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In a market ruled by value and convenience, traditional full-service restaurants (FSRs) have faced an uphill slog. But even in 2024, some FSRs are flourishing. We dove into the data to explore factors driving success at three very different full-service chains: First Watch, Chili’s Grill & Bar, and Outback Steakhouse.
First Watch first burst onto the scene in 1983 with a single restaurant in California – and now boasts some 544 locations across 29 states. With offerings ranging from Superfood Kale Salads to more traditional pancakes and bacon and eggs, First Watch has emerged as a prime destination for diners seeking to enjoy a leisurely breakfast with family and friends.
And foot traffic data shows that First Watch, still firmly in expansion mode, is continuing to grow its audience. Between June and September 2024, First Watch saw consistent year-over-year (YoY) visit growth, outperforming both the full-service restaurant category and other diners & breakfast spots.
One factor that may be helping to propel First Watch’s success is the relative affluence of its customer base. Analyzing the income breakdown of First Watch’s trade area shows that in Q3 2024, nearly ten percent (9.7%) of households in the chain’s captured market earned $200K+ per year, compared with 6.5% for diners & breakfast chains and 6.9% for the wider FSR space. On the flip side, only 43.9% of households in First Watch’s captured market had annual incomes below $75K, compared to just over 50.0% for both analyzed segments.
Amidst concerns surrounding food inflation, rising labor costs, and discretionary spending cutbacks, First Watch’s wealthier customer base may be helping to shield it from some of the value pressures that have weighed on other restaurants – contributing to its resilience.
Another FSR that has been experiencing outsized visit growth this year – at least since April – is Chili’s Grill & Bar. Following a tepid start to the year, Chili’s launched its much-vaunted Big Smasher Burger on April 29th, 2024, and hasn’t looked back since.
The new offering, added to Chili’s 3 For Me value menu, presented a full-service value challenge to QSR favorites like the Big Mac. And in Q2 2023, the item helped drive a 14.8% increase in same-store sales.
Since the big launch, weekly YoY visits to Chili’s have been consistently elevated – kept aloft with the help of viral hype around Chili’s long standing Triple Dipper offering, as well as the new secret Nashville Hot Mozz offering that became so popular it spawned a halloween costume.
Unlike First Watch, Chili’s has found success by embracing its role as a value chain. The median household income (HHI) of Chili’s captured market in Q3 2024 was $73.1K – below the nationwide median of $76.1K, and on par with that of the wider FSR space ($73.7K – By way of comparison, the median HHI of First Watch’s captured market was $85.6K in Q3).
And a closer look at the demographic make-up of Chili’s captured market shows just how broad the appeal of the chain is. In Q3 2024, Chili’s visitor base was over-represented for a wide range of segments across age and income groups – from “Wealthy Suburban Families” to “Young Urban Singles”, “Suburban Boomers’, and residents of “Blue Collar Suburbs”. By delivering high-quality meals at affordable prices, Chili’s has solidified its place as an everyman’s chain, offering value comparable to that of quick-service restaurants.
Aussie-themed Outback Steakhouse – Bloomin’ Brands’ biggest chain – is another full-service restaurant that is successfully weathering the storm. Like other FSRs, Outback has faced its fair share of challenges over the past few years, with rising costs and spending cutbacks taking a toll on the chain’s performance. But in Q3 2024, the average number of visits to each Outback Steakhouse location increased 0.5% YoY, even as overall traffic to the chain fell 1.7% in the wake of strategic rightsizing moves that included the shuttering of a number of underperforming locations. By contrast, the average number of visits per location in the wider FSR space dropped 1.2%, while overall foot traffic to the segment fell 2.1%. Outback Steakhouse’s ability to sustain a YoY visit-per-location uptick in Q3, even if a minor one, shows that its rightsizing efforts are paying off.
And drilling down deeper into regional data for the chain shows that in some areas of the country, Outback Steakhouse is positively thriving. In California, Outback’s third-largest market in terms of store count, the chain saw a YoY visit increase of 5.3% – significantly higher than the statewide FSR average of 1.1%. In Washington and Oregon, Outback Steakhouse experienced even more substantial visit increases – 9.0% and 9.6%, respectively – even as full-service restaurants generally languished. And in all three states, the number of Outback Steakhouse locations has remained basically unchanged over the past year, meaning that these increases reflect the growing draw of the chain’s existing venues.
First Watch, Chili’s Grill & Bar, and Outback Steakhouse are very different full-service chains – but each of them is thriving in its own way. How will the three brands fare as the holiday season picks up steam?
Follow Placer.ai’s data-driven dining analyses to find out.
This blog includes data from Placer.ai Data Version 2.1, which introduces a new dynamic model that stabilizes daily fluctuations in the panel, improving accuracy and alignment with external ground truth sources.
Quick-service restaurants (QSRs) have faced headwinds in 2024, from higher costs to increased competition. But some brands are weathering the storm particularly well. We dove into the data to check in with two of the nation’s most prominent restaurant companies – Restaurant Brands International (RBI) and Yum! Brands – to see how their biggest chains, Burger King (RBI) and Taco Bell (Yum!), performed in Q3 2024.
Burger King, RBI’s largest restaurant chain, has been the focus of a major modernization effort, dubbed the “Royal Reset”, that includes a series of restaurant remodels and equipment and technology upgrades. Burger King has also been rightsizing – closing underperforming restaurants to shore up the chain’s overall strategic positioning.
And foot traffic data shows that these initiatives are paying off. In Q3 2024, overall visits to Burger King dipped 1.7% YoY – but the average number of visits to each Burger King location increased slightly (0.4%). This per-location uptick may have been fueled, in part, by the chain’s summer “$5 Your Way” value meal special, which kept YoY visits elevated through July. And some major markets – including Texas, Illinois, Washington, and Connecticut – performed even better, with average visit-per-location growth ranging from 1.5% - 5.1% YoY.
Taco Bell is Yum! Brands’ largest chain – accounting for over 70.0% of visits to the company’s U.S. restaurants in Q3 2024. And the Tex-Mex leader is another QSR that is standing strong in 2024. Throughout the summer, Taco Bell experienced YoY visit growth ranging from 1.2% to 2.2% – and though the chain saw a minor 1.9% YoY dip in September, this may be due to the month having one fewer Friday than the equivalent period of 2023. (Friday is Taco Bell’s busiest day of the week). Even accounting for this dip, visits to Taco Bell were up 0.6% YoY overall in Q3 2024.
One factor that has likely helped Taco Bell weather recent QSR storms has been its strength in executing special promotions. In July, the Tex-Mex leader attracted big crowds with a limited-time offer commemorating the 20th anniversary of the chain’s popular Baja Blast beverage. And in October 2024, the restaurant marked National Taco Day (Tuesday, October 1st) with ten hours of $1 tacos – fueling a substantial traffic spike: On the big day, visits rose 14.7% above the chain’s daily year-to-date (YTD) average, and 18.4% above the chain’s Tuesday YTD average.
