Professor: Malls, small businesses can jump back from 'retail apocalypse'

From left, Bucknell professors Jimmy Chen and  Kate Suslava discuss small businesses and declining malls on Thursday.

Malls in the Valley and across the U.S. have suffered as traditionally large anchor stores, such as Macy's and Sears, have shut down and in-store foot traffic has dwindled.

But, while the popularity of online shopping shows no sign of receding, all is not lost, "if retailers learn to take advantage of the evolution of the ways transactions take place," said Jimmy Chen, a Freeman College (Bucknell) of Management analytics and operations management professor.

According to data cited by Business Insider, a business news website, more than 2,200 stores are already closing in 2020, as the "retail apocalypse drags on," Chen said.

For the past two or three years, retail has been in a period of transition.

"In the 1970s through the 1990s. We had too many shopping spaces, especially in the apparel segment of the market. Often when you walked into a mall, 70 percent of the stores were selling clothes, which might not have been the best combination of stores you could have in a mall," Chen said. 

"Maybe the stores closing, in the end, will turn out to be a good thing," Chen said. "We are seeing restaurants and fitness and health centers move into malls. Hopefully, this will bring a brand new climate and experience to going to a mall." 

In Monroe Township, for instance, Family Practice Center is expanding its services by opening a clinic in a space at the Susquehanna Valley Mall formally occupied by Sears.

Malls, in order to survive, have to be re-imagined or re-purposed, he said. "More and more people are shopping online. People don't want to go out. They want to use their cellphones to buy."

It's all about finding the right balance for your businesses, Chen opined. "At the heart of both demand and supply market activities are convenience and operations efficiency. To that end, some businesses might want to have more presence on the internet, others might want their presence felt in a physical store. You need to have both."

Small businesses at a minimum need to "have a good webpage, just so people can search for information about the business on the internet. Nowadays if people can't find your webpage, they don't really trust your business.," Chen said.

Misleading messages

Sometimes store closings are frequently accompanied by misleading corporate messages, added Bucknell accounting professor Kate Suslava. 

Suslava has created a dictionary of corporate communication euphemisms by analyzing 78,000 earnings call transcripts for U.S. companies over 14 years.

"The first thing I notice managers would do when they are closing a business is to come up with a strategy," Suslava said. "They'll put a spin on the situation, hoping that there is not too much negative reaction to the news, because that is what managers are afraid of. Their compensation is often tied to stock price. So when they deliver the news they hope there is no sudden drop in stock price."

Managers are very creative with the use of euphemisms, Suslava continued, "like 'right-sizing,' using the positive word 'right.'"

The idea is to be indirect, and introduce an element of confusion. Macy's "said goodbye to great colleagues and good friends."

They were laying people off.

Another euphemism used for a business that is closing is "we are reducing duplicative work."

Or "we will be addressing the unhealthy part of the business."

Companies can be very clever in their announcements of bad news, Suslava said.

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