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As discussed last week, 2023 was a year that forced restaurant operators to stay agile amid inflationary headwinds and changes in consumer behavior, daypart shifts, new approaches to drive-thru, and population migration changes. This week’s ICR Conference also gave us a chance to speak with the management team from more than 25 restaurant chains as well as their investors to better understand their lessons from 2023 and how they plan to apply them in 2024.
Despite most chains reporting that visits are still down on a year-over-year basis, there was a sense of optimism among many of the operators we spoke to. Many acknowledged that there were still pressures weighing on consumer spending, but that the strategies put in place during 2023 to stabilize visitation trends had been working (including an emphasis on value, elevated experience, adopting new restaurant formats to better address a wider range of commercial property types, and new menu innovations). Several management teams acknowledged that the contractor availability and equipment supply chain bottlenecks that had plagued new store openings in 2023 had started to dissipate, with several chains planning to resume or even exceed their pre-pandemic pace of restaurant openings (although many admitted that new store buildout costs are still running 25%-30% higher than they were 5 years ago). Given the higher costs involved with new store openings (and the risk of opening a location in a subpar site), there was a heavy emphasis on harnessing new data sources to better understand migration trends, trade area demographics, and incumbent competition when making site selection opportunities (and thank you to customers like Dave & Buster’s and Chuy’s for highlighting how they are incorporating Placer data into these decisions).
Below, we discuss a few key trends that restaurant operators and their commercial real estate partners should be thinking about as we move into 2024.
Perhaps it shouldn’t be surprising at an event where several restaurant operators were looking to raise capital, but the overarching theme from most management teams that we spoke to this week was that they were ready to accelerate unit expansion plans. Expansion strategies differed by concept, but most operators planned to open new locations across a combination of existing and new markets. With respect to new markets, many operators told us they were prioritizing South and Southeastern markets for new market expansion, echoing what we heard from McDonald’s and others last year. Below, we’ve presented the latest data from Placer’s Migration Trends Report which shows total population changes by market from November 2019-November 2023. Indeed, our data confirms that many South (Phoenix, Texas) and Southeast (Central Florida, Carolinas) markets were among the highest growth populations in the U.S. over the past four years.
That said, with so many restaurant operators targeting these regions, we heard from several executives about the importance of fully understanding the makeup of the markets. Said another way, just because a market has seen meaningful population growth, it doesn’t necessarily mean it’s a candidate for expansion. Below, we’ve presented the same migration map as above (2019-2023 population growth), but with a origin/destination household income filter. A red dot on this map indicates that a market saw the average household income fall because of migration, while a green dot indicates that a market saw an increase in household income. Here, we see a slightly different story, as many higher growth populations actually saw a decline in household income due to migration. We also see the impact of the urban/suburban migration shift that we’ve discussed in the past, with many smaller markets across the Carolinas and Central Florida seeing the highest household income growth versus 2019.
Below, we’ve attempted to bring the two charts together and identify markets that have not only seen population growth but also a significant increase in household income. We see markets like Las Vegas and other areas in Central Florida and the Carolinas region score well using this methodology, but a number of other markets like Boise City, ID, Lakeland, WI, and Spokane, WA also seeing increases in population but also an increase in their average household income.
Most U.S. markets have gone through significant changes post-pandemic both in terms of population size and population makeup. At the end of the day, it's important for restaurants and retailers to not only understand both of these factors when evaluating new markets for growth. We’ve certainly seen success stories–Portillo’s continues to thrive in Texas, for example–but we’ve also seen cases where restaurant openings haven’t been as successful in newer markets because of migration changes.
We spoke about trends in the eatertainment category last year with the conclusion being that these concepts were still key in driving traffic to commercial properties (despite facing tougher year-over-year comparisons from the great reopening we saw in 2022). There was a palpable sense of optimism among the eatertainment concepts we spoke to at the event, whether they were more focused on entertainment (including Dave & Buster’s, Puttshack, and Pinstripes) or interactive dining (Kura Revolving Sushi Bar or GEN Korean BBQ).
