Is off-mall where it’s at?
Sephora and Bath & Body Works last week announced plans to aggressively open off-mall locations in 2021. The moves come as traffic woes impact enclosed malls and retailers turn to open-air locations that offer a social distancing advantage.
Sephora’s largest store expansion in its 21-year history in the U.S. will include over 60 freestanding locations and 200 shops inside Kohl’s. The Kohl’s partnership was first announced in December.
Sephora wrote, “Following a year in which e-commerce dominated the retail landscape, this move signals Sephora’s confidence in the future of the brick-and-mortar shopping experience and continued creation of welcoming spaces for all. With a focus on growing its presence in off-mall locations, the retailer also aims to make Sephora more accessible to beauty shoppers across the country.”
L Brands plans to open 49 new Bath & Body Works stores in North America that are “almost entirely off-mall,” while closing up to 40 mall locations.
Andrew Meslow, CEO, said on L Brands’ fourth-quarter investor call that only 35 percent of Bath & Body Works’ sales now come from malls, with the remainder representing digital and off-mall. Off-mall’s profitability rates, he added, tend to be “on par or better than an average mall store” given their lower operating costs. In 2020, Bath & Body Works’ off-mall stores saw a “pretty substantial outperformance” versus mall locations, in part due to the pandemic.
“As Bath & Body Works has become much more of a destination in and of itself, what we see in our off-mall locations, not surprisingly, is significantly higher conversion rates than we see in mall stores,” added Mr. Meslow. “If someone is coming into an off-mall location, they almost certainly have already decided before they made the trip that they intend to make a purchase.”
Among other mall stalwarts, Gap is shuttering many mall locations in favor of strip centers and outlets, and Foot Locker is opening a number of community-driven freestanding locations. Nordstrom is aggressively expanding its Rack off-mall concept, while Macy’s is testing smaller off-mall stores.
On Macy’s fourth-quarter call, Jeff Gennette, CEO, said, “Adding off-mall locations will provide customers with a fuller omni experience by providing more convenience, selection and speed whether they are shopping the digital or stores channels.”
- Sephora To Expand Brick & Mortar Footprint With 260+ New Stores In 2021 Across The U.S. – Sephora
- Sephora is Coming to Kohl’s! Prestige Beauty Brands Yout Know and Love – Kohl’s
- L Brands Reports Record Fourth Quarter 2020 Results – L Brands
- L Brands Inc (LB) Q4 2020 Earnings Call Transcript – L Brands/The Motley Fool
- Macy’s Inc (M) Q4 2020 Earnings Call Transcript – Macy’s/The Motley Fool
- Will More Retailers Go Off-Mall in 2021? – MSN Money/The Motley Fool
- Can Gap prosper without mall stores? – RetailWire
DISCUSSION QUESTIONS: Will the shift toward off-mall locations outlive the pandemic? Why have off-mall locations become more attractive real estate options in recent years for many retail banners?