Black Friday: The Moment of Truth for Struggling Malls

As this article in the Wall Street Journal points out through the tales of a specific Phoenix based mall, this could be a make or break year for many mall-based retailers:

“In a pattern repeated at urban malls across the country, Metrocenter deteriorated as wealthier families moved to outer suburbs and upscale shopping palaces cropped up there to cater to them. Big-box stores lured away Metrocenter's increasingly blue-collar customers and gang incidents damaged its reputation. Then came the housing crisis.”

A general rule of thumb is that any mall with annual sales per square foot of $200 or less in this economy is in danger of failure. An estimated 95 of the 1,006 large, enclosed malls in the U.S. meet that description, with the U.S. average being $340 per square foot.

The reason that this year is going to make or break particular malls is clear.  While the recession is technically over, there are still concerns, especially after last year's putrid holiday spending numbers, about how people will or will not choose to spend any disposable income that they have. That is why the results from today, Black Friday, will dictate the outcome for many struggling malls and retailers alike. Double digit unemployment numbers certainly do not help.  Yet, in the spirit of the holiday season, many families may find they simply are not able, or willing to go two years in a row being stingy with their kids' gifts.  Your local mall operator is counting on it, and their very existence may depend on it.