The demise of malls has been widely predicted for years. The combination of online shopping, cultural shifts and aging edifices have chipped away at the appeal of large suburban shopping centers. Covid-19 has exacerbated malls’ struggles – estimates are that one-third of existing malls will close by 2021 (Retailwire). Amplifying the problem for mall operators is the bankruptcy and departure of traditional anchors like Lord & Taylor, JCPenny and Neiman Marcus. Without these anchors, negotiating leases with other retailers is more difficult. This creates a downward spiral where lower occupancy decreases the likelihood of signing new leases. For mall operators, this means that to stop the bleeding, the first step is to find new anchors.
While most predictions are doom and gloom, malls will survive but only through evolution. Traditionally, an anchor tenant provides a steady flow of traffic and, in the past, that has meant department stores that specialize in clothing or housewares. Already, several operators have taken steps to replace anchors with non-tradition retail. Westside Pavilion mall located in Los Angeles recently signed a 14-year agreement with Google for new offices. Stonestown Galleria in San Francisco has plans to install a Whole Foods and Health Care provider. American Dreams in East Rutherford, NJ (formerly Meadowlands Xanadu) is introducing experiential attractions like a ski slope and waterpark to drive visits. Retailers like Apple have become more important to malls by providing the steady traffic malls desperately need, also improving their negotiating power.
These new anchors will inevitably create a change on their own. The mall is an ecosystem, where each retailer has some measurable impact on others. For example, some stores are highly planned destinations while others rely on pass-by traffic to draw in impulse shoppers. One retailer may benefit from having a competitor nearby by making that mall a destination for a particular product type or customer segment. For example, a North Face benefits by having a Patagonia, L.L.Bean and Eddie Bauer in the same mall; same goes for Footlocker, Champs, House of Hoops and Flight 23 all being in the same mall. Understanding flow and customer experience and behavior is essential to the success of the new and evolved mall. At Envirosell, we use metrics like impulse rates and need-states to determine the relationship between stores, and advise retailers on where and how to present themselves to potential customers. Determining how and where customers wait at a health care provider or in what order a customer visits different store types is essential both for malls and the retailers to operate successfully.
The mall concept is not dead, but definitely disrupted. Actionable directives based on good data will make all the difference in who survives or goes extinct. Envirosell has a long history in helping both retailers and mall operators optimize their offerings to shoppers to increase basket size and improve customer satisfaction. Contact firstname.lastname@example.org to see how we can help you, or click here to check out our services page.