The closure of six area Elder-Beerman locations in the next few months could spell trouble for area malls who have relied on customer traffic and high-price leases from the longtime department store.
Bon Ton Stores Inc., the parent company of Elder-Beerman, announced last week it was going out of business after it could not attract a buyer during its bankruptcy proceedings. The closure will mean more than 250 stores across the U.S. will close and the loss of hundreds of jobs in this region.
“The question is, ‘Will this lead to other stores (closing), and is it more indicative of a more serious problem at the mall?’” BTIG analyst James Sullivan said “If that’s the case, you risk a particular mall failing.”
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Retailers — like Bon-Ton Stores, Sears, even Toys “R” Us — that have typically anchored malls and shopping centers are shutting down thousands of stores across the country. The dying chains are another sign of the traditional retailer’s inability to adapt and compete with online retailers like Amazon.
More than 12,000 stores are expected to close in 2018 — up from roughly 9,000 in 2017, according to Cushman & Wakefield, a real estate brokerage firm. The retail industry is greatly important to the country’s economy as it supports one in four jobs across the country.
In Ohio, more than 60 grocery, eyewear, shoe, auto, clothing and other retail companies are headquartered — making the fast decline of brick-and-mortar stores even more alarming for local and state economies.
Around one-third of U.S. malls are projected to close in the next few years, which is forcing local shopping centers like the Dayton Mall and the Mall at Fairfield Commons in Beavercreek to plan for changes that have been brewing in the retail industry for years.
Malls will have to get creative and many may not have much time, retail experts said.
Andrew Feinblatt of Cincinnati-based OnSite Retail Group, said replacing an anchor tenant like Elder-Beerman is difficult. Square footage alone is an issue — as most retailers aren’t looking for massive boxes to lease out right now. Even Target is shifting to more small-format stores.
» CONTINUED COVERAGE: Elder-Beerman parent company confirms liquidation
Operating agreements, or reciprocal easement agreements, for Elder-Beerman spaces could also limit what type of tenant takes over the space, Feinblatt said. While medical tenant or mixed-used residential space might make sense in a renovated tenant space, multiple parties would have to agree to it. Zoning regulations with local municipalities can also hinder a quick turnaround to fill the space.
Still, Feinblatt said he doesn’t think it’s a hopeless situation for local shopping centers. Retailers, especially discount ones like At Home and T.J.Maxx, are still expanding in large spaces. Malls are “being proactive,” trying to bring in more food, drink and entertainment options at their centers, he said.
“It’s about evolution, creativity, it’s an opportunity to get creative to find a solution that appeals to today’s consumer,” he said.
Bon-Ton Stores Inc. officials announced a joint bidder, including a group of the bankrupt retail chain’s bondholders, won an auction last week for the company’s asset. Great American Group and Tiger Capital Group —and the holders of Bon-Ton’s second-lien secured notes will acquire the retailer’s inventory and certain other assets, Bon-Ton said in a statement.
The bondholder group has wanted all Bon-Ton stores to close since the beginning of the bankruptcy process. Bon-Ton employs about 24,000 people. The company operates roughly 250 stores in 23 states under the Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers brands.
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“While we are disappointed by this outcome and tried very hard to identify bidders interested in operating the business as a going concern, we are committed to working constructively with the winning bidder to ensure an orderly wind-down of operations that minimizes the impact of this development on our associates, customers, vendors and the communities we serve,” said Bill Tracy, Bon-Ton’s CEO.
Bon-Ton had been working with U.S. mall owners Washington Prime Group Inc. and Namdar Realty Group to secure a bid that would have kept open a large portion of Bon-Ton locations. The deal reportedly fell through after the court ruled Bon-Ton wouldn’t be able to pay $500,000 “work fee” to the group.
It would’ve benefited the mall groups as Bon-Ton Stores are major tenants for both companies. Washington Prime owns both the Dayton Mall and the Mall at Fairfield Commons, and the company had a vested interest in saving Bon-Ton Stores. Washington Prime and local mall officials did not respond to request for comment.