Burger King and Taco Bell found success in Q3 2024 through limited-time promotions – and in the case of the former, a strategic focus on rightsizing while updating existing stores. How will RBI and Yum!’s biggest brands perform in Q4?
Follow Placer.ai’s data-driven restaurant analyses to find out.
This blog includes data from Placer.ai Data Version 2.1, which introduces a new dynamic model that stabilizes daily fluctuations in the panel, improving accuracy and alignment with external ground truth sources.
Starbucks’ preliminary fiscal Q4 2024 (July-September 2024) results--including a 10% decline in comparable transactions in its North America segment--reinforce that the company has "drifted from its core", as new Starbucks CEO Brian Niccol discussed following the release. The results also come at a time when other coffee and beverage chains are seeing year-over-year visit increases, reinforcing that new product innovations aren't connecting with consumers–management explained that “accelerated investments in an expanded range of product offerings coupled with more frequent in-app promotions and integrated marketing to entice frequency across the customer base did not improve customer behaviors.” (The difference between our visit per location figure and Starbucks’ reported number is likely due to lower coverage of urban stores in our platform).
As we wrote when Niccol assumed the CEO role in August, Starbucks’ transformation won’t happen overnight, but the data behind Niccol’s early strategies at Chipotle still hints at a successful turnaround. Niccol's plan to improve the Starbucks customer experience, remove bottlenecks and operational complexities (including a more streamlined menu), and refine Mobile Order and Pay is a sound strategy, but it will take time to implement. Positively, we believe that Starbucks has a strong foundation to work from. Below, we show the monthly visitor per location trend line since the beginning of 2022. While declines in visit frequency is something the company will work to address with its current initiatives, the number of visitors coming into each location generally remains strong (down only 2%-3% per month on average thus far in 2024). Assuming the company can execute Niccol’s plan to reduce bottlenecks and operation complexities, Starbucks’ wide visitor reach should drive improved engagement and visit frequency.
As we also pointed out a few months ago, we believe that Starbucks’ success in smaller underpenetrated markets have been somewhat overlooked. We analyzed Starbucks’ unit expansion opportunities in detail in September 2022, and we’ve seen progress on this initiative since then. Starbucks’ recent store development effects have been focused on “Tier 2 and Tier 3 cities where we see population growth and forecast both underserved demand and high incrementality.” We’ve revisited our visit per location data for Starbucks’ Top 25 designated market areas (DMAs) versus non-Top 25 DMAs over the last 12 full months below, and similar to our last update, Starbucks is seeing higher visits per location in its non-Top 25 markets. Many of these non-Top 25 DMA stores have been opened in the past 12-18 months, which suggests improved metrics as operational complexities are reduced and these locations enter the same-store sales base.
Photo Image Credit: Orange County Register
We know there’s appetite for Six Flags Fright Fest, Universal Studios Halloween Horror Nights, Knotts’ Scary Farm, and Halloween Screams at Walt Disney World, but one innovative car wash takes you to another level, inviting you to go on a “nightmarish journey that turns an ordinary car wash into a realm of terror.” Big Wave Car Wash in Anaheim is one of the locations, and it’s immediately clear that this spooky spectacular is a hit. Compared to another local car wash competitor, we see that the addition of the scary performers nearly triples Big Wave’s traffic, especially Thursday-Sunday with the October kickoff.
We compared the Spatial.ai PersonaLive segments for Big Wave and Drive Thru Express Car Wash from January-September 2024 vs from October 1-19, 2024. In the month of October alone, we saw over 4x more visits from Near-Urban Diverse families and from Melting Pot Families to the haunted carwash compared to the entire rest of the year. Among Young Urban Singles, there was a 2.5x multiplier for just the three weeks in October compared to January-September. And while Ultra Wealthy Families normally only make up 1% of the visits, during this spooky spectacular, they accounted for 5%. Now you know where to go when junior is bored–head for the haunted car wash!
No surprise, the trade area drawn during the month of October is significantly larger as people come from a total trade area of 53 sq miles during this event (October 1-19, 2024 in red), compared to 12 sq miles the rest of the year (January-September 2024 in blue).
Over the past two weeks, the home industry has been abuzz with news from the remnants of Bed Bath & Beyond. A retailer that stood as the leader among specialty players continues to try and find new life in physical retail despite the closure of the original chain and its subsidiaries. After a year back in business, buybuy BABY, under new management, announced that it would be closing its 10 reopened locations.
Over at Beyond Inc., the new holding company for Overstock.com and the newly reformed Bed Bath & Beyond brand, they announced new partnerships with both Kirkland’s and The Container Store. The former partnership is going to help bring the brand back to physical retail with the creation of five Bed Bath & Beyond “neighborhood” small format stores, with locations to be announced; stores will be scouted, developed and operated by Kirkland’s. In the partnership with The Container Store, Beyond Inc. made a financial investment in the retailer and will allow The Container Store to leverage the brand’s assets, name, assortment and data; shop-in-shops also appear to be a part of this new partnership.
The home industry has been incredibly challenged in the post-pandemic period (below). However, as the category became further consolidated over the past few years, these new partnerships could help to revitalize all three brands, all of which have a strong brand identity with consumers. These partnerships also allow the brands to harness their strengths to benefit multiple banners.
How closely aligned are these brands? Kirkland’s tends to focus on furniture and furnishings, The Container Store handles all things organization, and the Bed Bath & Beyond brand name still carries weight as the undisputed leader in all things home.
Looking at PersonaLive’s demographic and psychographic segmentation of visitors to all three brands in 2022, before Bed Bath & Beyond’s closure the next year, there are some clear alignments and also opportunities to reach new visitors through the partnerships. Kirkland outperformed Bed Bath & Beyond with suburban cohorts such as Wealthy Suburban Families, Upper Suburban Diverse Families and Blue Collar Suburbs.
Through the lens of The Container Store, it provides a lot more opportunity for Beyond Inc. to reach higher concentrations of visitors from segments such as Ultra Wealthy Families, Educated Urbanites and Young Professionals. Looking at the partnerships with both Kirkland’s and the Container Store as a collective strategy, Beyond Inc. can capitalize on the migration to suburban communities by consumers and higher income households with the new brand.
Another positive sign for the partnerships is the high levels of cross visitation between the retailers before the closing of Bed Bath & Beyond. In 2022, Bed Bath & Beyond’s final full year of operation, 20% of visitors to Kirkland’s and almost a quarter of visitors to The Container Store cross visited Bed Bath & Beyond.
In theory, both partnerships will allow Bed Bath & Beyond to return to physical retail in alignment with both consumers and the current retail landscape. Industry specific retailers and incredibly important to the health and long term success of the industry, and the idea of welcoming back a beloved brand is exciting. It should be interesting to see the new small format stores and installations as the debut and look at the impacts of the partnership on the broader home category.