We’ve updated the eatertainment versus casual dining category visit per location analysis we’ve presented in the past below. Although eatertainment’s visit per location outperformance narrowed versus casual dining during Q4 2023, we believe this is a byproduct of seasonality (shift to sit-down dining during the holiday season) and expect the gap to widen once again during Q1 2024.
Most of the eatertainment concepts we spoke to at the ICR conference planned a two-pronged approach to unit expansion in 2024: infilling existing markets and establishing a beachhead in newer markets. Most concepts in this category were planning to grow their store bases by at least double-digit growth rates in 2024, with some like Pinstripes are forecasting 30%+ unit growth this year. Other like Dave & Buster’s are planning to focus on remodeling activity on top of new unit openings to modernize their locations. As demand for eatertainment remains strong among consumers and mall owners, we anticipate that this will remain one of the past growing categories in dining during 2024.
Casual dining concepts often have a reputation of catering to an older population. However, Darden’s management team called out several demographic trends that should benefit its different brands (including Olive Garden, Longhorn Steakhouse, Cheddar’s, Yardhouse, and others). First, while the percentage of the population in their peak earning years (typically between the ages of 35 and 55) had been on a downward trend for much of the 2000s and part of the 2010s, we’ve seen a reversal of this trend in recent years, which should stimulate demand for full-service dining. Second, the company noted that it over-indexes to millennials. Our data reinforces this, as the potential trade area audience profile by age cohort for Olive Garden (below) indicates a higher percentage of population between the ages of 30-49, encapsulating much of the millennial age range (roughly 27-42 years old today). Last year, we noted that some of the shift to earlier dining times may have been due to changing demographic trends in cities, with an increase in younger families in urban markets needing earlier dining times. Darden's commentary offers further validation of these trends and offers hope for other casual dining chains as this generation cohort continues to enter their peak earning years.
Last year, we noted that some of the shift to earlier dining times may have been due to changing demographic trends in cities, with an increase in younger families in urban markets needing earlier dining times. Darden's commentary offers further validation of these trends and offers hope for other casual dining chains as this generation cohort continues to enter their peak earning years.
Grocery anchors proved to be a saving grace for many a shopping center during COVID. With apparel and dining shut down and only essential retailers allowed to open, many centers suddenly found that having a superstore/mass merchant like Walmart or Target, a warehouse like Costco or Sam’s Club, or a grocery store on the premises helped to steady some of the waves of traffic fluctuations. Whether it was as part of a specific center or more broadly adding grocery-anchored centers to a portfolio, REITs started looking more closely at the role of grocery in their centers. Indeed, we have written about the inclusion of specialty grocery stores and ethnic grocery stores in shopping centers being even rather quotidian these days. We’ve also written about the redevelopment of shopping centers that include food halls as part of their renaissance.
So it was rather surprising that Bristol Farms’ concept Newfound Market, which opened at the Irvine Spectrum in March 2022, recently announced that it is closing. The initial concept was to be “very much about experience…diving in deep on food and beverage…curated, yet everyday.” It was to feature seven of Bristol Farms’ own chef-created restaurant brands.
We take a look at some Placer statistics to see what might have accounted for reduced traffic for what sounded like an amazing concept. As a control, we compared the Bristol Farms in Irvine to one in nearby Newport Beach. We see that when Newfound Market first opened, it had nearly twice the traffic of the one in Newport Beach. This could be due to overall excitement about the chef-driven concepts, wanting to check out a new grocery store, or other factors. However, traffic for Newfound Market began dwindling in Fall 2022, and fell even further in Fall 2023, likely leading to its closure.
If we look at variance, we see that during the same time period, traffic grew for Irvine Spectrum Center as a whole (note it was one of our spectacular callouts for holiday shopping 2023 in terms of year-over-year growth), and traffic was fairly steady for the Newport Beach branch of the Bristol Farms.
