MAPLEWOOD, Minn. — Another day, another mall--or malls--goes bankrupt. The Ohio-based Washington Prime Group, the company that owns Maplewood Mall in Maplewood and Northtown Mall in Blaine, has filed for a Chapter 11 Bankruptcy.
We've talked about malls a lot on this show with Carlson school of management professor George John, so we checked in again.
Professor John said this bankruptcy filing may not be as big of an indicator as we may think it is.
"Those are not what I would call first tier malls--they're what I call second tier malls-- not quite strip malls," John said. "It's very hard to generalize anything from that incident. Remember the same party actually owns both malls, the fact that they're both in chapter 11 has nothing to do with the individual fortunes of each mall."
So what does a Chapter 11 mean?
"We let all the finance and money people work it out behind the scenes while the company continues to operate," John explained. "Basically what has to happen is someone has to inject new cash, because the reason they're in chapter 11 is probably a shortage of cash. To the consumer it's kind of opaque they don't have to notice anything."
Which is interesting because right now John said we're in a unique situation where consumer spending is up, while the consumer satisfaction is down.
Usually those two things trend in the same direction.
"Between inflation, spot shortages, difficulty getting employees, customer satisfaction, all of that is sort of unsettling news," he said. "But when you mix it all together, my favorite word is murky, we're not really sure what's going to happen going forward."
John said it could possibly be because we're all sailing in uncharted waters.
"Historically, we saw a shrinkage of actual employment the likes of which we've never seen," he said. "Having said that, the government spent all this money and sent people checks and people have not been hi the way the economy would have hit them it's been really cushioned. What does that mean for the recovery? Depends on which expert you listen to, when I watch consumer behavior, my reaction is that we just don't know."
So in terms of malls sticking around, John says they probably will.
"The fact that someone is willing to give them money to stay in chapter 11, means that someone thinks they can recover from it, so that's number one," he said. "Will they? That depends on that murky outlook I was telling you about it a few minutes ago, individual retailers have to have enough savvy to pivot and adapt to what people want."
Washington Prime Group has said both the malls will stay in operation during the proceedings.