Death of Canadian malls: Future of suburban shopping centres in jeopardy

Photo from Michael Galinsky's Malls of America series, circa the 1980s.
Photo from Michael Galinsky's Malls of America series, circa the 1980s.

In the classic 1995 film Clueless, Cher and her bestie Dionne spend a disproportionate amount of time shopping at the mall. Like the soda shop before it the mall has long been the quintessential destination in pop culture, and IRL (texting speak for “in real life”), for teens to waste away the day.

But in the two decades since Clueless premiered many malls across North America have been dying a slow, undignified death. Most malls were built decades ago to cater to Canadians who had migrated to the suburbs. For years, shopping castles surrounded by parking-lot moats ruled the retail kingdom, until they were hit by a triple-whammy in the ‘90s: power centers, e-commerce and aging infrastructure.

Things have only gotten worse as of late. Over the past 12 months the list of retailers found in your average Canadian mall who have been forced to close their doors is staggering. Among them are clothing stores like Smart Set and Boutique Jacob Inc., home decor destinations like Bombay & Co, Inc., electronics retailer The Sony Store and even stationery store Grand & Toy. The most recent and arguably highest profile departure is Target, pulling out of Canada after less than two years.

Several experts say malls must adapt to the times, or the retail model will die off.

“There is an abundance of choice out there now,” Doug Stephens, a retail industry futurist based in Toronto, told Yahoo Canada News in an interview. “The days of simply being available and thus being successful are over.”

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If malls are to survive, they must move beyond a cookie-cutter approach where all malls look the same and have the same stores. The next generation of shoppers, Millennials and Generation Z, expect variety, uniqueness and individualization, says Stephens.

His kids, now 20 and 23, have rarely ever shopped at malls, instead opting to shop at smaller independent retailers during their teens and into their twenties, Stephens says.

But, just like harbouring a secret crush or gossiping about the popular people, shopping is a teen pastime that never seems to go completely out of style. Teens still love to shop, spending the majority of their money (either earned at part-time jobs or given to them by their parents) on clothes and food, according to a recent U.S. survey. And after years of decline the number of trips teens make to malls has stabilized at 29.3 trips per year, says the same survey. But operators must give young people a reason to trek all the way to the mall, instead of just buying items online with a few swipes of their index finger.

Emily Li, 20, loves to shop ‘till she drops and has frequented malls for years. Unlike Stephens’ kids, when Li was a high schooler in a suburb outside of Toronto she would often go to the mall in a pack (yes, teens still travel in packs). When she moved away to study economics in Waterloo, Ont., she still made frequent trips to the two major malls in the region by bus. These days, the president of the Federation of Students' Style Society at the University of Waterloo is so busy with school she has scaled back her trips and has migrated to doing to more shopping online.

Yet Li doesn’t think she will ever give up going to the mall completely.

“Nothing beats trying on clothes in person… unless they invent some sort of robot thing that replicates that,” says Li, laughing.

While the millennial is half-joking, the in-person experience might just be just what stops malls from going the way of soda shops, roller rinks and arcades.

Malls are still king for baby boomers

Yorkdale Shopping Centre just off the highway on the outskirts of Toronto has long reigned as one of the queen bees of Canadian malls by continually improving its in-person experience.

Baby boomers and Generation Xers grew up frequenting suburban malls and now at the height of their earning and spending powers, malls are spending millions on revamps to cater mainly to those age groups.

Since Yorkdale first opened in 1964 it has undergone four major renovations. The most recent $220-million, 145,000- square-foot expansion was completed in 2012. The new crown jewel will be a 188,000 square-foot Nordstrom set to open in the fall of 2016.

Most ‘super-regional’ malls like Yorkdale, defined as those over one million square feet, both here and in the U.S. have long waiting lists of retailers clamouring to get in, said Ross Moore, national research director for CBRE in Canada. These top-tier spaces offer in-person perks like valet parking, posh eateries and personalized service to the upper-class clientele, who always have money to spend regardless of the state of the economy, as well as providing an aspirational experience for middle-class shoppers. Smaller regional malls, on the other hand, have been hit hard by bargain-hunting shoppers being lured away by power centres and online deals.

While Yorkdale is still seen as one of the country’s top retail castles. But, drive further up the highway and it’s a very different story. The Orillia Square Mall’s parking lot is usually close to empty and its Target store permanently closed in late March. All Targets in Canada, many anchor tenants in malls, will shut their doors by April 12. For many malls across Canada a fairy-tale ending seems unlikely.

“For the most part, the … car-dominated retail malls from the 1960s and 1970s are dinosaurs,” Linda Allen, community planner and managing partner of CitySpaces in Vancouver, said in an e-mail interview. “Frankly, some malls just aren’t worth fixing. In the States, older malls are being knocked down every month. It’s not worth investing in their regeneration.”

But mall owners north of the border are not going down without a fight, at least in the medium-term.

Tellingly, only two major enclosed shopping malls have been built in Canada since 1989: Vaughan Mills in Toronto and Cross Iron Mills in Calgary, according to a mid-2013 government report on our changing retail environment. Instead, malls are being redeveloped in almost every major metropolitan area across the country, according to a late 2014 report by CBRE Ltd.

While giant malls, like Yorkdale, will likely continue to be filled to the gills with shoppers, smaller malls will need to get creative, says Moore.

Future of malls is multi-purpose

Some malls in smaller cities and towns will not be able to find a tenant to replace Target stores. In those cases owners may opt to split the stores into smaller spaces to be leased out. And some will benefit from going to more of a mixed-use model, said Jim Danahy, chief executive officer of the retail-consulting firm Customer LAB.

Malls that have a mix of uses, perhaps including condos, satellite campuses and offices, will have the best chance of surviving by becoming a vital and lively part of their communities again, said Danahy.

Even with big changes the retail model may soon seem as retro as catalogues and general stores.

Amazon is testing drones in rural B.C. that might one day deliver items to customers within 30 minutes of ordering. The biggest online store on the planet is also testing a ‘Dash Button’ that allows Amazon Prime members to order products at the push of a button.

That doesn’t mean all physical stores are ultimately doomed. Amazon just opened its first brick-and-mortar store this February, primarily as a place for customers to pick up orders.

Danahy sees this model as the future. Malls won’t completely cede their throne to the web, but all retailers will have to become ‘omni-channel’ offering customers a mix of online, mobile and in-person options, he says.

The splashy renovations and new international retailers setting up shop here show the rumours of the death of the mall have been somewhat exaggerated. It will ultimately be up to the kids of the boomers and Gen Xers whether they want to continue the tradition of whiling away the weekend at shopping castles, or if it’s time for the kids to find a new hangout spot.


Follow Melissa on Twitter: @Melissa_Dunne33