How much did the number of Newfound Market shoppers change over time? We compared the Bristol Farms Newfound Market Shopper from Apr.-Dec. 2022 with that of the shopper from Apr.-Dec. 2023. During that time, there were over 150K fewer visits and around 100K fewer visitors. Visit frequency also decreased from 1.54 to 1.4 (below).
There was a slight dip in the average household income of the visitor.
There was a marked decrease in the proportion of Ultra Wealthy Families coming in 2023, and somewhat of a decrease of Wealthy Suburban Families.
Interestingly, the trade area has expanded from 2022 to 2023, as shown by the increase in red dots from further afield.
And indeed, Placer analysis reveals that the trade area increased by 28 square miles. On one hand, this is a plus, showing that there is a magnetic draw to a wider audience. On the other hand, given that most grocery stores live on weekly visits from a much tighter trade area, this could indicate that a trip to Irvine Spectrum and/or the Bristol Farms Newfound Market began to fall under the umbrella of a “destination” visit, rather than a regular “essential” visit. Over time, those locals who associate the Irvine Spectrum more with a Ferris Wheel might not have grocery shopping there as top-of-mind, and those who come from further away have already tried out the food hall.
The average visit frequency to Bristol Farms Newfound market was 1.54 from Apr.-Dec. 2022 and 1.40 from Apr.-Dec. 2023. In contrast, the average visit frequency to the top four most-trafficked Bristol Farms was closer to 3-4 visits, a rate more than double. Most telling is when we look at the bar chart below and see that the number of one-time visitors versus 30+ time visitors at Newfound Market is almost in direct contrast to its four other peers, who have a much higher proportion of their visits in the 10+ range.
This by no means negates the fact that grocery stores and food halls can be wonderful additions to shopping centers. For instance, 99 Ranch opened at Westfield Oakridge around the same time period (March 2022) and to date it has proven to have a steady stream of traffic. Keep in mind that Oakridge is more of your neighborhood mall with typical mall retailers, hence more likely to be part of a weekly or monthly routine.
Comparing year-over-year variance, the 99 Ranch at Oakridge has also overindexed on a percentage basis compared to the overall mall. The grocery store draws from a trade area of 58 square miles, with an average of 2.86 visits.
With sales of mountain passes up and eager skiers and snowboarders ready to hit the slopes, let’s take a look at how Backcountry has been performing of late. This brand may be familiar to many, as it has been an online retailer for the past 27 years. Lately, though, the retailer has made a foray into brick-and-mortar stores in areas where they have a strong concentration of online customers, with the store count currently up to 9 nationwide.
The Palo Alto store opened in Spring 2023. Visitation trendlines show that this store at the Stanford Shopping Center has jumped to be neck-and-neck with the Seattle store in Dec 2023.
The majority of Backcountry shoppers come from very high-income households, such as Ultra Wealthy Families, Educated Urbanites, and Sunset Boomers (using PersonaLive data for select store trade areas).
Backcountry opened its first physical store downstairs from its corporate headquarters in Park City, UT in 2021. The impetus for opening a brick-and-mortar store was to “deepen connections with its customers.” In addition to the Palo Alto store, Backcountry also opened its first east coast outpost on 14th St in Washington DC during spring 2023, one of the hot retail corridors we wrote about. The newest entrant is a 23,000 square-foot flagship location open at the Grove in Los Angeles in July, which will provide gear for all sorts of popular outdoor activities, such as hiking, camping, water sports, running and climbing.
The holidays conjure up warm, cozy images of families sitting around artfully-set tables and enjoying delicious home-cooked meals. But for many people, Christmas Day is also a time to eat out. And while many restaurants are closed on December 25th, several national and regional chains keep their doors open for patrons eager to enjoy a nice, stress-free meal with loved ones – without the clean-up.
