The internet has contributed to the closing of department stores operated by Sears, Kmart, and Bon-Ton. It has ripped apart niche retailers like Charlotte Russe and Payless ShoeSource. And the damage from the so-called retail apocalypse isn't over, with companies like Gap and Ascena Group closing stores and even entire brand concepts. This is a huge problem for mall real estate investment trusts (REITs) like Simon Property Group (NYSE: SPG).
But Simon and its peers have a plan: densification. What is this? And will it help?
The notion of the retail apocalypse is being overhyped by the media because it is a compelling story. That, however, doesn't mean it isn't a real issue. Store closures are a clear problem for retail landlords. It's one of the main reasons the entire enclosed-mall REIT sector is suffering today, with even industry giant Simon -- generally considered to be one of the best-run mall REITs around -- down by around a third from its 2016 highs.