Our Opinion: Another loss challenges Berkshire Mall viability

It probably didn't take J.C. Penney executives long to put their Berkshire Mall store on last week's closing list. As Penney and its rivals struggle to be relevant in the age of online shopping, particularly fashion sales by Amazon, they've been closing underperforming stores. For a company with $12.6 billion in annual sales, shuttering 138 stores is a relatively minor adjustment; the stores named Friday represent less than 5 percent of Penney's sales.

But on the ground in Lanesborough, this corporate tweak raises serious questions about a new mall owner's ability to restore vitality to a shopping destination on thin ice for years.

The Penney's announcement follows the closing of Macy's last winter and a Best Buy in late 2015. The mall's negative reviews on Yelp are sobering. People remember good times at the Berkshire Mall. Now, they post about empty storefronts. When Penney's wraps up its nearly 30-year run here in June, there is no assurance that customers will keep the habit of shopping at this mall.

That isn't good news for the retailers that owner Mike Kohan has managed to retain. It puts their employees at risk of joining the dozens of people who face layoffs at Penney's.

Sears announced in January it will close stores in South Attleboro and Fairhaven this year, preserving its anchor location at the Berkshire Mall.

But the Penney's closing puts this mall in select company of having lost multiple big tenants. That's more than a warning sign of trouble. It's a rout. Kohan knew he had problems to confront. That's why he was able to acquire the mall for a paltry $3.5 million last September.

Edward Dittmer of Morningstar Credit Ratings told National Real Estate Investor recently that repeat closings within a mall change public perception, reducing traffic and hurting remaining retailers. Green Street Advisors, which tracks this industry, said last year a large number of malls in America risk becoming "irrelevant retail destinations." That is the prospect the Berkshire Mall is staring in the face.

In a message to investors last month, Penney's executives said they still believe in brick-and-mortar stores, but only in the right places. In the right zipcodes, they mean. Penney's is investing in places where shoppers can be lured to in-store Sephora boutiques. Increasingly, America's malls fall into two categories: those with Tesla dealerships and Apple stores and those hanging on for dear life.

The have, have-not split in malls is only going to widen. An estimate from CoStar Group Inc, a real estate information provider, holds that to return to productivity (and profitability) levels nationally as of 2000, mall operators would have to shed 1 billion square feet of retailing space. That's 38.8 square miles, nearly the size of the city of Pittsfield.

Just two years ago, Penney's said it did not expect to close more stores, having rebounded from its disastrous 2012 campaign to be a more "hip" retailer, a move that led to a 33-percent drop in sales. That experiment was probably a non-starter for Lanesborough shoppers. And now, if they want to prowl in-store Penney's boutiques, they'll have to gas up for a longer drive.


If you'd like to leave a comment (or a tip or a question) about this story with the editors, please email us. We also welcome letters to the editor for publication; you can do that by filling out our letters form and submitting it to the newsroom.

Powered by Creative Circle Media Solutions