it said.

“We’re not in a co-tenancy situation yet,” Burnsville Center general manager Joe Duperre said, referring to a clause in some retail contracts that grants tenants reduced rent if key tenants or a certain number of tenants vacate a building.

Duperre and his Tennessee-based company — which owns the mall along with Seritage Growth Properties, which owns the Sears space, Macy’s and JC Penney — have been working with city officials.

“I think we welcome any help we can get,” Duperre said. “As a private business and being a community focal point, it’s important for us to embrace the community and move forward.”

HORROR SHOW JUST WON’T END FOR MACY'S AND NORDSTROM

From CNN Money

More trouble in mall land: Wall Street is bracing for more signs of the retail apocalypse this week when Macy's and Nordstrom(JWN) detail the latest pain from the loss of mall shoppers who've migrated online.

Worse than slumping sales, department stores are likely to paint a gloomy picture about their busiest and most critical time of the year. Morgan Stanley recently warned that sales will outright decline during the holiday quarter at both Macy's (M) and Nordstrom.

The obvious reason for shrinking sales is that fewer and fewer Americans are heading to the malls to do their Christmas shopping. Instead of battling the crowds, they're finding great deals and more convenience on Amazon and elsewhere online.

JC PENNEY SHARES
TOUCHES ALL-TIME LOW AFTER
SLASHING OUTLOOK

By ANNE D'INNOCENZIO Associated Press

NEW YORK — J.C. Penney slashed its annual profit forecast as it accelerated the clearance of slow-moving inventory and warned of weaker sales.

Shares tumbled more than 20 percent to an all-time low Friday, pulling Sears, Dillard's, Kohl's and other retailers down with it.

The S&P index that tracks department stores tumbled 4.8 percent.

The warning was taken as a bad omen for retailers, particularly those that rely on clothing sales, as they head shakily into the crucial holiday shopping season.

Like many department stores, J.C. Penney has tried to reinvent itself as American spending patterns change radically. That transformation has meant less spending on clothes, and more spending on the home, or getting out of it for dinner or a trip to the spa. When money is spent on clothing, increasingly it ends up in the register at discount stores like T.J. Maxx, or more menacingly, at Amazon.com.

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Amazon: The ever-looming threat to Target and Best Buy.

From Mpls/St Paul Biz Journal

"CEO Hubert Joly, who joined Best Buy in 2012, rejected that idea right away, calling the alleged showrooming threat "one of the greatest falsehoods about our company." Instead, he got more aggressive on price, establishing a price-match guarantee and also beefing up his company's e-commerce business. And he may have been right — Best Buy actually took market share from Amazon (NASDAQ: AMZN) earlier this year."

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