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Region retail continues to adapt to internet age

Region retail continues to adapt to internet age

People stream movies instead of going to video stores, book trips online instead of visiting travel agents, and comb through iTunes for new music instead of perusing the bins of a local record store.

Consumers these days are far more likely to buy goods and services from a website, their phone or a voice command through Alexa, and it's had a big effect on the Region's retail sector.

2018 was another tough year for traditional brick-and-mortar retailers in Northwest Indiana. More national retailers faltered and more big-box stores emptied out, leaving communities and malls grappling with how to fill the vacant space.

Toys R Us and Babies R Us closed locations in Merrillville, Hobart and Michigan City as the 70-year-old New Jersey-based chain, known for its catchy "I Want to be a Toys R Us Kid" jingle, shuttered more than 700 locations nationwide. The bankrupt Mattress Firm closed stores in Schererville, Highland and Calumet City. Longtime stalwart Carson's, a staple of Region life for decades, vanished from the landscape after its parent company, the Bon-Ton Stores, filed for bankruptcy in February. 

The Bon-Ton Stores sought a Chapter 11 bankruptcy that would have allowed it to reorganize its debt, but creditors and a bankruptcy judge weren't keen on its prospects of remaining a going concern. The Pennsylvania- and Milwaukee-based chain ended up having to close all 260 locations across 24 states.

After a lengthy liquidation sale, Carson's closed its standalone three-story department store at the former Woodmar Mall at Indianapolis Boulevard and 165th Street in Hammond around the same time, perhaps symbolically, that the brand new Hammond Sportsplex opened on the site of the once-bustling indoor shopping mall.

Just before the end of August, Carson's also shuttered its locations at the Southlake Mall in Hobart, where it was one of the original anchors, and at the Marquette Mall in Michigan City, which is struggling and could be demolished to make way for a more modern outdoor shopping center.

The mall along the bustling Franklin Street commercial corridor lost J.C. Penney in 2015 and closed its haunting, eerily vacant interior the following year. The only remaining anchor is Sears, which itself faces an uncertain future. 

The 132-year-old Sears, a dominant American retailer through its catalog days and as a department store, finally faced a reckoning after failing to turn an annual profit since 2010, an eight-year stretch when it lost $11 billion and sold off iconic brands like Craftsman Tools in a desperate bid to stay afloat.

It ultimately may end up being forced to shutter its remaining Sears and Kmart stores in Hobart, Michigan City and Valparaiso, and decided to close the Big Kmart in Griffith by year's end, laying off 113 workers.

Griffith Town Council President Rick Ryfa said the closure could result in the demolition and redevelopment of the entire Griffith Park Plaza, a huge aging outdoor shopping center at Ridge Road and Cline Avenue. He said the property could be turned into a more mixed-use development, possibly with office towers.

Looking to the future

Communities will have to reimagine some space as the retail industry continues to adjust in an e-commerce era, said Aaron McDermott, president of Latitude Commercial in Schererville.

"I would say this was a year that can be expected for the next couple years," he said. "I think big-box stores are going to continue to 'smart size,' meaning they are going to start taking less square footage and be more selective in the new locations. As internet shopping continues to expand its reach, you will see more and more retailers using their brick and mortar stores as pickup and delivery centers as evidenced by Strack and Van Til’s new Instacart program."

Major retail hubs like the Southlake Mall on U.S. 30 and Mississippi Street in Hobart no longer will be able to rely on traditional department stores as the big draw.

"There are still segments of the retail industry that I think will start to become more and more obsolete," McDermott said. "That is why you are starting to see all the owners changing the way they bring shoppers into the mall. They are trying to make it an entertainment experience, as evidenced by the former Sears at Orland Square changing from one large big box to a 10-screen AMC theater, restaurants and additional retailers."

Top-tier malls will survive and find a way forward, but other properties face serious trouble, McDermott said. 

"Still some mall owners are going to suffer, and with a lot of debt getting ready to expire, there is going to be a large number of secondary malls that end up going bankrupt because they can’t refinance their debt," he said. "I think towards the end of next year and even more so into 2020 you will see secondary malls and power centers getting foreclosed upon, as evidenced by the Ultra Plaza Mall in Highland."

Ultra Plaza at Indianapolis Boulevard and Ridge Road fell into foreclosure after the departure of Ultra Foods, a discount supermarket chain that disappeared from the Region after the bankruptcy of parent company Central Grocers in 2018. It had a ripple effect that led to the closure of other stores like Fallas and Dollar General. 

Despite the woes of big national retailers, homegrown Region stores have seen some success. Wise Guys Discount Liquors has opened a big-box store at 1601 S. Calumet Road in Chesterton. Kali Beauty and Salvage+ both opened stores at the Boulevard Square strip mall in Schererville. And the boutique Indie Indie Bang Bang, which carved a successful niche in Gary's lakefront Miller neighborhood, expanded to add a second location in downtown Valparaiso.

Local retailers also expanded more into the online space, with Strack & Van Til, Jewel-Osco, the Schererville Whole Foods, Meijer and more heavily promoting home delivery and curbside pickup. 


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Business Reporter

Joseph S. Pete is a Lisagor Award-winning business reporter who covers steel, industry, unions, the ports, retail, banking and more. The Indiana University grad has been with The Times since 2013 and blogs about craft beer, culture and the military.

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