Old-fashioned malls are beating Amazon in small-town America

What does this mean for malls? Just look abroad. We do have malls, just smaller ones that you drive 30min to at the maximum, after that the added value becomes too weak. Japan kinda shows the endgame, with malls fully integrated in many train stations, so you can go for some shopping with minimal loss of time. Amazon is extremely strong in Japan, with same-day delivery for prime members, yet this doesn't seem to affect the more upscale malls that you describe much. Specialised stores for electronics or clothing meanwhile compete mainly on service, in some areas also on price (Amazon does have quite a different cost structure that makes certain things quite a bit more expensive).

Tl;dr: The only constant thing is change - looking abroad helps to see possible versions of the future.

But the couple of malls near me seem to also have a number of more innovative brands. Clothing stores that sell at much cheaper prices (ethics be damned), like H&M, Old Navy, etc. do quite well with the millennials and younger crowd especially because they change their merchandise very frequently. I read somewhere that H&M has a turn around for a new style measured in weeks from inception to shelf, whereas traditional brands take months. So these guys respond quicker to trend changes.

Other types of stores are also interesting. Compare Macy's makeup counter vs Lush. Lush, for those not familiar, is an ingenious brand that sells organic personal care products, made by hand, never tested on animals, and often in very innovative categories. Did you know there is such a thing as "skin conditioner" or "face shampoo" or "lip scrub"? I didn't until someone showed me their recent Lush purchases. These small stores attract a lot of people.

I think what's dying is Sears, etc. Not malls in general.

This is brilliant, because for her to return the items she'd have to drive to a UPS or Fedex location (depending) anyways, so why not just end up at their B&M presence instead and since she's there do a little shopping? She ends up buying about 1/3 of her clothes at the physical store just because of this smart policy.

If the on-line option wasn't available she'd buy far fewer clothes overall, but by making it easy for their customers to part with their money, they get better sales. By itself the store isn't as convenient as just finding another on-line retailer.

This model doesn't seem to be as easy to replicate with store types that sell more generic goods, and less likely to need B&M interaction.

The big advantage that discount retailers like those have for shoppers over Amazon is price and being able to physically inspect merchandise before you buy it. The selection of certain brands is also often better at the physical retail stores.

The fact that you can make > 75% profit margins per unit in some categories flipping from discount retail to Amazon FBA demonstrates the advantage that these retailers have over Amazon. Amazon's fee structure also makes it so that certain price points are just about never going to be profitable for Amazon unless fees go down -- and fees have been going up quite substantially.

If you want good prices, you should not shop at Amazon - you should shop at a physical retailer.

So, Amazon has some issues with its model especially in categories like apparel that make it a pain to earn continual profits from. I prefer to sell men's to women's apparel for example because women return products for fit reasons at much higher rates as compared to men. Fitting measurements for women are also much less standardized because there's a lot of variance in female body shape. A return on Amazon is more costly to a seller than it is to a physical retailer.

Also, JC Penney generally has a minimum quality standard and often really impressive prices per unit that Amazon's fee structure makes it impossible to beat. You are not going to profit from selling a $7 polo shirt on Amazon unless the quality is awful and maybe if Amazon is buying it from you as a vendor. If you buy a $7 polo from JC Penney the quality might actually be great and JCP will earn a profit.

I have different opinions about Macy's because they generally do not have a price advantage. There is really no benefit to buying stuff at Macy's unless you really want the name brands and you don't mind paying a higher price. For a certain kind of shopper, that's what they want and that's what they'll get from Macy's.

This article is just as cherry picked as some of the 'death-of-the-mall' stories are. I could do a similar cherry picking locally by comparing one successful shopping complex about 30 miles distant from another one that is failing. Depending on which direction I drove I could tell a different speculative story about the future of the mall in small town America.

A lot of what is missed in the retail discussion is that while online retail is where a lot of the growth is, physical retail is where the bulk of the transactions still happen in the US. There is a limit to how much of that Amazon can 'eat.' Some if it is regulatory: in the latest issue of Total Retail, two of the biggest online sellers in 2016 were Walgreens and CVS. That's 'cause of online prescription pickup. If Amazon did go into that business -- as it might -- then the picture might start to look significantly different.

Amazon is terrible for clothes, but non-Amazon is fantastic.

But when I need clothes, car parts, electronic components, computer parts, any physical product with a non-zero chance of failure or an immediate desire really - knowing I can try something on or walk in 10 minutes later and return something and get it replaced on the spot is a killer feature - one that online shopping cannot replace.

I'd go so far as to argue that real stores are always better than online stores - online stores can only win on price and selection. For every other metric around, delivery time, replacement effort, ability to compare and to try, there's just no replacement.

And of course, since modern men's clothing is so horribly dull and men just wear a t-shirt and jeans usually, that means the large majority of square footage in the mall is dedicated to women's clothing.

Back to those stores that aren't at the mall: 1. Bookstores are still at the mall, but only some malls. It's called "Barnes & Noble". Lots of malls have them. But you don't see the small ones like Waldenbooks any more; they're all gone. People aren't reading books as much any more, and a lot of people who do buy e-books. 2. Not many people buy physical music any more. If they do, they get it on Amazon. Otherwise, everything is either MP3/AAC downloads or streaming music services. 3. No one buys software in a box any more; you just get it online. And a lot of application software has gone by the wayside, to be replaced with SaaS, web apps, etc.

(Funny enough, I've shopped two malls in one day on the same bus route: Metro's 75 runs between Northgate Mall and University Village. It was my favorite bus route when I lived in Lake City.)

And I can't help but think along the same lines that you are. You're telling me that you have these enormous storefronts with several multi-thousand sqft and often multi-story commercial spaces. You're telling me that they're sitting empty as retail giants fail to sell enough goods. You're telling me that people want fun experiences these days instead of consumer goods.

Call me crazy, but maybe you should turn that J.C. Penny's into a giant laser tag arena with drone-targets, or a VR-cade, or a big IMAX/4D/whatever theater, or a 'hot desk' shared workspace. You know, things that people can pay to use for fun or relaxation?

I guess in California they are having some success taking the roofs off of malls and making them outdoor spaces. Hopefully, America can just build pedestrian oriented cities and then we won't need malls.

The problem with this is that it's expensive real estate, and people just hanging out and maybe occasionally playing some game isn't going to generate enough profit for the place to stay open.