So with the holiday season in the rearview mirror, we dove into the data to explore nationwide December 25th dining trends – focusing our analysis on more than 100 chains, mostly full-service, with significant national or regional presence. Which brands are most popular on Christmas Day? And what differences can be observed in different regions of the country?
Nationwide, visits to dining chains nationwide were down 59.7% on December 25th, 2023, compared to a Q4 2023 daily average. But digging down deeper into the different areas of the country reveals significant regional differences.
The Pacific states – including California, Washington, Oregon, Alaska, and Hawaii – saw a drop of just 33.8% in dining visits on Christmas Day compared to the region’s Q4 2023 daily average. Next in line were the various regions of the South, where December 25th foot traffic dropped between 51.2% and 56.9%, followed by the Mountain states. And on the other end of the spectrum lay New England, where visits were down 83.3% compared to a Q4 baseline. Other areas of the Northeast and Midwest also experienced foot traffic dips in excess of 70.0% – indicating that residents of these areas are less likely to dine out on the holiday.
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But which chains are most popular on December 25th? Analyzing the distribution of holiday visits among 25 leading Christmas Day restaurant destinations shows that three all-day breakfast chains – Waffle House, IHOP, and Denny’s – dominated the Christmas Day dining market this year.
Together, these 24/7 eateries, which tend to experience significant holiday visit bumps, accounted for an impressive 70.4% of holiday dining foot traffic. After a leisurely morning of presents and hot cocoa, it seems, nothing quite hits the spot like waffles, pancakes, and other breakfast favorites. And with affordable prices, seasonal menus, and special holiday vibes (complete with pajama-clad customers), these restaurants offer plenty of holiday cheer.
But breakfast chains aren’t the only dining venues that draw Christmas Day crowds. Red Lobster, the popular seafood chain, cornered 4.9% of this year’s December 25th dining foot traffic. And Applebee’s, Black Bear Diner, Golden Corral, and TGI Fridays each received between 2.0% and 3.0% of Christmas Day visits.
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Drilling down deeper into the data for holiday visit trends shows that each state has its own favorite Christmas Day destination. In no fewer than 21 states nationwide – including New York, Texas, Michigan, and Florida – IHOP topped the chart. Denny’s and Waffle House, for their parts, each led the charge in 11 states, with Waffle House dominating the Christmas Day scene in much of the South.
But in some places, other chains topped the Christmas Day rankings. In Iowa, Minnesota, and North Dakota, people flocked to Perkins Restaurant & Bakery – the casual-dining chain known for its iconic pies and pancakes. In Wyoming and South Dakota, Red Lobster drew the biggest crowds. And in Oregon, Shari’s – a chain with some 80 locations in the western region of the country – attracted the most holiday visits.
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Foot traffic data also reveals, unsurprisingly, that visitors to the three Christmas Day leaders – Waffle House, IHOP, and Denny’s – spent more time in the restaurants on Christmas Day than they usually do. Some 17.3% of Christmas Day Waffle House visits lasted more than one hour – compared to 14.7% on an average day in 2023. IHOP and Denny’s also saw significant holiday increases in dwell time.
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Though many restaurants are closed on December 25th, chains that do stay open – especially all-day breakfast eateries – draw significant crowds. How will holiday winners like Waffle House, IHOP, and Denny’s continue to fare as people settle back into their post-holiday routines? And how will Christmas Day dining trends evolve nationwide in the years to come?
Follow placer.ai/blog to find out.
The Placer.ai Nationwide Office Building Index: The office building index analyzes foot traffic data from some 1,000 office buildings across the country. It only includes commercial office buildings, and commercial office buildings with retail offerings on the first floor (like an office building that might include a national coffee chain on the ground floor). It does NOT include mixed-use buildings that are both residential and commercial.
Has the remote work war run its course? For a while last year, it seemed like not a day went by without another headline proclaiming the demise of WFH. And as return-to-office mandates continued to pile up (et tu, Zoom?), the debate over offsite work productivity grew ever more rancorous.
