�� or it should be – now seriously focusing the minds of Australian shopping centre operators and retailers. So far, shopping centres in the US have done a remarkable job in replacing the departed retailers. Landlords have needed to be on their A-game because the numbers are daunting. According to Fung Global Retail and Technology, which tracks the store openings and closures of US retail chains, the first four months of 2017 have brought 3,658 store closures, an increase of 119 per cent over the figure for the comparable period last year. Of the total number of closures, 3,191 involve specialty stores. How do the numbers break out by specialty retail category? The table shows that women’s apparel is the biggest loser, with 771 closures or 24.2 per cent of the total. Of these, 601 closings are attributable to the demise of three chains that have historically taken lots of space in regional shopping centres – The Limited, Bebe (which will continue online) and Wet Seal. The electronics category is not far behind women’s apparel in second place, which will serve as a warning to Australian retailers in the same category. Possibly the most alarming takeaway from the numbers in the table is that if you put all of the apparel-related categories together, then you come up with just under 73 per cent of the total. More closures are sure to come, as the retail world becomes increasingly omnichannel, and don’t think for a moment that the retailers running for the exit will all be low-profile or marginal operators, as evidenced by recent reports that Abercrombie & Fitch is seeking a buyer. The future of shopping centres For shopping centre operators, the closures pose a formidable challenge. Historically, retail chains that bite the dust have been chased out of business by stronger competitors who were better at meeting the needs of the market and rented even more space than the retailers they vanquished. For example, women’s specialty retail was beaten up as a category when unisex retailers arrived on the scene that could serve men, women and kids either out of separate stores or from a single, large partitioned one. Lifestyle changes have also had a material impact on traditional women’s specialty, spawning whole new specialty categories such as athleisure, exemplified by Lululemon and Lorna Jane. Later still, social media further eviscerated women’s specialty by pushing spending away from apparel toward beauty products, which gave a lift to retailers like Sephora. So no matter how badly women’s specialty got hammered, there was always another category to pick up the vacated stores. For landlords, this was manna from heaven – not only were there vibrant replacements for the old retailers, but they sucked up more space and did deals even in rotten shopping centres. Today, things are very different. Not enough retail chains in any of the non-food specialty categories are opening anywhere near enough stores to compensate for the losses incurred because of retailers going out of business or pruning their store portfolios. It’s not that the same innovation isn’t occurring in retail, it’s just that the new players are much more picky about where they lease expensive retail space. The strong centres get stronger, the weak get weaker. Rather than rely on successfully competing for the smaller pool of specialty retailers, US regional centre operators are looking at new business models and paradigms, signalled by a re-weighting of their specialty mix away from discretionary merchandise categories in favour of food, dining, entertainment and services. They are doing a brilliant job – so far. Vacancy continues to hover in the mid-90 per cent area but there is immense pressure to continue changing fast. Amazon in Australia Australian shopping centres cannot hide from the same forces that are upending the old US model. Curiously, despite the fact that Amazon is going to become America’s largest apparel retailer this year, much of the concern about Amazon’s arrival among Australian retailers is in categories like groceries and electronics. It’s not that such concern is unjustified, it’s just that specialty clothing retailers – already tottering from global fast fashion, e-commerce, lifestyle changes and consumers in a generally lousy mood – are also set to be severely tested by Amazon. Unfortunately, the popular quote from Nietzsche, “what doesn’t kill you makes you stronger”, doesn’t apply in this case. In the retail world, you can get weaker and weaker until you just fade away. To prevent that from happening, Australian landlords will need to take some serious risks on more than one new paradigm. And in launching new concepts and formats, they will need all the cooperation and ‘vision-sharing’ they can get from the nation’s planning community, which sometimes exhibits little understanding of, or interest in, economics or consumer preferences. Michael Baker is a Sydney-based retail consultant and former head of research at the International Council of Shopping Centers. michael@mbaker-retail.com