All Elder-Beerman stores are expected to close in the next 10 to 12 weeks.
Future of area malls
Washington Prime has about 15 Bon-Ton leases in its portfolio and nine of those have both Sears and Bon-Ton locations, including both the Dayton Mall and the Mall at Fairfield Commons.
Miami Valley Centre Mall officials said the closure and liquidation of all Bon-Ton stores is disappointing for the Piqua shopping center.
“As owners of the mall since 1993 we have seen many changes in retail both locally and nationally. The Mid-America Management Corporation’s commitment to the mall and the city of Piqua remains as strong as ever” the mall group said in a statement.
The Greene Town Center, which is owned by Ohio-headquartered Olshan Properties, does not have Elder-Beerman, Sears or Toys “R” Us as anchor tenants.
Chris Kershner, executive vice president of the Dayton Area Chamber of Commerce, said Bon-Ton’s liquidation is reflective of retail changes happening across the country. Despite economic planning and a diverse retail landscape, a national retailer’s demise is beyond anything local malls can salvage, he said.
“That’s pretty difficult,” he said. “It’s much greater than Dayton. Certainly losing Elder-Beerman and their presence, those jobs, will have an impact. I would say we have, as a community, already made an effort to revitalize some of our mall areas.”
Last year, Washington Prime started introducing new, innovative methods to lure shoppers back to traditional retail. Some of the company’s ideas included breweries, outdoor seating, Amazon lockers and art galleries in malls and shopping centers.
Washington Prime also installed self-service Amazon Lockers at some centers, so that customers can pick up their packages at the mall. The retail group formed a sponsorship agreement with Coca-Cola so the lockers are easy to spot — the lockers are covered in promotional signage for Coca-Cola.
The company is working with Cleveland Avenue, a food and beverage venture capital accelerator, which will provide the retail group with the opportunity to test new restaurant concepts in centers. Cleveland Avenue will also help the retail group find new ways to “rethink the food court.”
“Everyone is reading into what today’s consumer wants,” Feinblatt said. “They’re trying to come up with solutions to meet those needs. It might be restaurants, it might be entertainment, fitness, movies.”
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Elder-Beerman, which grew from a Dayton dry goods store to one of downtown’s great emporiums before a decades-long dirge through bankruptcies and quarterly losses, will close all of its stores in the next 10 to 12 weeks.
Here’s a timeline of the company’s 135-year history:
1883: An advertisement in the Dayton Daily Journal announces the establishment of the Boston Dry Goods Store. One of the owners is Thomas Elder.
1896: Elder moves his store to the Reibold Building at Fourth and Main streets. This becomes the Elder & Johnston Co. department store’s home for more than six decades.
1950: Arthur Beerman enters the retail store ownership business and soon opens “Beermans for Bargains” junior department stores in the McCook and Northtown shopping centers.
1953: Bee-Gee Shoes formed in Beerman partnership with Max Gutmann.
1956: Beerman buys the downtown Home Store.
1962: Beerman merges his Beerman stores with the Elder & Johnston Co.
1963: The Northwest store at Philadelphia Drive and Siebenthaler Avenue opens.
1968: The Hamilton store opens in the downtown redevelopment area. Shortly thereafter, the Richmond, Ind., store opens.
1970: Arthur Beerman dies; Max Gutmann becomes president.
1976: The Courthouse Square store in downtown Dayton opens. The store is five floors, including the basement.
1978: The chain moves into Hamilton County with the purchase of the downtown and suburban Cincinnati Mabley & Carew stores.
1981: Margos La Mode chain purchased.
1987: Elder-Beerman stores open in Michigan.
1989: Elder-Beerman acquires 10 Meis department stores located in Indiana, Illinois and Kentucky, bringing the total number of the companys department stores to 43.
1991: Total number of Elder-Beerman department stores rises to 47. Gutmann retires; Milton Hartley named president; distribution center opens in Fairborn.
1992: Newspaper reports Elder-Beerman Co. is negotiating to buy the 25-store H.C. Prange Co. department store chain of Green Bay, Wis.