But amidst all the noise, a new hybrid reality appears to have taken hold, offering both companies and employees the benefits of a mixed model. Yes, productivity can thrive outside the office – but there is something about the intangible spark that ignites when people interact with one another in person that has proven crucial to business success. So while recent survey data shows a precipitous drop in fully remote work over the past three years, most companies aren’t requiring people to go back to the office full time.
With these trends in mind, we dove into the data to explore the state of office foot traffic as the year drew to a close. How did December 2023 office visits compare to pre-COVID? And what impact did the holiday season have on the demographic profile of the typical office-goer?
Last month, buildings in our Nationwide Office Index received 36.5% fewer visits than they did in December 2019 – reflecting a continuation of the same general holding pattern that has seen foot traffic hovering around 40.0% of pre-COVID levels, with some minor fluctuations.
But delving further into the data for key commercial hubs nationwide highlights the persistence of important regional differences – with New York City emerging as last month’s clear office recovery winner. In December 2023, the Big Apple experienced a year-over-four-year (Yo4Y) visit gap of just 19.2% – the smallest seen by the city in some time. At the other end of the spectrum lay San Francisco, with a Yo4Y visit gap of 53.1%.
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But December is a bit of an outlier, work-wise. It’s the heart of the holiday season – kicked off by Thanksgiving at the end of November, and bookended by New Year’s Eve on the other side. And foot traffic data shows a small but distinct shift in the demographic profiles of office buildings’ captured markets – i.e. the areas their visitors come from – during the last month of the year.
Nationwide, and in major cities like New York and San Francisco, office-goers tend to come from relatively affluent areas with greater-than-average shares of one-person households. But over the final three months of 2023, both of these metrics in office buildings’ captured markets gradually declined. November office visitors were more likely to come from larger and lower-HHI households than October visitors – and December visitors were more likely to come from such households than November ones. This may reflect the greater flexibility of higher-HHI employees to work from home more often during the holiday season. It may also reflect a greater tendency on the part of singles to take extended trips to visit family during the holidays, and plug in from afar.
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Hybrid work may be here to stay, but employees and companies will likely continue to negotiate the exact terms of the new model in the months and years ahead. Are the remote work wars really over? And what will office recovery look like in the new year?
Follow placer.ai/blog to find out.
With their experiential vibes and treasured blends of well-known brands and local gems, high-street retail corridors are experiencing something of a renaissance. Iconic shopping districts like Fifth Avenue and SoHo in New York City, Rodeo Drive in Beverly Hills, and Newbury Street in Boston are seeing steady influxes of luxury and high-end apparel brands. And economic headwinds notwithstanding, consumers continue to flock to these important retail destinations to shop, grab a bite to eat, and take in all the sights and sounds they have to offer.
So with the new year upon us, we dove into the data to see how major urban shopping districts nationwide fared this holiday season. How did visits to these corridors in the final months of 2023 compare to last year? And who are the consumers driving the high-street revival?
Over the past six months, visits to major urban shopping districts have been consistently higher than they were last year. And as the holiday season kicked into gear, the year-over-year (YoY) growth trajectory trended upwards – indicating a robust turnout during this holiday period.
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To examine some of the factors behind this growth, we analyzed the demographic profiles of the captured markets of POIs (points of interest) corresponding to major high-street corridors throughout the country.
The analysis shows that throughout the U.S., high-street shopping districts hold special appeal for affluent audiences – and for consumers belonging to Spatial.ai’s PersonaLive’s “Educated Urbanite” psychographic segment. This segment encompasses well-educated young singles that live in dense urban areas and make relatively high salaries. Given the demographic profile of their visitors, it’s no wonder that high-street corridors are finding success while expanding their luxury and high-end apparel portfolios.
In Q4 2023, the captured markets of Fifth Avenue, SoHo, and Times Square all featured higher median household incomes (HHIs), and greater shares of the “Educated Urbanite” segment than New York’s statewide baselines. Each of these quintessential New York City landmarks, however, drew a somewhat different visitor base.
