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November 07, 2019

Sears at Mall Sunk; Options Murky for Store Space, Workers

     While the pending closure of the Sears store at the Imperial Valley Mall in El Centro will leave a gaping hole in the area’s retail and employment landscape, there are mixed opinions about whether the wound can be quickly healed.


     Optimism resides in the strength of the broader U.S. economy, which, in 2018, is consistently boasting unemployment rates below four percent. Pessimism boils up from an old foe: Imperial County’s unemployment rate in August was about five times that, continuing a decades-long trend of exceeding state and national averages.


     “Specific to the Imperial Valley, the typical Sears store has 100 or more employees. The region isn't flush with job opportunities for these folks,” Michael Bracken, managing partner and chief economist of Development Management Group, Inc., in Palm Desert, wrote in an e-mail seeking his insight.


     Bracken frequently consults on economic matters in Imperial County. He expressed concern not only over the immediate result of lost jobs but its ripple effects and how long they might linger.


     “The loss to the region in terms of wages (and purchasing power) is something on the order of $2.5 to $3.5 million per year,” Bracken added. “The bigger question is what employment opportunities will be available for these displaced people. Sears has a history of long-term employment with the average employee having a tenure longer than that of most retailers.”


     Sears declared bankruptcy on Oct. 15 amid prolonged loss of market share and financial woes. The iconic American retailer has regularly rolled out store closure notices and 142 more came amid the bankruptcy. Media reports stated the stores would close by year’s end.


     It hit home for Imperial Valley when the store at 3751 S. Dogwood Ave. was on the list. Sears is one of four “anchor” stores at the Imperial Valley Mall, large retailers that drive business and maximizing what malls can charge other tenants for leases.


     A mall official confirmed Sears would close but did not have a specific date. Further inquiries were referred to the corporate office of mall operator CBL & Associates Properties, which did not immediately respond to a request for comment.


     Of the mall’s other anchors, JC Penney and Macy’s face woes similar to Sears, though perhaps not as dire, reporting losses and store closures in recent years. Dillard’s, a higher end store, has fared better.


     Though there are frequent job openings at other local retailers, many are part time. But in 2018 alone Calexico has seen the closure of its JCPenney, Toys R Us and Forever 21 stores, as large retailers continue struggling against strong headwinds generated by online competition and changing buying habits.


     Local officials, meanwhile, expressed confidence the county is prepared for such economic hits.


     "We obviously have to discuss this as a group," said Priscilla Lopez, interim director of the county Workforce Development Board.


     The board has a Rapid Response Service to mitigate the job displacement, she said. It offers services such as job search listings, assistance with career pathways, new job training and assistance for applying for unemployment insurance benefits.


     "We've already reached out to Sears and are trying to make this as easy a transition (for employees) as possible," said Lopez. "We want to make sure they know they have a support system in the county. We already have a team arranging a meeting to facilitate the transition for Sears employees." El Centro Mayor Cheryl Viegas-Walker vowed action.


     "It's not a surprise but it is a disappointment," said Walker. "The council will do whatever it can to help Sears employees find work. We know as we build up to the Christmas season, more retail stores will add to their staff. But Sears employees have very marketable skills."


     Council Member Jason Jackson added, "We'll discuss it at tonight's (Oct. 16) meeting. I would imagine they're (mall owners) looking for a replacement. But I don't believe it will impact Dillard's or any other stores."


     He added the economy is now much stronger than it was several years ago and that should help all the Sears employees find jobs sooner.


     County Supervisor John Renison said he is, “devastated about the news of Sears closing but we have a great team with Tony Rouhotas and Esperanza Colio (Warren) (respectively county chief executive officer and deputy chief executive with oversight of economic development) who will be working to bring more investment to the Valley and help the employees that will he losing their jobs.”


     As the former Sears staff searches for work, it could be challenging for the mall to backfill behind the loss.


     “Historically, department stores have been the ‘anchor’ of regional shopping malls. They are the large box user and help bring large amounts of people to the mall itself,” Bracken stated. “The challenge, and therefore opportunity, for mall owners will be to successfully transform their former department store buildings into revenue-producing facilities.”


     With the loss of large retailers now common for malls, strategies have emerged for recovery, he added.


     “Mall owners throughout the nation are transforming the vacant department stores to restaurants, entertainment areas (gaming/movie theatres) and even into uses that involve residential, office or even institutional (colleges, medical),” Bracken stated.


     That is what happened to Sears’ previous El Centro location at a former mall at 1150 N. Imperial Ave. After Sears departed when the Imperial Valley Mall opened in 2005, the space was vacant for a time before being converted to Imagine School, a charter school. Unfortunately, that space is again facing turnover as the school was recently forced to close after losing its charter.


     Bracken noted it can be difficult for malls to find a similar replacement for the loss of a large anchor store.


     “Unfortunately, Sears Holdings (which includes both Sears and Kmart) have been in a slow decline for a number of years,” Bracken explained. “Consumer

preferences continue to change and they just were not able to transform themselves quick enough.”


     He added, “Overall, same store sales of traditional ‘department’ stores have been in decline for almost a generation. This certainly has been reflected in the loss of such brands as Broadway, Mervyn's and Montgomery Ward. Today, the greatest challenge facing traditional retail is the rise of online shopping.”


     El Centro has already endured the loss of a Sears sister store, Kmart, that closed several years ago. The location, also on North Imperial Avenue in El Centro, demonstrates the possibility of recovery. It has since been filled in by the Ashley Home Store furniture retailer.

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