Here & Now

On Bon-Ton Closing: "Brick And Mortar Has To Respond"

Frederica Freyberg:

They've been something of a fixture across Wisconsin for more than 120 years. Tonight, a closer look at the closing of Bon-Ton stores, which include Boston Store and Younkers. Bon-Ton, with corporate offices in Milwaukee and Pennsylvania, will close 260 stores in 24 states, 13 of them in Wisconsin. The Wisconsin stores employ more than 2200 people, including 700 at the Milwaukee headquarters. What does this closure say about the changing landscape of retail? And what does it mean for shopping malls, now losing their iconic anchor stores, not to mention the economics of it? For that we return to Russ Kashian, director of the Fiscal and Economic Research Center at the University of Wisconsin-Whitewater. Thanks for being here.

Russ Kashian:

Thank you.

Frederica Freyberg:

Now, from a business perspective, how stunning is it to lose 2200 jobs across the state, 700 Bon-Ton corporate jobs in Milwaukee?

Russ Kashian:

Well, I think what we have to do is reduce it from the aggregate to the individual. We have to say, it isn’t simply 2200 jobs in a state with millions of jobs. It’s jobs in every community across the state. There are Younkers and Boston Stores throughout the state. Each one of them is going to peel off some jobs. And so it’s not simply one firm going under one place, there’s an impact in almost every single metropolitan area in the state.

Frederica Freyberg:

As for Milwaukee, speaking of metropolitan areas, the iconic Boston Store seems to be one of the last big retailers standing at that downtown Grand Avenue Mall. What becomes of that property?

Russ Kashian:

I'm concerned about it, of course. I always start from the individual, concern for the employees, because this is their livelihood. This is also their life, their friends, their family, their neighbors, their customers they’ve been working with for many years. I believe the land–the property downtown Milwaukee will be reused. It’ll be reused as housing or some kind of business property. The challenge down there is going to be how it impacts the other stores in the Grand Avenue. And the reason you have an anchor tenant is the anchor provides stability for the mall. When you lose that anchor, it’s going to list. And that’s my concern, is less the Boston Store site. It’s what’s next door to it.

Frederica Freyberg:

Well, right. In terms of what it might mean for the downtown, which civic leaders, as you know, are trying really hard to re-invent.

Russ Kashian:

Correct. And you’re losing a major retail player, which will bring other people into downtown.

Frederica Freyberg:

Now, for smaller cities that will lose their major department store, what could that spell?

Russ Kashian:

Well, I don’t think it’s good. I look at a city like Manitowoc, where the Younkers that’s there is the last remaining vestige of that mall. I don’t see it being repurposed very easily. So I think the city is going to have to be creative what to do with that facility. You have Janesville. Compounding this is the challenges that Sears and Penney's have all. So in a lot of these communities, you’ll have three anchor tenants. And the anchors are Younkers, Sears and Penney’s. All three of them are under assault.

Frederica Freyberg:

I read one expert in regard to this saying retail is in a state of disruption right now and the role of the department store has changed. How real in your mind is that?

Russ Kashian:

Well, I think it’s entirely accurate. I think the challenges — we’re doing — we do fine in the strip center where you have the unique store. Where someone pulls in, runs into the store, gets their goods and comes back out. The Bed, Bath and Beyond or those types of stores. The era of the large metropolitan mall I think has seen its heyday a long time ago. And this is the final footprint of what’s happening.

Frederica Freyberg:

Why is that?

Russ Kashian:

Well, a lot of it is e-trade. You know, we talked for years about the challenge that having the mall. The Walmart was built on the edge of town and it hollowed out the downtowns. And the mall was built at the edge of town. Southridge Mall was built in a cornfield in the 1960s. And now what’s happening is they’re building the Amazon distribution center in between several MSAs, between several metropolitan areas. And so the hollowing out is moving out even further. And so this is just what happened in the ’60s and ’70s to the downtowns is now happening to the malls as things continue to move out.

Frederica Freyberg:

The one thing that I've seen that apparently developers are doing is building these kind of open air malls, as opposed to these giant enclosed malls with, as you say, the anchor stores. What is an open air mall about in a climate like Wisconsin?

Russ Kashian:

It's about the specialty store. And the climate of Wisconsin is challenging sometimes. But I grew up in Wisconsin. 95% of the time it’s pretty good. You can run out of your car and run into the specialty store and get those goods that you’re looking for and get back to your car without having to traverse an entire shopping mall. The challenge was the department store was designed to bring the people into that store. And then they would kind of mosey on down to the specialty store inside the mall. If the department store isn’t there, then you have to go to the shopping mall and wander around the shopping mall. That’s challenging when I can simply park my car straight in front of that specialty store, the Lands' End store.

Frederica Freyberg:

You talked a moment ago about e-trade, so it’s kind of the Amazons of the world, this online shopping that is putting this pressure on bricks and mortar retail?

Russ Kashian:

It is. It is. I don’t think it’s the death knell of bricks and mortar, but I think bricks and mortar has to respond.

Frederica Freyberg:

Given the employment picture though right now, is it likely that employees who lose their jobs out of this will be able to find other work?

Russ Kashian:

Well, it’s easy to say, “Well, we have a very low unemployment rate. Therefore, they can go do something else.” I go back to the question is maybe they don’t want to — maybe they love their job. And so we have to have a little bit of concern and empathy for the people who worked at Boston Store in a social sense. Of course, they can go work somewhere. But it’s going to be a challenge because this is what their specialty was. This is what they were trained to do.

Frederica Freyberg:

Yeah. I appreciate the idea of empathy and the focus on the individual as opposed to just making it sound like a statistic and, “Oh, there’s plenty of jobs out there.” So Professor Kashian, we really appreciate your input. Thank you very much.

Russ Kashian:

Thank you.