Payless files for bankruptcy, malls wrestle with vacancies

Payless files, owners getting creative to fill storefronts

MINNEAPOLIS - Macy's, JC Penney, Sears and Kmart are all closing stores in 2017.
 
"This is the beginning," said Dave Brennan, a professor of marketing at the University of St. Thomas.
 
And other companies like Gander Mountain, Gordmans and Radio Shack are all filing Chapter 11 Bankruptcy protection. According to CNBC, nine major retailers have already filed this year, which is the most since the Recession in 2009.
 
Add another one to the list: Payless Shoes is filing for bankruptcy. The company announced it's closing 400 stores, four of those in Minnesota, including one  in Elk River. So, why is this happening to all of the retailers?
 
"The major shift is away from brick and mortar stores, more to Internet retailing," says Brennan.
 
Brennan also notes that e-commerce sales have jumped about 15 percent every year since 2010, which equates to hundreds of billions of dollars.
 
"The future will be propelled by Millennials and the Z Generation in terms that they are so computer savvy and they're used to it in terms of their consumer shopping behavior," says Brennan.
 
So, what's happening to all of the shopping centers with actual physical stores left behind, empty?
 
"Now, in some cases, what we're seeing is nontraditional retailers and services going in there," says Brennan.
 
Businesses like chiropractors, clinics and dentists.
 
That's true when we look at the numbers. According to Cushman & Wakefield NorthMarq's semi-annual "Compass Report," vacancies in the Twin Cities are holding steady since 2009, just 7.7 percent of square footage is empty. This means owners are getting creative in how they fill vacancies. 
 
"The beginning of a restructuring of retailing as we have known it in the past," says Brennan.
 
Brennan added that there's more here than just the Internet. Many of these companies had a rough Christmas and retail sales in general haven't grown as much in the past few years.

© 2017 KARE-TV


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