The pandemic has unleashed new trends that will impact the future of malls and the retail landscape for years to come. After the U.S. Bankruptcy Court for the Southern District of Texas approved the acquisition of J.C. Penney by an acquisition group that includes the nation’s largest mall owners Simon Property Group and Brookfield Properties, Partner Victor Sahn believes the retail business has been revolutionized.
“There’s a crossover effect in retail. When the tenants get in trouble, the landlords get in trouble. But what is happening now is different from anything that’s gone on before, and in a way that is more ominous than it’s ever been,” Sahn told Chain Store Age.
Both mall owners have been involved in rescuing specialty retailers as part of the venture group SPARC. Besides involving the two major mall landlords, by virtue of the SPARC acquisitions, as owners of a number of their major tenants who are in Chapter 11 cases, SPARC has added to the seismic change through at least two of their business practices. First, they are demanding 120-day terms from suppliers, many of whom are Southeast Asian companies, instead of the 30- or 45-day terms they’re accustomed to.
Sahn added, “But very few of the suppliers’ lenders or factors are willing to extend them 120-day terms, and so are not in a position to sell merchandise into the American market which is for most of these suppliers, by far their largest source of customers.”
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