Americans Go Back to the Mall

Discussion
Feb 15, 2011

It’s been a long time since it was "cool" to go
to the mall. That may be changing as department stores in malls are gaining
market share over those located off-malls for the first time since the 1980s,
according to Consumer Growth Partners.

To be clear, the gain was not a big one.
Mall-based department stores moved from 2.4 percent in 2009 to 2.5 percent
last year.

"Even though it was only a tenth of a share point, for department stores,
that is a huge change," Craig Johnson, president of Consumer Growth Partners,
told Fortune. "This is a real turn in the market. We’re optimistic
that the momentum is just gathering."

The increase in mall-based sales
can be tied to a general improvement in the economy, fewer new malls being
built to dilute traffic, and existing department stores performing better than
in the past as weaker rivals have gone out of business.

Another trend benefiting
malls has been the rise of non-traditional anchors in all or a portion of the
space vacated by chains that didn’t make it. Fortune points
out that a new wave of stores including Forever 21, H&M, Target and others
have moved into to fill the vacuum. 

Malls have also added more movie theaters,
grocery stores, gyms and even hotels to attract more people.

Discussion Questions: Is the long-anticipated rebound of the American mall underway? What factors make you most/least optimistic about malls as retailing destinations?

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

13 Comments on "Americans Go Back to the Mall"


Sort by:   newest | oldest | most voted
Dick Seesel
Guest
10 years 4 months ago

I don’t think a .1 percentage point gain is cause for celebration. Let’s see whether this is the beginning of a long-term trend or a blip in what has been a longstanding loss of market share. I do think that healthy regional malls have been working harder to re-engineer their tenant base with more successful specialty stores in recent years to offset growing vacancy rates, and have also added more dining and entertainment options for shoppers. But the traditional “mall anchor” (with the exception of Macy’s) continues to lose share to specialists and value-oriented retailers…and as long as that trend continues, regional malls can’t expect a dramatic turnaround soon.

Bill Robinson
Guest
Bill Robinson
10 years 4 months ago
What we are seeing here is the result of lots of hard work and convergence of three trends. The hard work comes from the mall developers and managers who have invested aggressively to revitalize their malls. They’ve transformed old regionals in lifestyle malls. They’ve driven higher traffic with restaurants, movies,and health clubs. They’ve innovated with pop up stores and kiosks. They’ve rewarded loyalty. As a result they’ve achieved a hard fought degree of relevance to the modern consumer. The three trends are department stores consolidation, private label merchandising, and personalized advertising. The recent past has witnessed the demise of a great many retailers who were so focused on the bottom line that they were killing their top line. The expense managers have died. The survivors are more balanced. The dramatic trend toward private label merchandising has made the department store more compelling. Consumers know that they can get a good, well-designed, and hip product that is also unique. The last trend is the huge dislocation of advertising money from mass marketing (e.g. newspapers and circulars)… Read more »
David Biernbaum
Guest
10 years 4 months ago

A small rebound of the American mall is underway because malls have diversified themselves and now have offerings that are not all the same.

Bill Emerson
Guest
Bill Emerson
10 years 4 months ago
As my statistics teacher liked to point out–one data point does not a trend make. Is this a positive sign for malls in general and department stores in particular? Sure it is. Does it mean the “return of the mall”? Not likely. According to the ISCS, there are over 100,000 malls in America with over 7 billion square feet of selling space. That’s one mall for every 3,000 people with 23 square feet for every individual. That’s a lot of space. Put differently, everybody could go shopping simultaneously and, if evenly distributed, it wouldn’t be crowded anywhere. This, ultimately, is the point. There will be malls that will grow and flourish. They will be the ones that evolve and change to the realities of retailing. As I covered in a recent post called “Filling in the gaps,” bringing in different categories and formats and even non-retail services is a very smart play. A strong possibility of gas prices going way up will also help the malls. The fact is, however, there is just too much… Read more »
Roger Saunders
Guest
10 years 4 months ago

There are a couple of “partners” in this equation that have to come together in order to make push the needle forward. Those “partners” are the tenants or retailers, and the landlords or mall owners.

The landlords have been real estate-centric–price per square foot, lining up financing to buy, sell, escape BK, lease negotiation, etc. Now, we all know that they are, in fact, in the real estate business. But performance of malls were strongest when these titans permitted themselves to “see through to the end consumer”.

When they were operating in this manner, they permitted themselves to work hand-in-hand with the merchants from whom they wanted to collect rents. If the consumer is going to come back to the mall, retailers and mall owners are going to have to sit down and develop the plans for the area of commonality they both have–the CONSUMER.

