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The rise and fall of the shopping mall

Daily Ticker

One of the most iconic pieces of Americana, the shopping mall, isn’t really American at all. In fact, the first mall was created by an Austrian refugee who wanted to recreate an American version of downtown Vienna.

Victor Gruen escaped to America from Nazi Austria in 1938 with, “an architect’s degree, eight dollars, and no English.” By the late 1940s, World War II was over and the American economy was in full swing. Suburban sprawl and consumerism were the new normal, and this bothered Gruen. “[Strip malls are] avenues of horror… flanked by the greatest collection of vulgarity—billboards, motels, gas stations, shanties, car lots, miscellaneous industrial equipment, hot dog stands, wayside stores—ever collected by mankind,” he wrote.

Gruen conveived of a central, indoor shopping location that would allow Americans to get out of their cars and socialize. He envisioned a crop of apartment towers popping up around the mall, the creation of an urban downtown within the suburbs - that's not what he got.

Gruen designed the first shopping mall in the United States which opened in Edina, Minnesota in 1956. The Southdale Shopping Center cost $20 million to create and had 72 shops, cafés and even a zoo. More than 70,000 people attended the mall on opening day. Copycat malls began to spring up around the country following Gruen's formula, plain exteriors with inward-facing stores, multiple floors looking down into a central atrium and high windows.

The mall was a success, and they grew in number quickly, partially because builders found they could benefit from tax breaks granted by suburban municipalities, but also because of something now dubbed "the Gruen effect."

When shoppers entered malls their senses were thrown off and they were dazzled by the new environment. Because of this, they would stay longer and shop more, often forgetting the purpose of their trip in the first place.

By 1960 there were 4,500 malls in America accounting for 14% of all retail sales. By 1975 there were 16,400 malls making up 33% of all retail sales and by 1987 there were 30,000 malls accounting for 50% of all retail dollars spent. The mall had taken over America.

Mall culture had truly arrived in the United States. Films and TV shows proliferated the idea of the “valley girl,” and the “mall rat.” In 1992, at the height of mall culture, The Mall of America, not too far from the first mall in Edina, Minnesota, opened its doors. The Mall of America occupied 78 acres making it the largest mall in the United States. On opening day The Mall of America had 330 stores, an amusement park, and employed 10,000 people.

By the mid-1990s, however, the concept of "the mall" had hit its peak. 140 malls were being built a year, creating too much competition, and discount stores like Marshall’s began popping up, attracting bargain hunters away from the confines of the mall.

The demographics of the suburbs also changed as money started moving back into the cities. Between 2000 and 2011 the number of suburban poor grew by 64%, double the rate of the city. In 2008, the U.S. toppled into a crippling recession and in 2011, for the first time in over 100 years, urban population growth outpaced suburban growth.

Around this time online retailers like Amazon.com took a 6% bite out of brick-and-mortar business.

Put all of this together and it meant bad news for the shopping mall. Retail analyst Green Street Advisors predicts that 15% of American malls will close within the next 10 years, and even Southdale, our nation's first mall, has 18% of its stores unfilled.

Victor Gruen ended up renouncing the mall, saying he hated what it stood for and publicly refused to “pay alimonies for these bastard projects.” It looks like 55 years later, he’s finally getting his wish.

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