Franchises Popping Up In Place of Department Stores?


When you go to your local mall, what do you see? If your mall is anything like typical malls across the country, it’s likely populated with large-scale department stores in addition to the smaller retailers. But according to several consumer reports, that’s already quickly changing.

Traditionally, department stores have always been the cornerstone of shopping malls across the country, and landlords have relied on their presence to drive business into the mall and to the various chain stores populated within. According to the Wall Street Journal, department store popularity peaked in the 1980s with more than 56 different department store brands, such as Sears, Kohl’s, and Bonwit Teller & Co.

But recently, the big names have not been bringing in business at the rate they once were. From 2005 to 2015, for instance, department store sales at General Growth malls dropped 10 percent while specialty store sales soared by 33 percent, according to the Wall Street Journal.

One reason for the decrease in revenue, according to, is that the products these stores carry are lacking in consumer appeal: Where department stores like Kohl’s and Macy’s release “lines” of clothing and products, consumers now tend to favor “fast fashion” that stores like Forever 21 and H&M have popularized. Competition from online retailers like further drives down department store popularity and sales.

Another reason for the downfall? Department stores occupy a vast amount of space. Normally, these stores pay less per square foot for store space since they have traditionally brought in more money. But with sales on the decline, landlords and investors are losing additional money every quarter. Cheesecake Factory, for example, brings in as much profit as Sears used to. Kicking out Sears in place of the Cheesecake Factory not only brings in more income, but frees up space for other lucrative businesses.

As the sales figures and popularity of department stores decline, many are predicting the quick rise of franchise businesses in their place, particularly in the next five years. According to the Wall Street Journal, more than half of all Sears leases will expire by 2021, leaving plenty of opportunity for specialty stores – including franchises – in their place.

So is this the end of retail as we know it? Not exactly. Rather, the downfall of department stores are a unique opportunity for franchise businesses. Franchising establishments have tripled since 2008, and could be a good fit to replace the once-popular department giants. Not only can niche retail franchises attract more consumers, but they are also poised to have as much negotiating power as a large lease holder, thanks to the shift in the market.

If you are a boutique retailer or food operator there may not be a better opportunity to expand into mall locations than right now. By franchising your business, it will allow you to expand your brand while minimizing the amount of capital and resources required to open additional locations.

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