Can the McKinley Mall survive without Sears?

November 9, 2019

By Samantha Christmann | The Buffalo News

Sears has decided it can survive without Western New York. But can the McKinley Mall survive without Sears?

McKinley was already struggling before Thursday’s confirmation its Sears store will close in February. Sears makes up 20% of the mall’s leased space. The mall, in financial straits, has seen a slew of closures, including major anchors Macy’s and Bon-Ton. And enclosed shopping malls as a whole have fallen out of favor among consumers.

So what happens to a mall that has been all but taken off life support?

The situation at the Hamburg mall is dire, said Burt Flickinger III, a retail expert and managing partner at Strategic Resource Group. But there are still opportunities for the center, built in the mid-1980s, to succeed, he said.

“It’s not the death of all hope,” he said.

Janel Lasker was busier than usual Friday during her shift selling appliances at the McKinley Mall Sears, as shoppers who heard about the store’s closure came looking for closeout sales. Liquidation won’t begin until next month.

“I haven’t seen this many people in a long time,” she said.

But even at its busiest, Sears’ longest checkout line consisted of just five people. Three others waited at a separate, slow-moving register in another department.

Just two miles away at the Quaker Crossing shopping plaza, drivers competed for parking space to visit bustling stores such as Target and Kohl’s. Customers returned to their cars with carts full of shopping bags.

Carolyn Robinson of Lackawanna can’t remember the last time she shopped at McKinley Mall.

It doesn’t have the stores she wants, and the ones it does have are too expensive, she said. She doesn’t like that the mall no longer has its dollar store, she doesn’t like any of the food in its ever-shrinking food court, and she thinks it’s “so stupid” that there’s no way to enter the mall through Bed, Beth & Beyond.

“It’s terrible,” she said.

At McKinley on Friday, mall walkers outnumbered shoppers.

Jim Kaitanowski of Orchard Park has been walking McKinley Mall since 2000. He tries to shop at stores such as Sears in order to support them, but he admits he and his wife do most of their shopping at Target and on the internet.

“That’s what’s doing this all in,” he said.

The story at McKinley Mall is the same as almost every suburban shopping mall in the country, including the Boulevard and Eastern Hills malls. Traditional department store anchors have disappeared in lock step with the shrinking middle-class shoppers who favored them. As the wealth gap widened, affluent shoppers gravitated to higher-end boutiques and upscale malls such as the Walden Galleria, while working-class shoppers moved on to discount and big-box stores in open-air shopping centers, such as Walmart.

And both groups migrated to the internet.

McKinley Mall, which has more than 25 vacant stores, is in receivership after failing to make a loan payment that cost more than the mall is worth. How could it possibly rebound after losing yet another anchor?

It can be done, but it will take a lot of creativity and luck, and the willingness of the landlord to play ball, according to Flickinger.

“These are tough times for McKinley Mall, but there could hopefully and realistically be better retail times ahead,” he said.

Paths to the future

Losing Sears may give the mall flexibility to try new things it couldn’t have managed with the giant store limping along on the property. Anchors are typically low-paying tenants. New, mixed uses could bring more revenue, better anchors, better cash flow and better overall financial returns, he said.

Creative reconfiguring of the mall, with portions knocked down and built out, could transform the space for new uses, in a layout more amenable to today’s shoppers.

Half of the property could be turned into something reminiscent of an outlet mall, featuring off-price stores such as Burlington and Ross Dress for Less, which are expanding, he said. It would be a good place for a BJ’s Wholesale Club, he said, especially considering BJ’s just struck a “brilliant deal” to demolish a Macy’s in a shopping center in Suffolk County and build a store on the site.

Lidl, Aldi’s biggest competitor, is likely headed for Western New York, too, he said. Though the Northtowns would probably get a Lidl before the Southtowns, his research shows the region can support up to 10 Lidl stores, and McKinley would eventually be a logical place to put one. The same goes for Costco, if it should enter the Buffalo Niagara market.

“There’s still a lot of expansion ahead for off-price retailers in Western New York,” he said.

So-called “e-sports,” competitive video games played before a spectator audience, are the fastest-growing area in entertainment and retailing and would complement the Buffalo-area’s strong sports culture and college population, Flickinger said.

Medaille College just added an e-sports major for fall 2020. The mall could team up with Erie Community College and private gaming companies in an education and commercial cooperative to put a significant e-gaming venue at McKinley Mall, he said.

The mall is challenged by a smaller, less dense surrounding population than shopping centers in the Northtowns. But the mall has other things in its favor, Flickinger said: It is visible and accessible to Canadians and others heading to and from Buffalo Bills football games at New Era Field. It’s an attractive place to stay for people priced out of downtown Buffalo’s hotels. And it is an area where population, employment and disposable income are growing.

“It may look like the proverbial dead elephant, but there is an opportunity for a retail renaissance,” Flickinger said.