Bargain retailers replacing department stores in the nation's malls

As major brick-and-mortar chains like JCPenney close their stores in shopping malls, bargain stores are moving in and adding thousands of new locations across the country.

Brendan McDermid/Reuters/File
A woman checks her phone outside the entrance of a JCPenney store in New York in this file photo. The company reportedly will shutter 33 stores this year.

The days of upscale shopping centers, stuffed with department stores, is a thing of the past. Now, due to the rise of online retailers and an economy slowed by the Great Recession, both department stores and traditional malls are disappearing — while bargain stores fill the empty space left behind.

Decline of Department Stores and Malls

The economy hasn't been kind to big name retailers. The once-mighty JCPenney is expected to close 33 locations this year, while Sears will close about 500 Sears and Kmart shops, according to CNN Money. To its credit, Macy’s only plans to close five stores this year.

Shopping malls are feeling the pinch too. With less consumer spending, a slowdown at department stores (many of which "anchored" malls), and the rise of Internet shopping, malls are watching the stores that remain instead leave for open air shopping centers with lower costs and less space, according to CNBC. In fact, the last indoor mall to open was in 2012, but it was hardly traditional. The $1.5 billion construction in Salt Lake City boasted waterfalls and a retractable glass roof, according to the Huffington Post. A traditional mall hasn't opened in America since 2009.

Rise of Bargain Stores and Shopping Centers

Their loss is the bargain stores' gain. Bargain chains have been gaining steam since the recession, as many people seek cheaper alternatives at places like Kohl's or T.J. Maxx. So as some mall staples are exiting the building, cheaper stores are taking over their physical spaces.

The biggest winner? Dollar stores. According to Reuters, stores like Dollar General (10,5557 locations) have been opening shops at a steady clip, with the top five dollar store chains set to open over 2,000 locations around the country.

And that means a silver lining for malls and shopping centers. The Reuters article adds that even with "retail construction at historically low levels," chains like "Costco Wholesale Corp, T.J. Maxx, Marshalls, Dollar General, Nordstom Rack and Ross Stores have been quick to fill vacancies." This has caused vacancy rates in shopping centers to fall from 9.5% in 2012 to 8.6% at the end of 2013.

Angela Colley is a contributing writer at, where this article first appeared.

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