The holiday shopping season is nearly upon us – and one category that always benefits from holiday sales is apparel. So with Q4 underway, we checked in western wear leader Boot Barn and discount footwear chain DSW (Design Shoe Warehouse, owned by Designer Brands, Inc.) to see how they fared in Q3 2024 – and what awaits them as Black Friday approaches.
Boot Barn and DSW – two very different shoe retailers – have been thriving in recent months. Since May 2024, the two chains have seen sustained monthly year-over-year (YoY) visit growth, finishing out Q3 2024 with visit upticks of 10.8% (Boot Barn) and 10.5% (DSW).
For Boot Barn in particular, Q3’s robust visit growth was at least partially driven by the chain’s aggressive expansion strategy: Between July 2023 and June 2024, Boot Barn opened some 50 new stores – and plans to open dozens more over the coming year. But foot traffic data also shows that the chain has succeeded in growing its footprint without significantly diluting traffic at existing locations. During Q3, the average number of visits to each Boot Barn location dipped just slightly below 2023 levels (2.8%), even as YoY visits to the chain surged by 10.8%.
DSW, for its part saw significant YoY visit growth throughout Q3, despite a store count that has remained relatively stable. As a store that offers shoppers access to high-quality, name-brand products at affordable prices, DSW lets consumers trade down while splurging at the same time.
DSW isn’t called a warehouse for nothing. The typical DSW store spans about 25,000 square feet (though the chain has begun experimenting with smaller formats) – compared to just 12,000 - 14,000 for Boot Barn. But despite the smaller size of Boot Barn’s locations, visitors to the western wear chain tend to spend more time in-store than visitors to DSW. Since 2022, average visitor dwell times at Boot Barn have ranged between 34.9 and 35.8 minutes, while dwell times at DSW have hovered between 32.1 and 32.8 minutes.
Customers at DSW may be more likely to know in advance what they’re looking for, making a bee-line for the discounted footwear they’ve been waiting to get their hands on. Visitors to Boot Barn, on the other hand, may spend more time browsing the brand’s wider selection of merchandise.
The difference in visitor dwell times may also be partially due to Boot Barn’s firmer positioning as a weekend destination: Over the past twelve months (October 2023 - September 2024), 59.5% of visits to Boot Barn took place between Fridays and Sundays, compared to 56.3% for DSW.
Still, visitors to both chains tend to remain in-store for more than half an hour – revealing a highly engaged customer base eager to explore the brands’ varied offerings.
With a strong Q3 2024 under their belts, what can DSW and Boot Barn expect this holiday season?
Looking at weekly fluctuations in visits to Boot Barn and DSW in 2022 and 2023 – compared to yearly weekly averages – reveals another striking difference between the two chains: Visits to Boot Barn peak in November and December each year, as customers descend upon the chain to purchase western-themed gifts for loved ones. DSW, on the other hand, sees greater visit boosts in spring, perhaps buoyed by shoppers updating their wardrobes in anticipation of warmer weather.
But zooming in on the two chains’ busiest days of the year tells a somewhat different story. Even though DSW experiences a more muted holiday shopping season, the shoe leader – like Boot Barn – draws its biggest crowds of the year on Black Friday. On November 24th, 2023, visits to DSW jumped 134.5% compared to the chain’s daily average for the 12-month period from October 2023 to September 2024 – a smaller spike than that seen by Boot Barn, but significant nonetheless.
After that, however, the chain’s visitation patterns diverged. For DSW, the next eight busiest days of the year were all Saturdays in Spring – including the Saturday before Mother’s Day (May 11th) and the Saturday before Easter (March 30th). For Boot Barn, on the other hand, December shopping days – including Super Saturday (December 23rd) – drove the biggest foot traffic spikes.
With holiday shopping just around the corner, DSW and Boot Barn both appear poised to enjoy a healthy Q4 – each in their own way. Which other footwear and apparel brands are likely to succeed this holiday season?
Follow Placer.ai's data-driven retail analyses to find out.
This blog includes data from Placer.ai Data Version 2.1, which introduces a new dynamic model that stabilizes daily fluctuations in the panel, improving accuracy and alignment with external ground truth sources.
The dining industry showcased its agility over the past couple of years as it rapidly adapted to shifts in consumer preference brought on by COVID and rising prices. And with a new year around the corner, the pace of change shows no signs of slowing down.
This white paper harnesses location analytics, including visitation patterns, demographic data, and psychographic insights, to explore the trends that will shape the dining space in 2024. Which dining segments are likely to pull ahead of the pack? How are chains responding to changes in visitor behavior? And where are brands driving dining foot traffic by taking advantage of a new advertising possibility? Read on to find out how dining leaders can tap into emerging trends to stay ahead of the competition in 2024.
Comparing quarterly visits in 2023 and 2022 highlights the impact of the ongoing economic headwinds on the dining industry. The year started off strong, with year-over-year (YoY) dining visits up overall in Q1 2023 – perhaps aided by the comparison to an Omicron-impacted muted Q1 2022. And while overall dining growth stalled in Q2 2023, several segments – including QSR, Fast Casual, and Coffee – continued posting YoY visit increases, likely bolstered by consumers trading down from pricier full-service concepts.
Foot traffic slowed significantly in Q3 2023 as inflation and tighter consumer budgets constrained discretionary spending. Overall dining visits fell 2.4% YoY, and full-service restaurants – with their relatively high price point compared to other dining segments – seemed to be particularly impacted by the wider economic outlook. But the data also revealed some bright spots: Fast Casual still succeeded in maintaining positive YoY visit numbers and Coffee saw its Q3 visit grow an impressive 5.4% YoY. As the return to office continues, a pre-work coffee run or lunchtime foray to a fast-casual chain may continue propelling the two segments forward.
Restaurant visitation patterns have evolved over the past few years. Although an 8 PM seating was once the most coveted slot at fine-dining restaurants, recent visitation data suggests that sitting down to dinner earlier is rising in popularity.
But among the QSR segment, the opposite trend is emerging, with late-night visits rising. Analyzing hourly foot traffic to several major QSR chains reveals that the share of visits between 9 PM and 12 AM increased significantly between Q3 2019 and Q3 2023. Even Taco Bell – already known for its popularity among the late-night crowd – saw a substantial increase in late-night visits YoY – from 15.4% to 20.3%.
Who is driving the late night visit surge? One reason restaurants have been expanding their opening hours is to capture more Gen-Z diners, who tend to seek out nighttime dining options. But location intelligence reveals that younger millennials are also taking advantage of the later QSR closing times.
An analysis of the captured market for trade areas of top locations within one of Taco Bell’s major markets – the Chicago-Naperville-Elgin, IL-IN-WI Metropolitan area – reveals a year-over-four-year (Yo4Y) increase in “Singles & Starters.” The “Singles & Starters” segment is defined by Experian: Mosaic as young singles and starter families living in cities who are typically between 25 and 30 years old. As consumers continue to prioritize experiential entertainment and going out with friends, late-night dining may continue to see increased interest from young city-dwellers.
