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COMMENTARY

Shoppers hit the malls for the holidays, but not like they used to

Boulevard Mall was merry and bright Friday afternoon.

Corridors bustled, shoppers were laden with bags, and workers were busy with customers in every store. You'd be forgiven for thinking middle-tier enclosed malls are doing just fine.

Unfortunately, you would be wrong.

Enclosed shopping malls such as McKinley, Boulevard and Eastern Hills have gotten a good dose of Christmas cheer this holiday shopping season but they continue to struggle in comparison to recent years. Though hard numbers won't be available until after the holidays, merchants said traffic has slowed dramatically. Sales are down and even the holiday rush is more subdued than years past.

Quinton Chiavaroli of Kenmore has worked in a food kiosk at the Boulevard Mall for four years. He has seen a lot of changes since the food court closed, he said.

"It's been dead. It has gone down every year," he said. "This is the only time of the year it's busy, but it should be a lot busier than this."

Boulevard Mall owner Forest City gave up control of the mall last year instead of going into foreclosure after the mall failed to make a payment on its $92 million loan. The mall itself was then valued at only $53 million. Several tenants have left the mall since then.

But mall manager John Ecklund has seen glimmers of hope and has been able to secure more seasonal retailers this year.

"We are getting anecdotal comments from some of our major stores that their sales are actually up over last year, and while I wasn’t here last year to make a visual comparison, shopper traffic has appeared strong to me," he said.

This holiday season saw record online holiday spending, according to data from Adobe Analytics. Spending was up 17.8 percent from Nov. 1 to Dec. 19 compared to the same period last year, making it the biggest online shopping period of all time. People buying goods online and picking them up in-store grew a total of 47 percent according to the study, the biggest year ever for that activity.

Still, the majority of retail shopping happens at brick-and-mortar stores. As recently as three years ago, 90 percent of sales were made in person, according to a study by consulting firm A.T. Kearney. And though online shopping increased, visits to physical stores declined just 1 percent on Thanksgiving and Black Friday compared to last year, according to retail data firm ShopperTrak.

But malls are getting hit harder than other shopping centers, due to changing consumer preferences. In fact, so-called "power centers" – open-air retail plazas just a short trip down the road from the Boulevard, Eastern Hills and McKinley malls – have been bumping all season.

Eric Recoon, vice president of development and leasing for Benderson Development Co., said power centers continue to see increased traffic and rising popularity; especially as developers add amenities such as seating areas with fireplaces, Christmas attractions and holiday celebrations. And though online shopping has affected power centers, too, "the best centers have never been better," he said.

The best malls are holding up better, too, experts said.  And, as is the case with other Class-A malls in the country, Walden Galleria remains the heart of Western New York retail. Able to attract top tenants and build an attractive mix of retail, restaurants and entertainment, the mall has plenty of shoppers, though, it's certainly not as crowded as it was when it first opened in 1989 and was able to support two locations of many retailers in the same mall. But it still is the region's biggest retail success story.

Outlet malls tend to operate under a unique set of circumstances, as if they are not enclosed shopping malls nor retail plazas, but a different retail animal altogether. Fashion Outlets of Niagara Falls, USA, known as a magnet for Canadian shoppers, is even more peculiar because of its location near the Canadian border.

The Buffalo Niagara market has long counted on the influx of Canadian dollars to buoy its bottom lines, but that lifeline has been weakening just as retailers need them most.

Traffic from Canadian consumers has slowed dramatically as the Canadian dollar weakened and crossing the border became more time-consuming, outlet mall merchants said. Border-crossing numbers collected from the Peace Bridge bear those observations out. Eastbound automobile crossings from Canada into the United States totaled 147,854 in November. That was down from 156,791 for the same month last year; and down a whopping 30 percent since 2007.

Of course there are other factors in play when it comes to Canadians. They got a popular outlet mall of their own in Niagara-on-the-Lake in 2014. Perhaps most importantly, the value of the Canadian dollar has tumbled to 74 cents, down from 79 cents last year. It had been worth more than the American dollar in 2010 and hovered near par for about three years, giving the mall a boost.

As Canadian visitors to the outlet mall have decreased, more homegrown shoppers have rediscovered the mall, drawn to its expansion, increased selection and easier-to-navigate parking and crowds, store representatives said. That may be why some stores have been able to maintain flat sales and even report increases.

"Maybe it’s the fantastic winter weather conditions, or maybe it’s the surge in consumer confidence but in any case, we’re seeing lots of smiles and full shopping bags this week," said John Doran, the Fashion Outlets' general manager.

The true test will come in the New Year.

Most retailers, even if sales are slow and traffic is down, will stick things out until after the busy holiday shopping season. They'll reap whatever benefits they can from the Christmas rush, then re-evaluate in January. Malls see their heaviest turnover in the first quarter of the year, when business is at its slowest and tenant leases come up for renewal.

By the numbers

Online holiday spending in 2018: $110.49 billion

Year-over-year online shopping increase: 17.8 percent

Decline in foot traffic on Thanksgiving and Black Friday: 1 percent

Source: Adobe Analytics, ShopperTrak

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