It’s the end of an era for shopping in downtown San Francisco. Shortly after Nordstrom announced it was closing its 312,000-square-foot, five-floor spot in the mall, the entire Westfield San Francisco Center itself followed suit. Now, the Mayor of San Francisco is even proposing to tear down the massive building. How could San Francisco’s once beloved and largest shopping mall go under so suddenly? A combination of factors unique to San Francisco as well as general trends in U.S. shopping are to blame.
Why The Westfield Mall is Closing
The Westfield San Francisco Center has been dealing with problems for a while now- from bad press from thefts to dwindling foot traffic in the area. Now, the companies who own the mall, Westfield and Brookfield Properties, have handed in the keys for the iconic downtown complex and stopped making payments on their $588 million loan. The mall’s decision to shut down came shortly after Nordstrom, which occupied 45% of the mall, announced they were closing their store in May.
A mall spokesperson told CNN that “A growing number of retailers and businesses are leaving the area due to the unsafe conditions for customers, retailers, and employees . . .” And that Nordstrom’s decision to close “underscores the deteriorating situation in downtown San Francisco.” It’s true, many stores in the area have closed since 2020, including Whole Foods, Anthropologie, Office Depot, CB2, Old Navy, H&M and Crate & Barrel.
Why Are So Many Stores Closing in Downtown SF?
You may remember the viral videos of brazen thefts on retail shops in downtown SF that circulated on social media over the past couple years. Although crime in San Francisco in general has gone down in the last six years, it is true that property crime has been on the rise. According to SFPD data, the city “saw a 23% increase in property crimes between 2020 and 2022, with spikes in burglary and theft headlining the surge.” But crime isn’t the only thing keeping people away from the mall. Hangover from the pandemic, which saw more people work from home and shopping online rather than in person, is likely contributing to the problem.
Along with retail closures, San Francisco has been recently plagued with office closures as well. San Francisco has reached a 30 year high in office vacancies with nearly 30% of office buildings left empty. This is up from just 4% before the pandemic. These empty offices mean less people are dropping into retail stores and restaurants during their work breaks.
Now, there’s less foot traffic from tourists and locals alike. Visits to the city are down 42% since 2019, from 9.7 million visitors per year to just 5.6 million in 2022. Tourists have been spending less money when they visit too. In fact, tourists have spent around 23% less on shopping in the city than in previous years. This could be from downtown’s souring reputation or from general consumer trends in the U.S.
Malls in General in America are In Hot Water
Although San Francisco’s retail situation is pretty dire, the city is far from alone when it comes to dying shopping malls. According to one industry watcher, there could only be 150 malls left in the U.S. by 2033. Malls have been in steady decline since the 1980’s which had 2,500 malls compared to just 700 today. The rise of internet shopping, cultural shifts away from in person shopping, and the pandemic have all contributed to this trend.
Online shopping has been rising in popularity for a while now and got a big boost during the pandemic. It makes sense because shopping online is not only convenient, it prevents you from being near other people who may be sick. But, even without the pandemic, online shopping has been on the rise for the last two decades. In fact, “Since 2001, online sales have grown by 300%, while department store sales have dropped by 50%.
Another thing we can’t ignore is that although San Francisco might be an easy scapegoat for crime, shoplifting incidents are rising in general around the U.S. Inflation, covid-era loans and boosts coming to an end, and other financial hardships are contributing to the problem. “…as economic fears grow amid inflation and rising borrowing costs, shoplifting often comes with the territory, industry watchers say.” People are stealing necessities like milk and bread, or even participating in organized shoplifting schemes. Either way, this trend is troubling for retailers. Target recently announced that it may lose half a billion dollars this year due to theft.
A Flawed Business Model
But, it’s not just the pandemic, online shopping, and shoplifting that is bringing down the mall. The business model of the mall, some argue, is the real nail in the coffin for U.S. shopping centers like the Westfield San Francisco Center. Malls typically rely on big department stores like Macy’s and Nordstrom to drive traffic to their locations and thus other smaller stores. However, these big department stores have been struggling for years now.
Some attribute the near death of department stores to shifting spending habits since the 2008 Great Recession. According to Vox, since then, “the vast majority of income growth in the US has gone to high-income households, squeezing middle-class households and altering where they spend money.” Essentially, the middle class doesn’t want to – or can’t afford to- spend money at luxury retailers like Nordstrom anymore. However, “traditionally, luxury retailers have been immune to economic downturns,” due to their wealthier clientele. But, since the end of covid, these once resilient stores haven’t bounced back.
One reason for this is probably because of the way we consume media. Although online shopping may seem less social, social media companies like Instagram, Pinterest and TikTok all have features that make online shopping tempting and easy. Shopping culture and advertisements have shifted to a focus on relating to customers through brand accounts. This makes it easier for consumers to discover smaller brands and interact directly with brands that might otherwise be found through department stores. All of this has made it difficult for the in-store shopping and department store model to compete.
Is In Person Shopping Gone for Good?
While malls may be suffering right now, in store shopping probably won’t be dying anytime soon. According to data from 2020-2022, in store shopping took a nosedive during the pandemic, but, surprisingly came back to pretty normal levels in 2022. This is probably due to the irreplaceable experience of shopping face-to-face. In-person customer service, an in store experience, and instant gratification from buying something immediately are all distinct advantages of brick and mortar stores.
What Will Happen to Westfield Center’s Retail Space?
After all is said and done, San Francisco is going to have an empty 500,000-square-foot building in the heart of downtown. SF’s mayor, London Breed, proposed creative solutions to fill, repurpose, or completely tear down and rebuild on the Westfield San Francisco Center. The space could become anything from a new shopping center, a lab space, company headquarters or even, as the mayor suggested, a sports stadium.
No matter what the space becomes, let’s hope it doesn’t remain empty and brings much needed foot traffic to beautiful San Francisco .
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