Online shopping continues to grow at a rapid rate across the United States. 2016 was the second year in a row in which online Black Friday sales surpassed in-store sales. While this transition may be profitable, it is causing major strains on shopping malls in small town America.
The Wall Street Journal recently did a case study in Steubenville, Ohio where two major retail chains have closed down in the local mall. Macy’s and Sears are shutting down at this location, much like they plan on doing in other parts of the country in 2017. Macy’s said it will be closing dozens of stores and terminating more than 100,000 jobs this year due to a slow holiday sales season. Sears continues to struggle to make ends meet, recently obtaining a $200 million line of credit from the company’s CEO.
Together, Macy’s and Sears make up 37% of the leasable space at the Fort Steuben Mall. This is comparable to many malls in America where Sears, Macy’s, Dillard’s and JCPenney make up the cornerstones of the shopping center. As these retailers shut down stores to appeal to the demand of online shoppers, small shopping malls could eventually become extinct.
America’s desire for convenience is a double-edged sword. It encourages online shopping while simultaneously leads to returns at physical stores. People love shopping from their homes, but if an item they ordered online isn’t quite what they wanted, they would rather drive to a physical store than take the time to ship back the item. In 2016, 90% of consumers went to brick-and-mortar stores to return items purchased online over the holidays.