"This is not what we wanted to hear, but that's the reality of the economic times," said Phil Thornton, the mall's general manager. "Obviously, anytime you have a national retailer go dark on you, it can have a negative effect, but we'll push right through it."
Port Washington, N.Y.-based Steve & Barry's said in late November that it plans to close all 173 of its remaining stores, including anchor shops at Lafayette Square and Washington Square malls.
Bay Harbour Management and York Capital Management, the investment firms that bought Steve & Barry's out of bankruptcy court in August, initially shuttered about 100 stores but planned to keep the remainder open. They reversed course when sales proved disappointing.
The shutdown comes at a particularly inopportune time for Lafayette Square Mall, which learned just two months ago that another anchor Sears is pulling out.
Thornton is hoping a slew of new tenants will attract families and shoppers to the mall. A 95,000-square-foot Shoppers World department store the first in the Midwest will open in December on the first floor of the former JCPenney space.
Shoppers World is a family-owned, New York-based discount chain that operates 10 stores in New York and New Jersey. The local store will be the chain's first outside the East Coast.
A 75,000-square-foot entertainment center called Xscape also is expected to open its doors in December.
Still, retail experts say it will be challenging to find a replacement anchor tenant to fill the 50,000-square-foot Steve and Barry's space.
"They have an uphill battle against them just on the demographics of the area and the economy," said Mark Perlstein, a principal with Indianapolis-based Sitehawk Realty. "The mall needs to redefine itself, and that's a very difficult task to do in today's economic environment."
New York-based Ashkenazy Acquisition Corp. purchased the mall from Simon Property Group Inc. in December 2007 and said it would spend $12 million to revamp the property by sprucing up the facade and attracting new retail tenants and restaurants.
The mall recently erected a new electronic sign on Lafayette Road, and plans to install another on 38th Street. Thornton said the mall is 80-percent to 90-percent occupied, but wouldn't say whether the figure takes into account new tenants or tenants that have announced plans to close.
James Lowry, a retail professor at Ball State University, said losing two anchor tenants in a short period makes redevelopment difficult.
"At this juncture in our economy ... many retailers are pulling back and even the solid retailers have dropped their expansion plans," he said. "It makes it very challenging today to fill that much space."
Mall officials are hoping a "family friendly" focus helps fill the gap.
A 1,200-square-foot Teddy Mountain retail store similar to the Build-A-Bear Workshop concept will open this month in the mall's food court.
And the new Xscape family entertainment center, on the first floor of the former Lazarus space, should attract kids and their parents with features such as an indoor go-kart track, bumper cars, laser tag, bowling and a miniature tea-cup ride, Thornton said.
Richard Feinberg, a retail professor at Purdue University, said placing an emphasis on families could pay off, particularly if the mall takes a long-term approach.
"There's no good strategy for the next six to 12 months that's going to create success things are really bad; consumers just aren't spending," he said.
"If they have a long-term view, two to five years, then thematic development might make sense."