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Shopping malls and their bleak business future


Shopping malls once attracted consumers looking to make purchases under one roof. However, this common destination boasting convenience and climate control may become all too uncommon.

Mall business that once boomed faces dire predictions of a bust. Credit Suisse, a leading financial services company, forecasts that shopping centers will lose the battle as quickly as they are shedding square footage. Over the next five years, 20 to 25 percent will permanently close their doors.

The outlook remains bleak as the list of affected stores represent high-profile names. Payless ShoeSource is shuttering locations while Gymboree may be become another statistic in the record number of bankruptcies for the sector.

The domino effect started with the weak first quarter sales growth that matched the Great Recession of 2008. Bankruptcies put retail locations out of business. Closed stores shed staff. According to the Labor Department, 6,100 jobs were lost in May with most cuts coming from department stores and other retail locations.

E-commerce is now responsible for retail’s remaining growth. However, in a strange twist of irony, those retail companies who survive will be facing an unlikely foe.

Amazon.com is quite literally going back to the future. CEO Jeff Bezos is speeding towards 88 in his online giant’s DeLorean by launching brick and mortar bookstores and grocery-pick-up locations.

Not surprisingly, Wal-Mart continues to be a popular destination for shoppers. The Bentonville, Arkansas big-box behemoth continues to attract price sensitive shoppers who are not particularly loyal to brands.

First-quarter earnings results may be a harbinger of things to come with more store closings, layoffs and falling sales as the year trudges along.

Posted on Business Law

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