Fifth Avenue, with its array of museums, luxury high-rises, and expensive department stores, drew the most affluent crowd, with a captured market median HHI of $105.6K – some 35.7% above the statewide median. SoHo, for its part, known for designer apparel stores, trendy cafes, and whimsical tourist attractions (Museum of Ice Cream, anyone?), attracted the largest share of “Educated Urbanites.” And Times Square, a top Big Apple attraction with broad popular appeal, boasted a visitor profile closest to statewide baselines.
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A look at the visitor profiles of major California shopping districts reveals a similar trend. The captured markets of Beverly Hills’ Rodeo Drive, Santa Monica’s 3rd Street Promenade, Hayes Valley in San Francisco, and Abbot Kinney in Los Angeles all had higher median HHIs in Q4 2023 than the statewide median of $85.7K. Of these, the captured market with the highest median HHI was that of Hayes Valley in San Francisco – an unsurprising finding given the relative affluence of the Bay Area. Not far behind was Rodeo Drive, with a median HHI of $113.9K.
Hayes Valley also led the charge for “Educated Urbanites,” with no less than 61.4% of the population of its captured market – nearly two-thirds – belonging to this segment. But all four of the analyzed high-street corridors were significantly over-indexed for this demographic compared to the California baseline of 13.1%.
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Looking at urban shopping districts in other major cities nationwide – including Newbury Street in Boston, Fulton Market in Chicago, and Walnut Street in Philadelphia – shows that the unique draw of these corridors for young, affluent singles isn’t confined to New York and Chicago. In all three corridors, the median HHIs and shares of “Educated Urbanites” in the captured markets
also exceeded statewide baselines – oftentimes by a wide margin.
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Evolving work routines and post-COVID population shifts continue to present municipalities and other civic stakeholders with significant challenges. But the revival of high-street retail corridors shows that cities are up to the task. How will major urban shopping districts fare in the new year? And how will their audiences continue to evolve?
Follow Placer.ai’s data-driven retail foot traffic analyses to find out.
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.
This report leverages location intelligence data to analyze the auto dealership market in the United States. By looking at visit trends to branded showrooms, used car lots, and mixed inventory dealerships – and analyzing the types of visitors that visit each category – this white paper sheds light on the state of car dealership space in 2023.
Prior to the pandemic and throughout most of 2020, visits to both car brand and used-only dealerships followed relatively similar trends. But the two categories began to diverge in early 2021.
Visits to car brand dealerships briefly returned to pre-pandemic levels in mid-2021, but traffic fell consistently in the second half of the year as supply-chain issues drove consistent price increases. So despite the brief mid-year bump, 2021 ended with overall new car sales – as well as overall foot traffic to car brand dealerships – below 2019 levels. Visits continued falling in 2022 as low inventory and high prices hampered growth.
Meanwhile, although the price for used cars rose even more (the average price for a new and used car was up 12.1% and 27.1% YoY, respectively, in September 2021), used cars still remained, on average, more affordable than new ones. So with rising demand for alternatives to public transportation – and with new cars now beyond the reach of many consumers – the used car market took off and visits to used car dealerships skyrocketed for much of 2021 and into 2022. But in the second half of last year, as gas prices remained elevated – tacking an additional cost onto operating a vehicle – visits to used car dealerships began falling dramatically.
Now, the price of both used and new cars has finally begun falling slightly. Foot traffic data indicates that the price drops appear to be impacting the two markets differently. So far this year, sales and visits to dealerships of pre-owned vehicles have slowed, while new car sales grew – perhaps due to the more significant pent-up demand in the new car market. The ongoing inflation, which has had a stronger impact on lower-income households, may also be somewhat inhibiting used-car dealership visit growth. At the same time, foot traffic to used car dealerships did remain close to or slightly above 2019 levels for most of 2023, while visits to branded dealerships were significantly lower year-over-four-years.
