There are mounting concerns that the ‘Amazon effect’ is taking a toll on brick-and-mortar retailers, leaving them unable to survive against the competition from e-commerce.
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Credit Suisse predicted as many as 25% of malls in the U.S. will close in the next five years, partly due to the rise of online shopping, in a report released over the summer. The National Retail Federation reported for the first time ever, online shopping will be the most popular destination for holiday shopping with 59% of consumers saying they will be doing their shopping online.
Due to this trend, one retail analyst said this Christmas will be the last for many malls.
“It certainly is for many of the older malls that have not kept up with the re-tenanting that’s required to survive in the age of e-commerce,” Marcus & Millichap CEO Hessam Nadji told Maria Bartiromo during an interview on “Mornings with Maria.”
But Nadji said some malls that have bucked the trend and succeeded by bringing in other types of businesses to boost foot traffic.
“On the other end of the spectrum you have malls that are thriving because people are eating out more, in fact restaurant sales exceeded grocery store sales for the first time last year, so that means people are going out. Entertainment is a huge draw.”
According to Nadji, U.S. consumers are starting to spend more.
“But what’s really interesting is that Apple or Amazon’s brick-and-mortar strategy, if you look at the Whole Foods strategy for Amazon, Apple’s store openings, especially the flagship store in Chicago, that tells you that the consumer is still alive and kicking, I mean retail sales are up 3.8% on a core basis.”