Millennials and Gen-Z consumers aren’t only heading to their favorite fast food joint for a late-night bite – these audience segments are also helping drive visits on the weekends. Smoothie King is one chain feeling the benefits of young, health-conscious consumers.
The chain, which opened in New Orleans, LA, in 1973 as a health food store, has since grown to over 1,100 locations nationwide and is currently expanding, focusing on the Dallas-Fort Worth CBSA. The area’s Smoothie King venues have seen strong visitation patterns, particularly on the weekends – weekend visits were up 3.4% YoY in Q3 2023. The smoothie brand’s trade areas in the greater Dallas region is also seeing a YoY increase in weekend visits from “Young Professionals” – defined by the Spatial.ai PersonaLive dataset as “well-educated young professionals starting their careers in white-collar or technical jobs.”
While some dining chains are appealing to the late-night or weekend crowd, others are driving visits by appealing to sports lovers. How have recent rule changes around student athletes changed the restaurant game, and how can college football teams drive business in their hometowns?
College sports have long been a major moneymaker, with top-tier teams raking in billions of dollars annually. And as of 2021, college athletes can enjoy a piece of the significant fan following of college sports thanks to the change in the NCAA’s Name, Image, and Likeness (NIL) rules, which now allows student athletes to sign endorsement deals.
Since then, multiple restaurants have jumped on the opportunity to partner with student athletes, some of whom have millions of followers on Instagram and TikTok. Chains like Chipotle, Sweetgreen, Slim Chickens, and Hooters have all signed college athletes to various brand deals.
How can brands ensure they partner with athletes their customers will want to engage with? Analyzing a chain’s audience by looking at the interests of residents in a given chain’s trade area can reveal which type of athlete will be the most attractive to each brand’s customer base. For example, data from Spatial.ai: Followgraph provides insight into the social media activity of consumers in a given trade area and can highlight desirable partnerships.
Examining the trade areas of Chipotle, Sweetgreen, Slim Chickens, and Hooters, for instance, reveals that Sweetgreen’s visitors tended to have the largest share of Women’s Soccer followers. Conversely, Sweetgreen’s trade area had lower-than-average shares of College Football Fans or College Basketball Fans, while residents of the trade areas of the other three chains showed greater-than-average interest in these sports. Leveraging location intelligence can help companies choose brand deals that their customers resonate with and find the ideal athletes to represent the chain.
Finding the right college athlete partnership is one way for dining brands to appeal to college sports enthusiasts. But dining chains and venues located near major college stadiums also benefit from the popularity of their local team by enjoying a major game day visit boost.
One of the country’s most popular college football teams, the Ohio State Buckeyes, can draw millions of TV viewers, and its stadium has a capacity of 102,780 – one of the largest stadiums in the country. And while tailgating is a popular activity for Buckeyes fans, nearby restaurants are some of the biggest beneficiaries of the college football craze. Panera experienced a 235.3% increase on game days as compared to a typical day, Domino’s Pizza visits grew by 283.3%, and Tommy’s Pizza, a local pie shop, saw its visits jump by a whopping 600.9%.
This influx in diners also causes a major shift in game day visitor demographics, as revealed by changes in visitors at dining venues located near stadiums of two of the nation’s best college football teams – the Ohio State Buckeyes and Ole Miss Rebels. Based on Spatial.ai: Personalive data for the captured market of these dining venues, game day visitors tended to come from “Ultra Wealthy Families” when compared to visitors during a typical non-game day in September or October.
The analysis indicates that popular sporting events create a unique opportunity for restaurants near college stadiums to attract high-income customers game day after game day, year after year.
While some spend game day tailgating or visiting a college restaurant, others hold a viewing party – with a six-foot submarine. And the sub’s popularity extends beyond Superbowl Sundays. Sandwich chains including Jersey Mike’s, Firehouse Subs, Jimmy John’s, and Subway (recently purchased by the same company that owns Jimmy John’s) have seen sustained YoY increases in visits and visits per venue in the first three quarters of 2023.
Some of the growth to these chains may be related to their affordability, a draw at all times but especially during a period marked by consumer uncertainty and rising food costs. And subway leaders seem to be seizing the moment and striking while the iron is hot – Jersey Mike’s opened 350 stores in 2023 and still saw its YoY visits per venue grow by 6.6%. And Subway reported ten consecutive quarters of positive sales, a promising sign for its new owner.
The love for a healthy, affordable sandwich extends across all income levels, with all four chains seeing a range in their visitors' median household income (HHI). Out of the four chains analyzed, Jersey Mike’s – which has long prioritized a suburban, middle-income customer – had the highest trade area median household income of the four chains at $77.3K/year. Subway, known for its affordability, had the lowest, with $62.9K/year. The variance in median HHI combined with the strong foot traffic growth shows that when it comes to sandwiches, there’s something for everyone.
Persistent inflation and declining consumer sentiment may pose serious challenges for the dining space, but emerging trends are helping boost some restaurants. Customers seeking out a late-night bite drive visits to QSR chains, and health-conscious diners are boosting foot traffic to smoothie bars and sandwich shops. Meanwhile, sports sponsorships and game-day restaurant visits can provide a boost to dining businesses that take advantage of these opportunities.
“Retail media networks have turned retailers into ad moguls. That’s a huge change and nobody yet understands all the implications of it.”
Constantine von Hoffman, MARTECH
Companies operating consumer-facing brick-and-mortar venues traditionally relied on selling goods and services as their primary revenue stream. But recently, leading retailers such as Walmart and Target have begun to leverage their immense store fleet into a powerful advertising platform.
Online retailers have been tapping into the advertising power of their digital sites for years by relying on various automated tools to show third-party advertisements to relevant consumer segments. But now, retailers with a strong offline presence can also leverage physical marketing impressions and focus their campaigns while reaching consumers at the point of purchase. Retailers have long recognized the intent that drives a store visit, and understanding the full value of leveraging that visit to its full extent is an important new frontier.
Major retailers are continuing to see their physical visits outnumber their online ones.
And in spite of the gloomy predictions regarding the future of brick and mortar retail, major retailers are continuing to see their physical visits outnumber their online ones. Monthly numbers of visitors to Walmart and Target significantly outpace the brands’ online reach, according to web data from Similarweb. So although, up until recently, these brands have focused their media placements on their digital channels, it is becoming increasingly clear that these chains’ physical stores hold powerful – and currently untapped – advertising potential.
Online visitor data source: similarweb.com
And with the recent rise in digital advertising costs, retail media networks are becoming more attractive for companies looking to make the most of their ad budget. Retail media networks can also help brands reach rural communities, elderly Americans, and other consumer segments that are currently underserved by digital advertisers.
This white paper explores several retailers on the cutting edge of the retail media network revolution. Keep reading to find out how advertisers can use retail media networks to promote to hard-to-reach consumers, segment their ad spending, and optimize their campaigns.
Residents of rural areas use the internet less frequently, and have lower levels of technology ownership than their urban and suburban counterparts. As a result, companies that stick to digital advertising may have a harder time reaching rural consumers. Brick and mortar retailers popular in smaller markets can fill in the gaps and help brands promote their products and services to this hard-to-reach audience.
