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Crisis In The Malls - Segway And Santa Flee As Trump Says Merry Christmas

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Just when you thought it was safe to shop for miracles on 34th street, the skies have darkened yet again. First it was Segway issue, and now it’s Santa Claus. Is it time to pause and ask the question: “who will be shopping in the mall this COVID year?”

Segway PT ended its run on July 15th, when the last Segway Personal Transportation vehicle rolled off the assembly line in Bedford, New Hampshire. This event brought no joy for mall watchers, but Segway’s seemingly unrelated business decision would require a degree of respect. However, even with that tacit understanding for stopping production, the loss of Segway was hurtful to the many mallrats who longed for a career patrolling fashion’s aisles. As Segway pulled the plug, shopping mall pundits felt it was a philosophical turning point for retail. To them, this event signaled the end of an era that had peaked 11 years earlier with the movie - Paul Blart: Mall Cop.

Mall people continue to articulate that surviving in the year of COVID meant adjusting to the slow reopening of the (non-essential) fashion meccas. As people arrived, the once robust shopping aisles were now occupied by fewer consumers – many practicing social distancing skills, while shopping in facemasks that hid their fashion emotions. Then, just as the shopping dust was settling down, a few days ago there was additional bad news hitting the fashion headlines - the announcement that Santa Claus may also bail out of the mall.

It turns out that the headlines were accurate (if not 100% correct), as fictional visions started to appear - with Santa trimming his beard; his sled being packed up; and Dasher, Prancer, Vixen, Comet, Cupid, Donner, Blitzen, and Rudolph being sent out to pasture. Some say that construction crews were being contacted - perhaps to adjust any remaining physical versions of the Holiday, which would probably now be virtual or by appointment only. Like the rest of our fashion-less 2020 year, the all-important seasonal Holidays are suddenly shrinking before our eyes.

Attempts to verify all the rumors have shown them to be reasonably true, if not somewhat exaggerated. Santa may now be enclosed in plexiglass, streamed live over the internet, or visited by making a reservation in advance. What kind of Christmas selling season is this going to be? Where is the spirit? Where is the red fluffy knee to sit on, and what about the annual Santa photo? What will become of the Holiday Season? Is it too late to get the President to declare Santa an essential business? After all, wasn’t President Trump the one who publicly declared that we should be saying “Merry Christmas” again? Didn’t he just say to supporters: “remember when I first started campaigning, department stores wouldn’t use the words - Merry Christmas”

Unfortunately, Santa leaving is only part of the story. Truth be told, a more thoughtful analysis of the shopping mall world indicates that there are less stores to visit because of continued bankruptcies and store closures. And now, with no Segways and no Santa, some beg the question – what is the incentive to go to the mall at all this Holiday season?

To the rescue, enter the marketing teams who cleverly predict the future. In the middle of all this craziness the American spirit lives on - with the opening yet another new mall in East Rutherford, New Jersey called (appropriately) the American Dream. Their intuitive marketing team is probably following Butch Cassidy’s thought process, and borrowing the line from the movie: “You just keep thinking Butch, that’s what you are good at!”

For the past 18 years, a new shopping experience was promised at the famous N.J. Meadowlands. First it was called Xanadu. Then, Xanadu imploded and it was renamed “American Dream.” The mall was designed as a family destination - sporting an incredible water park, amusement park, ice rink, ski slope, 350 stores and 100 restaurants. Covering 3 million square feet, the new mall partially opened last October, but due to COVID-19, it was shuttered since last March. On October 1st, it reopened with approximately 60 stores operating, along with the Dream Works Water Park, a snow park, two mini-golf sections, and a Nickelodeon-themed amusement park.

Everyone wishes the developers of American Dream well, and early signs of positive foot traffic indicate that the concept might well be the dawning of a new day for shopping. However, opening a mall in this environment takes a lot of guts, and flies in the face of published data, which consistently indicates that shopping malls are in trouble. Several years ago, we had about 1,500 larger shopping malls. Today there are closer to 1,000 - but in five years the number could easily fall another 20%. It’s really hard to predict where the next zombie mall will be. Some of it depends on health of the anchor store (of which - many are closing), and some of it is based on the availability of consistent foot traffic, or the re-purposing the location to fit the needs of the local community. To add fuel to the fire, a recent survey from the International Council of Shopping Centers indicates that only 45% of U.S. consumers plan to visit a shopping mall this season.

Last week GAP GPS and Banana Republic announced that they will close 350 stores in North America by 2023. Other store closings from big-name brands continue to be announced and U.S. retail bankruptcies are the highest they have been in 10 years.

Retail has already seen 17 major bankruptcies in the last year and has 27 majors so far this year. Retail loan defaults are running at 20% and retailers have shed 483,000 jobs since February. We hear of big brand names that have filed for protection like J.C. Penney, J. Crew, Neiman Marcus, Lord & Taylor, Brooks Brothers, Men’s Wearhouse, JoS. A. Bank, Lucky Brand, Pier 1, and True Religion – to name but a few.

History will tell you that for 159 years, Santa has appeared in Macy’s M for the Holiday shopping season. Since 1861 Santa routinely showed up, but this year it’s not going to happen. Fully understanding the need for safety, but also relating to the unique symbolism of the Holiday season, some mall operators are working towards variations of a touchless Santa, or putting Santa behind plexiglass or in a plastic bubble. Depending on state regulations, you might see a Santa wearing a face mask – further indicating that our world has surely been turned upside down.

Everyone who is a fan the original 1947 holiday movie Miracle on 34th Street will recall that it features the Macy’s flagship store, and fans can relate to how Christmas, Santa, and Macy’s are completely synonymous. With that in mind, it’s pretty clear that Macy’s fully understands the dramatic significance of not having a physical Santa in the store this year. It is also clear that the exact wording in the movie, left room for virtual reality. It was Kris Kringle who turned to little Susie Walker (played by 8-year-old Natalie Wood) and said: “Now wait a minute, Susie. Just because every child can’t get his wish that doesn’t mean there isn’t a Santa Claus.”

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