Department stores with household names used to be enough to get customers to trek out to the nearest mall — and maybe hit a few other stores and grab dinner while they were out.
A lot has changed in the last several years.
The owners of the Waterfront shopping complex this week bought the building owned by the iconic department store chain Macy’s to make way for “more relevant concepts” at the open-air shopping center in Homestead.
M&J Wilkow and BIG Shopping Centers closed the deal for the two-level, 140,000-square-foot building on Wednesday. Financial details were not disclosed.
Department stores across the country have been going dark for years as shoppers increasingly browse online or shell out money for experiences and gadgets. And that’s hit hard for retailers, many of whom are now trying to “right-size” their store footprint. Macy’s, Sears, JC Penney and Bon-Ton are among the big-box tenants shrinking their real estate portfolios to keep up with changing spending trends.
At the Waterfront, the developer took the first step. Marty Sweeney, senior vice president of M&J Wilkow, said the firm approached Macy’s about buying the building that sits almost under the Homestead Grays bridge.
“It really hasn’t added very much to the experience and shopping mix for a number of years,” he said. “We believe we can bring in new stores and more relevant concepts to make it more active than it is now.”
So what would be more relevant? Possibilities could include residential development, restaurants or more entertainment options.
The Waterfront also is home to venues like an AMC Theater, Dave & Busters and the comedy club Pittsburgh Improv, which signed a new long-term lease in November and will begin an expansion project next year.
And the other tenants at the center “thrive” on the traffic those venues bring in, Mr. Sweeney said, noting that in customer surveys, shoppers have asked for entertainment and food and beverage options.
“We haven’t heard customers say, ‘Bring in a JC Penney or Sears,’” he said. “No one asks about department stores.”
‘A different ball game now’
Macy’s has been at the Waterfront shopping center for more than a decade, and, the company said the decision to close “is always a difficult one.” The store employs 66 workers, the company said in a statement.
A clearance sale will begin Feb. 11 and run for eight to 12 weeks.
The Cincinnati-based retailer has been paring down its brick-and-mortar stores for awhile.
A year ago, it announced the locations of 100 stores that would go dark. Locally, the list included Washington Crown Center in Washington; Shenango Valley in Hermitage; and Beaver Valley in Monaca. The former Macy’s building in Downtown Pittsburgh, which had closed in an earlier round of winnowing, has been under redevelopment.
The Waterfront location originally opened as a Kaufmann’s in 2003. Macy’s bought Kaufmann’s parent company two years later in a deal valued at $11 billion. At the time that the Homestead store opened, Kaufmann’s was experimenting with a new concept to woo more shoppers.
The Waterfront location was about 30 percent smaller than the typical Kaufmann's at that time and about a third less costly to build, officials told the Post-Gazette.
Such so-called "lifestyle" stores were meant to fit more easily into open-air shopping centers or tight urban markets where development opportunities might come as mall construction slowed.
But traditional department stores started to lose their luster over time, noted Brad Schwer, an analyst with Morningstar Research Services.
“It’s one thing for a retailer to adapt to changing fashions,” Mr. Schwer said. “But it’s a different ball game now. I can sit on my couch, order 10 things, send back eight, and not leave the house. So it’s lost its draw.”
In response, shopping center owners are trying to “recapture that space when leases end or by buying them out,” he said.
Retail has always been a shifting landscape.
In a 2016 report, Moody’s Investors Service noted, “Retail has long been a business of creative destruction, with some established tenants failing and new ones springing up to replace them.”
Stephanie Ritenbaugh: sritenbaugh@post-gazette.com; 412-263-4910 or Twitter: @StephanieRit
First Published: February 1, 2018, 3:18 p.m.