Brick and mortar retailers popular in smaller markets can help brands advertise to hard-to-reach audiences.
Dollar General saw significant success over the pandemic, with the current economic climate continuing to benefit the brand. Between January and August 2022, nationwide visits to Dollar General venues were 35.6% higher than they were between January and August 2019, while the number of visitors increased 25.4% in the same period.Visit numbers aggregate the visits to the chain’s various locations in a given period, while visitor numbers track the number of people who enter the brand’s stores.
The company has also been operating a media network since 2018. The Dollar General Media Network (DGMN) enables advertisers to reach Dollar General consumers across the company’s channels to build awareness both digitally and in physical spaces. Advertisers with DGMN can display in-store bollard, blade, and wipe stand signs, security pedestals, basket bottomers, and shelfAdz to deliver in-store messaging from parking lot to purchase. Recently, Dollar General announced that its ad platform was now working with 21 new advertising partners, including Unilever, General Mills, Hershey’s, and Colgate-Palmolive.
Embracing the Power of the Small Market
Advertising partners can leverage the DGMN to promote their goods and services to harder-to-reach consumers.
Dollar General has been serving rural residents for years, with the majority of the company’s stores located in communities with fewer than 20,00 residents. And while the brand is growing nationwide, Dollar General’s strength is particularly evident in small markets – which means that advertising partners can leverage the DGMN to promote their goods and services to harder-to-reach consumers.
Comparing year-over-three-year (Yo3Y) visit change to Dollar General stores in metropolitan and micropolitan core based statistical areas (CBSAs) highlights the company’s success in smaller markets. According to the United States Office of Management and Budget, metropolitan and micropolitan CBSAs have over and under 50,000 residents, respectively. Since January 2022, monthly Yo3Y visit growth to Dollar General venues in select Texas micropolitans has consistently outpaced foot traffic to nearby metropolitan areas. While the Sherman-Denison metro area saw August 2022 foot traffic hit a solid 24.5% increase over August 2019, the Gainesville, Texas micro area – around 35 miles east of Sherman – saw its foot traffic increase 54.5% in the same period.
Dollar General’s presence across a significant number of smaller markets means that advertising partners can use the growing DGMN to increase awareness and drive purchase consideration among these harder-to-reach consumers.
In the digital space, three tech giants – Alphabet (previously Google), Meta (previously Facebook), and Amazon – enjoy over 60% of the digital ad revenue in the United States. This means that companies are competing for impressions on a small number of platforms – and smaller brands geared at specific consumer segments may need to spend significant advertising budgets to outbid the larger players. Retail media networks create additional advertising platforms, and enable advertisers to diversify their ad spend, increase their (physical) impressions, focus on more specialized channels to better reach their audience, and potentially reach customers at their highest point of intent.
Retail media networks create additional advertising platforms and potentially reach customers at their highest point of intent.
Albertsons launched its retail media network, Albertsons Media Collective, in November 2021 with the goal of delivering “digitally native, shopper-centric and engaging branded content to the company’s ever-growing network of shoppers.” Currently, the grocer’s media network is primarily digital, but Albertsons’ head of retail media products Evan Hovorka recognizes the importance of leveraging in-store assets to deliver a unique advertising experience. The company is testing out smart carts that link with “Albertsons for U” loyalty program to display ads to shoppers – and Albertsons is likely to find more ways to reach in-store consumers as it continues to develop its retail media network.
The chain is also one of the most popular grocers nationwide. With the exception of March and April 2022, when inflation and high gas prices temporarily halted growth, the brand’s monthly visits and visitor numbers have consistently exceeded pre-pandemic levels. Monthly visits for Albertsons in August 2022 were up 5.7% and monthly visitors were up 5.4% on a Yo3Y basis. This means that advertisers with Albertsons can increase their reach and grow their physical ad impressions just by displaying their ads in Albertsons locations and tapping into the chain’s growing visitor base.
Looking beyond Albertsons' nationwide average foot traffic trends reveals some important regional differences. Between January and July 2022, visits to the brands increased 4.6% in Wyoming on a Yo3Y basis, while foot traffic to the brand’s locations in Oregon jumped 18.5% compared to January through July 2019. This means that a brand looking to reach consumers in Oregon can contract with Albertsons’ media network to show its ads to a fast-growing pool of visitors.
A larger visitor count translates to an increase in unique ad impressions, while more visits from fewer visitors can drive repeated exposures.
Diving deeper into the data reveals an additional layer of insight. Some states with only moderate visit growth are seeing a surge in visitor numbers, while other states are seeing a drop in visitor numbers but a rise in visits. A larger visitor count translates to an increase in unique ad impressions and more people exposed to the ads, while more visits from fewer visitors translates to more overall impressions that can drive repeated exposure among a smaller group of visitors. So advertisers can use segmented foot traffic data to decide where to focus their marketing depending on the goal of the campaign.
For example, Wyoming's moderate increase in visits hides a significant spike in visitors, which means that advertisers to Albertsons venues in Wyoming can get their impressions before a large number of different potential consumers. Meanwhile, Oregon's 18.5% increase in visits is the result of just a 9.4% increase in visitors – so Albertsons is cultivating an increasingly loyal following in the Beaver State, and the grocer’s advertising partners can expect that the same visitors will be exposed to their brand repeatedly.
So companies that want to increase unique ad impressions and build awareness can advertise to Albertsons customers in Wyoming, where their ads will be seen by a large number of new people. But in Oregon, companies may want to promote a campaign that focuses on moving Albertsons visitors through their funnel.
In order to accurately assess the ad distribution patterns in each location, brands operating retail media networks need to understand both visits and visitors trends in each region and for the chain as a whole.
Advertisers with retail media networks can use foot traffic data to refine their geographic audience by identifying the consumer preferences of a given brick-and-mortar brand on a store or city level.
In August 2020, CVS Pharmacy launched its media network, the CVS Media Exchange (cMx). The company estimates that 76% of U.S. consumers live within five miles of at least one store, and the cMx allows partners to tap into the chain’s reach by giving advertisers access to CVS’ online and offline channels, including in-store ads.
Although CVS has been closing locations recently, the brand is still one of the strongest players in the brick-and-mortar retail space. Its 2022 visit numbers have consistently exceeded pre-pandemic levels nationwide, and data from CVS locations in leading cities shows that its Yo3Y visits per venue and visitor numbers are even higher.
CVS’s nationally distributed fleet means that the brand’s locations in different regions attract distinct consumer bases.
CVS carries a varied product mix of daily essentials in addition to its healthcare offerings, so the brand attracts a wide range of consumer segments. And the chain’s nationally distributed store fleet means that CVS has locations in different regions that attract distinct consumer bases who do not all have the same lifestyle preferences. By using foot traffic data to understand the regional consumer preferences of CVS consumers beyond the store, advertising partners can refine their market and make the most of the cMx.
