(Bloomberg)—Barry Sternlicht, whose Starwood Capital Group owns shopping malls across the U.S., said he expects the nation’s retail landscape to be “smaller but healthier” in five years after some chains cut back or disappear.
“A lot of retailers don’t know how to behave in this environment, and they’re panicking,” Sternlicht said in an interview with Bloomberg Television to be aired Wednesday. “I see the tenants in my malls that get it, and the ones that are as confused as can be.”
Retail landlords across the country are grappling with record store closings. A Bloomberg gauge of publicly traded mall landlords has tumbled 18 percent in the year through yesterday. Amazon.com Inc. and other internet retailers continue to grow, while department stores including Sears Holdings Corp. and Macy’s Inc. have been closing hundreds of locations.
Nevertheless, retail is “not as big a mess” as some believe, Sternlicht said, pointing to the growth of the CVS Health Corp. pharmacy chain and a store expansion by Estee Lauder Cos., a company whose board he sits on. Still, “sales are kind of flat” at Starwood’s malls, and retailers need to get smarter about how they navigate the changing consumer environment, he said.
“This slow death of cutting stores doesn’t always work, unless they cut corporate -- that’s much harder to do,” Sternlicht said in the interview, taped at the Milken Institute Global Conference, in Beverly Hills, California. Still, “retail will re-balance” and be “smaller but healthier” in five years, he said. “The mall is not dead.”
To contact the reporters on this story: Daniel Taub in Los Angeles at [email protected] ;Erik Schatzker in New York at [email protected] To contact the editors responsible for this story: Daniel Taub at [email protected] Kara Wetzel, Dan Reichl
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