Two shopping malls in Arkansas will have to find replacements for anchor stores after Sears Holding Corp. announced another round of store closures earlier this month.
The Sears stores in the Northwest Arkansas Mall in Fayetteville and Central Mall in Fort Smith were among the list of 63 Sears and Kmart locations that will be shuttered by the company. Liquidation sales for the stores are scheduled to begin, and the locations will remain open until late January.
Eric Hertz, president of New York-based Center for Retail Real Estate, said the decision shouldn’t have been a surprise to operators of either mall considering the depth of Sears’ ongoing financial struggles. He also believes that the department store’s decision to close those stores should be viewed as an opportunity for developers at both locations as U.S. malls explore new ways to attract customers in the changing retail landscape.
“Picture yourself as a mall owner and you’re sitting there with a store that’s running out of steam, they have a long-term lease and there’s nothing you can do about it,” Hertz said. “That’s frustrating.
“At least they have control over the property, and now it’s a question of their level of imagination and how motivated they are. The sky is the limit, really, with what can be done with a space like that.”
Both malls will get the chance to develop solutions as Sears prepares to move out of both markets.
Northwest Arkansas Mall officials didn’t respond to multiple messages seeking comment about the closing last week, but the Sears store will become one of several vacancies within the enclosed shopping center.
There were about a dozen empty retail spaces in the mall as of early last week.
The Northwest Arkansas Mall — which currently has Sears, Dillard’s and J.C. Penney as mall anchors — was sold to limited liability companies formed by N.Y.-based Namdar Realty Group, Mason Asset Management and CH Capital Group for $39.5 million in late 2015. Namdar Realty Group referred questions to Mason Asset Management, which did not return a message seeking comment last week.
Casey McKinley, the marketing and specialty leasing manager of Central Mall in Fort Smith, said it was too early to speculate on a possible replacement for the Sears store. But McKinley said Central Mall does view the closing of the anchor stores as an opportunity to “enhance the retail offerings” to “better meet the needs of our customers.”
J.C. Penney and Dillard’s are the other anchor stores at Central Mall.
“We know that current economic conditions are challenging,” McKinley said. “However, this also provides us opportunities for the center to pursue other unique retail uses as many are right now.”
It’s a common theme for U.S. malls, which have seen thousands of closures from staples such as Sears, Macy’s, Nordstrom’s and other retailers over the past several years.
Hertz , the Center for Retail Real Estate president, said replacing a department store like Sears with another is no longer a wise solution to entice shoppers. Experiences matter to consumers because of the rise in online shopping, and malls that want to survive must find ways to reinvent themselves with the right mix of retail and entertainment.
“Not too long from now experience may outweigh retail in terms of the actual makeup of many malls,” Hertz said. “They’re moving in that direction. Sears isn’t the only one that’s threatened. As retailers continue to contract and vacate space, the obvious need is for something more experiential.”
The Florida Mall in Orlando tore down a closed Nordstrom and replaced it with a Crayola Experience family attraction in 2015. The mall also redeveloped a Saks Fifth Avenue, turning it into a dining pavilion that features new and relocated restaurants and stores. Natick Mall in Massachusetts is in the process of transforming a former J.C. Penney store into a Wegmans gourmet supermarket, while others have incorporated attractions such as miniature golf, trampoline parks, go-cart tracks and fitness centers into its empty spaces.
In Arkansas, the McCain Mall in North Little Rock transformed what at one time was an M.M. Cohn department store into a Regal Cinema a few years ago. It is one of the mall’s anchors, joining Sears, J.C. Penney and Dillard’s.
“It has been a great asset for us,” said Cheryl Ringgold, the mall’s director of marketing and business development. “It’s a great draw for the customers. People love to go to the theater.”
High-end movie theaters and food-hall concepts are among the potential conversions for vacated mall anchors, according to Hertz. The space could be leased to multiple retailers as well. Hertz also said there are larger-scale solutions, pointing to a revitalization project at Landmark Mall in Alexandria, Va., that was initiated by a Macy’s closing.
The plan will turn the 50-year-old mall into an urban area with shopping, restaurants, a movie theater, residences and green spaces for community events. Hertz said it shows what’s possible in the evolution of malls, where anchor stores are becoming a thing of the past and the new emphasis is on uses that involve lifestyle and entertainment options.
Not every mall will become a success story. Indeed, real estate research firm Green Street Advisors estimate that about 300 U.S. malls are at risk of closing over the next few years.
But Hertz said mall owners understand they have to transform their properties if they have “any future at all.”
“It takes a creative developer to really accomplish this type of transformation,” Hertz said. “You have to be dedicated to it. You have to put your team onto it and you have to bring in the right people and the right mix and then it can turn the entire mall around.”