Different regions have different fitness cultures. Chains catering to health-conscious consumers can use retail media networks and foot traffic data to focus their efforts on areas where inhabitants exhibit a high demand for regular workouts.
Analyzing cross-visit data from CVS locations across five major urban centers in the U.S. shows that the percentage of those who also visited gyms or fitness studios varied significantly across each DMA. In the New York area, 62.7% of those who visited CVS in Q2 2022 also visited a fitness venue during that period, in contrast with only 38.0% of CVS visitors around Dallas-Ft. Worth, TX in the same period. This information can help advertising partners in the health and wellness space decide where to place their campaigns.
Looking at cross-visit data on a city-wide level can provide a sense of the consumer culture in each area, but advertisers that dive into foot traffic data for individual stores can refine their messaging even further.
On average, 43.8% of CVS visitors in the Chicago DMA also visited a gym in Q2 2022. But drilling down to the top CVS locations in the city reveals that the rate of cross-visits varies significantly from location to location. Both the E 53rd Street and W 103rd Street locations have a relatively high share of visitors who visit fitness locations – 52.5% and 49.2%, respectively. Meanwhile fitness cross-visits were at just 36.6% for the South Stony Island Avenue location. Advertisers promoting health and wellness related products and services may want to focus on the 103rd St. and 53rd St. CVS locations.
Diving into a customer’s behavior and preferences outside the store can help retail media network operators and advertising partners find the areas and locations best suited for each type of ad.
Cross-visit data is one way to identify consumer preferences beyond the physical store. Advertisers can also analyze digital preferences of offline visitors to focus their marketing on the most appropriate locations.
Advertisers can also analyze digital preferences of offline visitors to focus on the most appropriate locations.
Over the past couple of years, Macy’s has been finding ways to reinvent itself and optimize its store fleet – and foot traffic data indicates that the retailer's efforts are paying off. In the first half of 2022, Macy’s exceeded its H1 2021 overall visit and average visits per venue numbers and posted a positive year-over-year (YoY) visitor count. In Q2 2022, despite the wider economic challenges, Macy’s visitors, visits, and average visits per venue saw YoY increases of 3.4%, 4.0% and 9.9% increases.
Like CVS, Macy’s launched its media network in August 2020, and by February 2021 the Macy’s Media Network was already generating $35 million annually. In addition to advertising on the company’s digital channels, Macy’s also offers partners the use of in-store screen displays, package inserts, and the brand’s iconic billboard in New York City’s Herald Square.
Advertisers can optimize their advertising by analyzing the differences in consumer profiles between a chain’s various stores.
Advertisers that understand the differences in consumer profiles between a chain’s various stores can optimize their advertising efforts. While looking at variations in cross-visit trends is one way to identify interested brick-and-mortar consumers, diving into visitor’s digital behavior and online preferences can also provide valuable insights.
Tools such as Spatial.ai’s GeoWeb, which tracks online engagement with various trends and topics by neighborhood, can reveal how offline consumers behave online. An index score of 100 indicates that consumers in an area have an average interest in a given topic, while scores over (or under) 100 indicate that consumers are more (or less) interested in the topic when compared to the national average interest.
We used Spatial.ai’s GeoWeb tool to analyze the online behavior of consumers in the True Trade Areas (TTA) of five Macy’s locations in the Philadelphia, PA DMA – and found that residents of the different TTAs stores showed differing indexes. For example, the Macy’s in the King of Prussia Mall location showed a high index of 161 in “Men’s Business Clothes Shoppers,” while the Cottman Ave. location had an only slightly above average index of 102. This means that advertisers of men’s business apparel may see more results by focussing their advertising on visitors to the King of Prussia location.
Advertisers that use retail media networks do a lot more than just reach in-store shoppers. Stores exist in the physical world, so advertisers can also reach passers-by through physical venues’ windows, blade signs – or in the case of Macy’s, through its Herald Square Billboard. Here too, foot traffic data can reveal the consumer preferences of people walking by the sign.
We looked at the online behavior in the TTA around the traffic pin on the corner where the billboard is located (Broadway/6th Ave and 34th Street in New York) to understand which advertisers might benefit most from a billboard at that location. While the “Men’s Business Clothes Shoppers” category was over-indexed compared to the national average, as would be expected in midtown Manhattan, “Women’s Fashion Brand Shoppers” had an even higher index. “Gen Z Apparel Shoppers” were over-represented, but “Leather Good Shoppers” and ”Athleisure Shoppers” were under-represented. So a brand that carries both elegant wear and athleisure may want to display its less casual clothing lines on the billboard.
Understanding how consumers behave both on and offline can help retail media networks and advertising partners promote their campaigns most effectively.
To transform their physical store fleet into a media network, brands and companies need to analyze the reach of each venue. The same chain operating in multiple regions may be reaching different types of consumers in each area, or even in various neighborhoods of the same city. These distinct audiences may have contrasting products, brands, and shopping preferences.
Retailers that leverage their brick and mortar presence can transform the advertisement space as it exists today.
Retailers can also partner with advertising partners who wish to promote goods and services not carried by the retailer. For this to succeed, the retailer will need to analyze how consumers behave outside of its stores. Understanding what characterizes the overall behavior of consumers in each locations’ trade area will allow the retailer to reach a larger audience and truly compete with the digital giants. And by leveraging their brick and mortar presence, brick and mortar retail can transform the advertisement space as it exists today.
Malls have long acted as a gleaming symbol of American retail. Following the opening of the first indoor mall in 1956, and as the American middle class increasingly moved from the city to the suburbs, malls continued to open at a rapid rate. By 1960, some 4,500 shopping centers had opened nationwide, filling the growing demand for “third places” – spaces that allowed the newly suburban populations to gather, socialize, and create community. And while that role evolved over the years, it’s safe to say that malls have played a major part in shaping the American shopping culture.
But malls’ rapid expansion led to an oversaturated market – some estimates suggest that there are approximately 24 square feet of retail space per U.S. citizen, as compared to 4.6 for the U.K. and 2.8 for China. Many began to predict the demise and downfall of malls, and that narrative intensified as online shopping grew in popularity. The rise of big-box stores, a focus on “services, not things,” and COVID-19 only accelerated these trends.
A lot of the doom and gloom predictions tend to de-emphasize the mall's role as a modern incarnation of a bustling downtown shopping area.
But a lot of these doom and gloom predictions focus on malls only as a place to shop, and tend to de-emphasize their other role as the third place – a modern incarnation of a bustling downtown shopping area, replete with shops, services, and places to meet. And after two years of isolation and a new, pandemic-induced wave of suburban relocation, malls’ potential to bring people together is more prized than ever.
So although malls were hit hard during COVID-19, many of them are finding ways to reinvent themselves and stay relevant. Today, more than halfway through 2022, the challenges that malls face continue to evolve and change – but malls are evolving too. This white paper covers a few specific ways that some malls have found to thrive in the new normal. Some shopping centers are turning to entertainment to draw crowds into their doors. Others are focusing on offering a full visitor experience that extends beyond simply grabbing a new shirt or a burger at the food court. Still, more are embracing omnichannel options, offering an integrated on and offline experience to their shoppers. In the face of significant retail challenges, top-tier malls are turning to innovative solutions to stay ahead of the game.