1993: 50th store opens at the Mall on Fairfield Commons, Beavercreek.
1994: Beermans widow, Jessie Beerman, dies; Eastown store closes.
1995: Milton Hartley resigns; Max Gutmann and Herbert Glaser return from retirement as chief executives.
1996: With 52 stores, Elder-Beerman files five-year plan asking court to remain independent. Company asks for second extension of time to file reorganization plan.
1997: Frederick J. Mershad hired from Proffitt’s Inc. as new president and chief executive. The company files reorganization plan. A settlement is reached that prevents Carson Pirie Scott and Proffitt’s from attempting a takeover of Elder-Beerman, at least until after Jan. 31, 1999. The company completes bankruptcy reorganization on Dec. 30.
1998: Elder-Beerman is an independent company with stock, held largely by creditors, traded on Nasdaq. In a surprise announcement, Elder-Beerman unveiled plans to replace McAlpin’s in the Dayton Mall. After 17 months in the mall, McAlpin’s said it failed to find a suitable site for a second Dayton area store. In the fall, Elder-Beerman signed a 10-year lease on the 82,000-square-foot Lazarus department store at the Lazarus Kettering Shopping Center.
1999: Elder-Beerman finished its first year as a publicly held company following bankruptcy proceedings with rising sales and growing profits. Later, a Washington state-based investment group purchased a large chunk of Elder-Beerman Stores Corp. stock and demanded that the board either fire top management or sell the company.
2000: Elder-Beerman sells Shoebilee Inc. for $10 million. Elder-Beerman’s board begins looking for a buyer, entering into confidentiality agreements with eight parties.
2001: Reynolds & Reynolds moves into three floors of the five-floor Courthouse Square store, leaving the department store with two selling floors. Elder-Beerman reports losses.
2002: Former Mead Corp. Chairman and Chief Executive Steven C. Mason, is named Elder-Beerman chairman. Former Belk Inc. executive Byron “Bud” Bergren is named president and chief executive. Elder-Beerman closes its Courthouse Square store, downtown Dayton’s last department store, amid a dispute over lease rates.
2003: After a lengthy bidding war, York, Pa.-based Bon-Ton acquired Elder-Beerman for $92.8 million. The acquisition is Bon-Ton’s largest, doubling the size of the company from 72 stores to 140 stores across 17 states.
2004: Bon-Ton announced the elimination of 311 of 450 jobs at the Elder-Beerman Stores Corp. headquarters in Moraine. Bon-Ton management acknowledges the company “did not properly anticipate” challenges with the merger. Bergren, who engaged in a bidding war against Bon-Ton and lost, is named the company’s chief executive and president.
2006: Bon-Ton announced plans to purchase four Parisian department stores — including the Beavercreek store— from Belk Inc.
2007: Bon-Ton announced plans to renovate and reconfigure its Elder-Beerman and recently acquired Parisian stores at Fairfield Commons Mall and operate both under the Elder-Beerman nameplate.
2009: Bon-Ton announces the elimination of 1,150 positions and announces plans to close its Elder-Beerman store in Hamilton.
2010: Elder-Beerman in Centerville closes to make way for Kroger.
2011: Bon-Ton announces closure of the Northwest Plaza shopping center, scheduled to close in 2012. Bergren announces retirement as chief executive to become chairman of the board. He is replaced as chief executive by Brendan Hoffman.
2012: Elder-Beerman store at Upper Valley Mall set for closure.
2014: Two Elder-Beerman stores at Fairfield Commons are combined under a consolidated store. Bon-Ton announces move of jobs from Fairborn distribution center to a new distribution center in West Jefferson, near Columbus. Kathryn Bufano is named president and chief executive officer.
2017: Middletown Elder-Beerman store closes. Bon-Ton president and chief executive Bufano resigns, and former chief operating officer William Tracy takes over. Bon-Ton hires a restructuring firm to look into bankruptcy as it grapples with more than $900 million of debt.
2018: Bon-Ton files for bankruptcy.