After a 70-year run, the business model driving the U.S. mall industry needs an overhaul, according to a new report, the New York Times reported today. Malls need to shift emphasis away from department stores and toward retailers that are less susceptible to competition from e-commerce, according to a report from real estate services firm CBRE Research. On average, department stores still occupy about 50 percent of the gross leasable area of shopping malls in the U.S., while similarly beleaguered apparel and accessory retailers take an additional 29 percent, said the CBRE report. Retail sectors that are growing, include restaurants, beauty and home furnishings, account for only a small percentage of the typical mall. The traditional mall model, developed seven decades ago, is heavily dependent on categories that are no longer fast-growing or meeting today’s consumer demands, the report said. But while change is necessary, it might be difficult for landlords to make changes quickly given the structure and length of leases, which could span 10 years. “Converting malls’ tenant bases to include more of the categories that in-person shoppers now favor won’t be an easy or quick fix,” said Melina Cordero, CBRE Americas head of retail research. “But it is a necessary evolution for the mall industry to maintain its place as a cornerstone of American retail.”