The pandemic posed significant challenges to malls. Although foot traffic to the category rose back up in the summer of 2021, the Delta and subsequent Omicron waves brought visits down once more. And as visit gaps post-Omicron began to narrow, inflation and gas prices put the brakes on any return to normalcy. April and May 2022 saw visits beginning to trend up, though the unrelenting rise of inflation, the highest it’s been in the past 40 years, has slowed that recovery slightly.
Foot traffic data shows that malls are continuing to attract visitors, despite the challenges that seem to crop up weekly.
Still, foot traffic data shows that malls are continuing to attract visitors, despite the challenges that seem to crop up weekly. And while they may no longer play the central role they once did in Americans’ shopping routines, malls still serve as indoor community hubs where friends and family can come together for diverse food, shops, and entertainment options. This could explain why top-tier malls keep on coming back despite the seemingly constant obstacles.
Comparing monthly visits from January 2022 through July 2022 to the same period in 2019 highlights the significant difficulties facing the sector. Indoor malls, open-air lifestyle centers, and outlet malls alike saw marked lags in foot traffic as compared to three years ago.
Monthly year-over-three-year (Yo3Y) foot traffic comparisons also highlight mall resilience.
The monthly year-over-three-year (Yo3Y) foot traffic comparisons also highlight mall resilience. Following an Omicron-plagued January, the visit gaps narrowed in February 2022 to less than 5% for all the segments. And although the increase in gas prices and inflation brought visits down in March, malls quickly bounced back in April 2022, with indoor malls seeing only 1.8% fewer visits than in 2019 and open-air shopping centers down only 4.8% Yo3Y. Foot traffic fell again in May and June as consumers tightened their budgets in the face of rising prices, but consumers appear to have quickly made peace with the new economic reality. By July 2022, visits to indoor malls and open-air lifestyle centers were only 3.5% and 2.7% lower than they had been in July 2019.
COVID didn’t just impact visit numbers – since 2020, mall visits have also gotten shorter, likely a result of pandemic restrictions and a general desire not to congregate any longer than necessary. And although 2021 and 2022 saw a slight uptick in time spent at malls and shopping centers – from 60 minutes in 2020 to 62 minutes in 2021 and 2022 – the median dwell time is still significantly lower than the 70 minutes median dwell time of pre-COVID 2018 and 2019.
Shorter visits are not necessarily a bad thing – intent-driven shoppers may simply be doing more research ahead of time and less in-mall browsing.
Shorter visits are not necessarily a bad thing in and of themselves – consumers today are highly informed, so many intent-driven shoppers may simply be doing more research ahead of time and less in-mall browsing. But shorter (and fewer) visits do mean that malls must focus on giving shoppers a reason to visit. We explore some successful strategies below.
Malls have long integrated entertainment into their overall experience in the form of arcades, movie theaters, and even coin-operated animal rides. Some malls, however, are taking their entertainment offerings to the next level.
In August 2021, CBL Properties, a Tennessee-based property developer, announced the opening of the Hollywood Casino by Penn National Gaming in the York Galleria Mall in York, Pennsylvania. The 80,000 square foot casino, which boasts 500 slots and 24 live-action table games, opened in the mall’s lower level. The space was occupied by a now-closed Sears department store, and the entertainment venue now functions as a new anchor to draw customers in.
The casino’s opening has had a dramatic impact on the mall’s foot traffic. In a year-over-three-year (Yo3Y) comparison, July 2021 saw 2.4% fewer visitors than July 2018. But when the casino opened in August 2021, visits to the location jumped to 31.4% Yo3Y. This increase is all the more impressive considering that the casino opened on August 19th, with only 12 days left in the month.
The mall, which had seen negative Yo3Y visit numbers until the casino’s opening, has sustained the positive visit trend through July 2022 – a testament to the appeal of in-mall entertainment.
Another mall betting on indoor entertainment is the Pierre Bossier Mall in Bossier City, Louisiana. In April 2022, Surge Entertainment opened a child-friendly space, which includes zip-lining, bowling, laser tag and arcade games. The Surge Entertainment chain is co-owned by Drew Brees, the former New Orleans Saints quarterback, and has 15 locations around the country. The Pierre Bossier Mall branch is filling the space vacated by Virginia College, which closed its doors in 2018.
Since Surge Entertainment opened its Bossier City location, the mall has seen a dramatic increase in average dwell time.
Since Surge Entertainment opened its Bossier City location, the mall has seen a dramatic increase in average dwell time. Between July 2021 and March 2022, median dwell time hovered between 51 and 58 minutes. But following the center’s opening, median dwell time jumped to 78 minutes. Since then, the median dwell time has remained consistently elevated: In the four months since the Surge Entertainment opening, median dwell times did not drop below 75 minutes.
Brick-and-mortar retailers once viewed online shopping as a threat – but now, mall owners and operators are increasingly turning to digital channels to complement existing approaches. COVID-19 and the surge of online shopping further fueled malls’ digital progress. Over the past two years, large malls and suburban shopping centers across the country have been rolling out various online and social shopping options and adopting omnichannel strategies.
In September 2020, Centennial, a real estate investment firm with many malls and mixed-use entertainment centers in its portfolio, launched a chain-wide omnichannel platform called Shop Now!. The app allows consumers to shop across all Centennial malls the way someone would shop on Amazon.
The first phase of the program, which launched in October 2020, allowed users to browse an AI-powered search engine connected to the inventory of all of the stores operating in their mall of interest. In February 2022, Centennial debuted phase two of the program at its Santa Ana, CA based MainPlace Mall. It allows customers to consolidate orders from several stores into a single cart, get the order fulfilled by personal shoppers, and have the orders ready for same-day delivery or on-site pickup.
The e-commerce app could have detracted shoppers from physically going to the mall – but instead, the program increased both monthly and loyal visitors.
The app allows consumers to browse and shop from the comfort of their phones. It could have detracted shoppers from physically going to the mall – but instead, the program has increased both monthly and loyal visitors. In the months following the launch of the second phase, MainPlace Mall saw its loyal visits increase by 5% (from 46.2% in February ‘22 to 51.3% in June ‘22), while overall monthly visits in April ‘22 increased by 5.5% when compared to 2019. The digital investment also helped the mall make sales that could have been lost to other e-commerce platforms. The mall’s brick-and-mortar success following the addition of a digital channel highlights how malls can rise to the top by embracing an omnichannel strategy.
Continuing its innovative streak, the MainPlace Mall recently added an experiential component with the opening the American Ninja Warrior Adventure Park in July 2022 in the place of four former retail stores. During its first month of operation, the park drove the mall’s share of loyal visits up by 13.4% compared to the previous month while boosting Yo3Y monthly visits by 18.0%.