Ed Rosenbaum
Guest
10 years 4 months ago

Let’s not throw a party because of a tenth of a point increase. I agree with several of the other comments. We do not know the reason for the small increase. It might be due to the new anchors taking over significant space vacated by traditional anchors. Let’s also wait for tax return checks to begin flowing back to the consumers before assuming we know if we are seeing an upsurge in true mall traffic. That will depend on the numbers on the receipt in the shopping bags leaving the mall.

Anne Howe
Guest
10 years 4 months ago
Bill Emerson said this: Put differently, everybody could go shopping (at a mall) simultaneously and, if evenly distributed, it wouldn’t be crowded anywhere. Wow. In my experience, there’s nothing more eerie than an empty mall. The good news is that shoppers do love to gather and feel “cool in the crowd” and that creates opportunity for malls and retailers that are willing to use “engagement” as a business tool. Without an integrated plan to “court and spark” shoppers, the reality is that most will not be able to show stats that verify a trend to the return of the mall era we once thought of as permanent. Nothing is permanent, and those who create reasons for shoppers to explore will benefit greatly from their efforts. If I were a mall operator, I’d look to get an Apple store. I’ve never been in an Apple store that wasn’t teeming with people exploring. There’s a secret sauce that more operators need to try to replicate across the various corners of the mall. I give credit to those… Read more »
Gene Detroyer
Guest
10 years 4 months ago

Are we so anxious to return to the old days that a 0.1 point gain gives us something to talk about? Retailing has changed and it is not going back. With regard to malls, there is simply too much square footage. That amount of retail square footage is not needed.

On the positive side, landlords are facing the facts more than retailers and are rethinking the purpose of the mall. They are making it a place for entertainment, dining and other reasons besides shopping. Those malls that survive will provide a reason for people to visit, not just a reason to shop.

Lee Peterson
Guest
10 years 4 months ago

Don’t forget, we’re looking at comp numbers that are up against numbers from dead center recession. Do some observational research of your own: malls are much slower than they used to be, especially the “traditional” malls. Even the tenant base in the traditional malls is not what it used to be–many more ma and pa stores, which is not good.

I also believe that the positive numbers are being driven by the explosion of the Lifestyle centers as well as the recovery. LCs are certainly a more vibrant opportunity for consumers with places to eat, rest, see a movie, even see a comedy show while you look around and pretend to shop. They also rely less on department stores to drive traffic, which, to me, is the way of the future.

So, glad the numbers (any numbers!) are up, but don’t let them fool you into thinking we’re going back to 1988.

Ralph Jacobson
Guest
10 years 4 months ago

My small, unscientific sampling shows there’s no recession in Southern California! Glendale Galleria, The Grove, Northridge Mall, Fashion Island, etc. are all jammed on the weekends. Busier than during the past Holiday Season. Shoppers are not just browsing. They all are carrying bags.

I think this of course has everything to do with “location, location, location.” If there is an attractive department store tenant to drive traffic, that’s great. However, there is just as much of a driver in the specialty shops, such as Apple Store.

Ted Hurlbut
Guest
Ted Hurlbut
10 years 4 months ago

One-tenth of a percentage point for just one month isn’t exactly a significant data sampling. I don’t see anything to suggest the long-term trends that have been afflicting mall-based department stores (mostly self-inflicted) are about to abate anytime soon. The demographics are a major negative, as they struggle to find relevancy with younger customers, who are much more inclined to specialty stores. They continue to struggle to differentiate themselves from retailers like Kohl’s and Target, who are primarily non-mall based. And their business model, based on endless price-promotions, means that their customers continue to define value first and foremost based on price, instead of quality, assortment and service.

Jack Pansegrau
Guest
Jack Pansegrau
10 years 4 months ago

If share increased by 4% for most businesses, I believe it would be big news–sure seems that when housing prices or a retailer like Best Buy or GAP have a year over year sales decline of 4% compared to ‘flat’ or ‘up 4%’ there will be lots of prognostications over the meaning.

So if I recall my algebra, 2.5% over 2.4% represents a relative increase of 4.16% and stated this way–“Department Stores ‘market share’ up 4% in 2010”–I see this as positive news. Perhaps as suggested, not a long-term change in the trend, too early to tell yet but for sure, a positive development.

Tim Henderson
Guest
Tim Henderson
10 years 4 months ago

This sounds more like the ongoing evolution of malls–a much-needed and necessary step if malls are to ever experience a rebound. Adding a variety of stores that keep consumers coming back is definitely smart. Like the Fortune articles notes, today’s consumers don’t mind shopping at a high-end apparel store and a Target in the same space. That type of variety is something today’s consumers rarely get outside the mall. It’s also more in line with post-recession lifestyle behaviors that find consumers being more strategic and mindful about how they shop and purchase.

wpDiscuz

Take Our Instant Poll

Are you more or less optimistic today about a rebound of American malls than you have in the recent past?

View Results

Loading ... Loading ...