The situation remains dynamic – with some reports of prices creeping back up – so the auto dealership landscape may well continue to shift going into 2024.
With car prices soaring, the demand for pre-owned vehicles has grown substantially. Analyzing the trade area composition of leading dealerships that sell used cars reveals the wide spectrum of consumers in this market.
Dealerships carrying a mixed inventory of both new and used vehicles seem to attract relatively high-income consumers. Using the STI: Popstats 2022 data set to analyze the trade areas of Penske Automotive, AutoNation, and Lithia Auto Stores – which all sell used and new cars – reveals that the HHI in the three dealerships’ trade areas is higher than the nationwide median. Differences did emerge within the trade areas of the mixed inventory car dealerships, but the range was relatively narrow – between $77.5K to $84.5K trade area median HHI.
Meanwhile, the dealerships selling exclusively used cars – DriveTime, Carvana, and CarMax – exhibited a much wider range of trade area median HHIs. CarMax, the largest used-only car dealership in the United States, had a yearly median HHI of $75.9K in its trade area – just slightly below the median HHI for mixed inventory dealerships Lithia Auto Stores and AutoNation and above the nationwide median of $69.5K. Carvana, a used car dealership that operates according to a Buy Online, Pick Up in Store (BOPIS) model, served an audience with a median HHI of $69.1K – more or less in-line with the nationwide median. And DriveTime’s trade areas have a median HHI of $57.6K – significantly below the nationwide median.
The variance in HHI among the audiences of the different used-only car dealerships may reflect the wide variety of offerings within the used-car market – from virtually new luxury vehicles to basic sedans with 150k+ miles on the odometer.
Visits to car brands nationwide between January and September 2023 dipped 0.9% YoY, although several outliers reveal the potential for success in the space even during times of economic headwinds.
Visits to Tesla’s dealerships have skyrocketed recently, perhaps thanks to the company’s frequent price cuts over the past year – between September 2022 and 2023, the average price for a new Tesla fell by 24.7%. And with the company’s network of Superchargers gearing up to serve non-Tesla Electric Vehicles (EVs), Tesla is finding room for growth beyond its already successful core EV manufacturing business and positioning itself for a strong 2024.
Japan-based Mazda used the pandemic as an opportunity to strengthen its standing among U.S. consumers, and the company is now reaping the fruits of its labor as visits rise YoY. Porsche, the winner of U.S New & World Report Best Luxury Car Brand for 2023, also outperformed the wider car dealership sector. Kia – owned in part by Hyundai – and Hyundai both saw their foot traffic increase YoY as well, thanks in part to the popularity of their SUV models.
Analyzing dealerships on a national level can help car manufacturers make macro-level decisions on marketing, product design, and brick-and-mortar fleet configurations. But diving deeper into the unique characteristics of each dealership’s trade area on a state level reveals differences that can serve brands looking to optimize their offerings for their local audience.
For example, analyzing the share of households with children in the trade areas of four car brand dealership chains in four different states reveals significant variation across the regional markets.
Nationwide, Tesla served a larger share of households with children than Kia, Ford, or Land Rover. But focusing on California shows that in the Golden State, Kia’s trade area population included the largest share of this segment than the other three brands, while Land Rover led this segment in Illinois. Meanwhile, Ford served the smallest share of households with children on a nationwide basis – but although the trend held in Illinois and Pennsylvania, California Ford dealerships served more households with children than either Tesla or Land Rover.
Leveraging location intelligence to analyze car dealerships adds a layer of consumer insights to industry provided sales numbers. Visit patterns and audience demographics reveal how foot traffic to used-car lots, mixed inventory dealerships, and manufacturers’ showrooms change over time and who visits these businesses on a national or regional level. These insights allow auto industry stakeholders to assess current demand, predict future trends, and keep a finger on the pulse of car-purchasing habits in the United States.