The difference in impact between the online platform launch and the opening of the American Ninja Warrior Adventure Park indicates that malls can enjoy both gradual gains over time as well as jumps in foot traffic and loyalty, depending on the strategy they adopt.
Omnichannel strategies can also revitalize food courts hit hard by the pandemic. Arundel Mills Mall, part of the Simon Property Group, began offering online orders in February 2022 via a platform called Snackpass, allowing users to use the app at various eateries around the mall. Snackpass, launched in 2017 as a food ordering app on the Yale campus, facilitates group ordering and includes various social features. Its current iteration allows customers to pre-order food, skip lines, collect rewards, and engage with friends. It also offers discounts on group orders, in an effort to promote social dining.
Since the beginning of the Snackpass partnership, the shopping center itself is seeing more visitors – many of whom are coming from farther away.
Since the beginning of the Snackpass partnership, the shopping center itself is seeing more visitors – many of whom are coming from farther away. In the five months following the app’s launch, Arundel Mills saw an overall increase of 15 square miles to its True Trade Area (TTA), and an increase of 29.5% in visits per sq. ft. – The consistent increase in TTA and visits per sq. ft. are a testament to the power of innovative dining partnerships to draw traffic to top-tier malls.
With many retailers reducing their on-mall presence, empty brick-and-mortar stores have attracted plenty of negative attention. But now, malls are increasingly repurposing vacated spaces in new, innovative ways that resonate with local communities and can fill their evolving needs.
At the Ocean County Mall in Toms River, NJ, Simon Property Group repurposed the huge space left by a former Sears store and turned it into a lifestyle center, with stores opening throughout 2020. The space is now being used by a number of highly popular chains such as LA Fitness, Ulta Beauty, HomeSense, and P.F. Chang’s and also includes a children's play area.
This pivot seems to be working. Median dwell time to the mall has increased from 53 minutes to 56 minutes, a significant change when considering that a majority of malls have recently seen their dwell times drop.
The center has also seen the median age for its trade area decrease from 40.5 years old in the first half of 2021 to 37.2 in the first half of 2022, a dramatic shift in visitor demographics. Yo3Y visits are strong as well – July 2022 were up by 17.1%.
In a similar tale of a closed Sears turning into a lifestyle center, the Northshore Mall in Peabody, MA turned the space vacated by the department store into a mixed-use center. The most significant anchor is now the high-end Life Time Fitness Center that offers cardio, weights, and functional training rooms, and includes yoga, pilates, and cycling studios, indoor and outdoor pools, basketball and pickleball courts, saunas, and a bistro.
As soon as the health club opened its doors in July 2021, visits to the mall increased – significantly outpacing the levels seen when Sears was still open.
As soon as the health club opened its doors in July 2021, visits to the mall increased – significantly outpacing the levels seen when Sears was still open. Both Yo3Y and year-over-four-year (Yo4Y) foot traffic numbers were impressive, with July 2022 seeing 17.2% more visitors than three years prior.
As visits to malls become more focussed, selecting the right tenant has never been more important – and that may mean looking at unconventional occupants to draw in customers.
In one example of tapping into local needs, the Westfield Oakridge shopping center in San Jose, CA, opened a specialty grocery store on its premises. 99 Ranch Market, one of the largest Asian supermarket chains in the U.S., began operating its first mall location in March 2022. The location includes classic grocery store items such as produce, meat, and seafood sections, and also boasts a dining hall, tea bar, and bakery.
Its opening day saw lines snaking out the door, as excited locals queued to sample the store’s delicacies. And the crowd-drawing hype seems to be more than a flash in the pan – the months following the opening were the mall’s strongest in the past year and a half. Yo3Y visits were up by 10.1% in July 2022 , with some shoppers reporting that the addition of the grocery store had turned Westfield Oakridge into their all-in-one stop shop.
Although the area was not lacking in grocery options, retail foot traffic data indicates that the new 99 Ranch Market at Westfield Oakridge Mall still filled a void.
Although the area was not lacking in grocery options, retail foot traffic data indicates that the new 99 Ranch Market at Westfield Oakridge Mall still filled a void – the new grocery store’s trade area has only minimal overlaps with the other trade areas of the nearby 99 Ranch Markets locations. This means that most of the new 99 Ranch Market’s customers were not being well-served by the existing locations of the chain.
Westfield Oakridge is not the only San Jose mall turning to food to attract the crowds. On June 16th 2022, following much hype and a pandemic-related delay, Eataly, the all-in-one Italian market, restaurant, and cooking school opened its first Northern California location at the Westfield Valley Fair in Santa Clara, CA.
Prior to the launch, the Westfield Valley Fair mall was already one of the more successful malls in the country – but the opening of Eataly seems to be driving even more foot traffic. Yo3Y visits to malls during Eataly’s opening week exceeded 20% for the first time in months and have since remained consistently elevated, with visits for the week of July 25th up 27.7% relative to the equivalent week in 2019.
In March 2022, regional department store Von Maur opened its doors at The Village of Rochester Hills, an open-air lifestyle center in Michigan. The retailer, which has 36 locations throughout the Midwest, took over the space left vacant by Carson’s, another Midwest-based department store.
What may be the first new department store in the Detroit metropolitan area in over a decade is driving visits to the shopping center.
What may be the first new department store in the Detroit metropolitan area in over a decade is driving visits to the shopping center. Von Maur’s March 2022 opening pushed Yo3Y visits up by 16.9% compared to the mere 4.3% Yo3Y increase the month before.
Part of the secret to Von Maur’s success lies in the psychographic characteristics of residents within the mall’s trade area. Using Spatial.ai’s GeoWeb data, a tool which tracks online engagement with various trends and topics by neighborhood, we found that the TTA surrounding The Village had an index of 131 for department store shoppers. In other words, people in the mall’s trade area exhibited heightened interest in department stores – they engaged with department-store-related content at a rate that was 1.3 times higher than the national average – which helps explain why Von Maur is thriving in this specific location. And in another testament to the strength of immersive retail experiences, Von Maur, which focuses on curating a unique shopper journey and features a pianist at all of its locations, has been ranked the top department store in America.
The addition of Von Maur is not the only change that The Village is implementing – the mall has continued adding new stores and will be opening more throughout the year. These, too, will likely boost foot traffic to the lifestyle center.
The mall’s ability to select tenants that cater to, and reflect the needs and behaviors of its consumers is likely to continue driving success. By drilling down into the nitty-gritty details of who comes to shop, where they come from, and what shops they enjoy frequenting, mall management can tailor the shopping center to meet the needs of its base.
The “death of the American mall” has been predicted for years. The reality, however, is much more nuanced than that – like many other sectors, malls are undergoing a shift to help them better serve evolving customer needs and survive and thrive in an ever-shifting retail landscape.
The malls featured in this white paper have found ways to consistently attract visitors despite the various obstacles faced by the category over the past two years. By understanding that the American mall must evolve along with the consumers, mall owners can successfully revitalize their retail spaces.
