Gottschalks' announcement yesterday that they're filing for Chapter 11 bankruptcy means yet more trouble for Bayshore Mall parent company General Growth Properties. A story on NPR this morning elucidated the woes of the nation's second largest mall operator. If GGP can't figure out a way to pay off their significant debts, or at least negotiate some new loan terms, by next month, they, too, could be forced into bankruptcy, according to Michael Niemira, chief council for the, ahem, International Council of Shopping Centers, a pro-mall trade association.
When mall stores go out of business (see: JC Penny, Mervyns, the Gap, Old Navy Outlet ...) it hits mall operators twice, according to NPR's report -- once through the loss of rent and a second smack via loss of revenues. (Mall owners often get a percentage of store profits.) Gottschalks may yet find a buyer and remain a going concern. But according to a California economist quoted on NPR, the problem is systemic: America simply has too many stores and too many malls. "We've been adding millions of square feet of retail space every year," he said. The trick now will be trying to strike "a realistic balance between what the consumer really needs and what the marketplace can give them."
Sounds like the task facing our entire economic system, no?