Although the role of malls has shifted, shopping centers still play a key role in the American retail landscape. But the nature of that role varies depending on the mall’s location, including whether it is situated in an urban or suburban market. Urban malls, located closer to city centers, can complement the existing commercial offerings and add to the multiple retail choices offered to consumers in a given area. Suburban malls – typically located in more residential or less densely populated areas – often serve as the primary shopping destination for the surrounding communities.
Much has been written about the COVID-era suburban expansion in recent years. At the same time, cities have proved to be surprisingly resilient, and some signs seem to indicate that the pandemic-induced urban exodus – however exaggerated – may have come to an end. To better understand how these migration patterns are impacting retail, we dove into the latest visitation metrics for shopping centers and leading chains in urban and suburban areas.
Looking at monthly visits compared to a January 2018 baseline – and focussing on pre-pandemic 2018 and 2019 – highlights the different roles of suburban and urban shopping centers within the wider retail landscape. In both 2018 and 2019, urban shopping centers outperformed suburban ones between January and October, while suburban shopping centers saw a larger spike in visits during the November/December holiday shopping season. This could indicate that consumers stop by urban shopping centers for their routine purchases but visit the larger suburban malls to take advantage of the larger store and product selection during the holiday shopping season.
The data from the past three years also reveals how the pandemic impacted these visit patterns. Since mid-2020, suburban mall traffic during the “routine shopping” period of January to October has largely caught up with traffic to their urban counterparts while still pulling ahead during the critical holiday season.
It’s likely that continuing hybrid work and “work from home” trends are at least partially responsible for the increased traffic to suburban shopping centers. Many consumers may not be traveling to offices in city centers as frequently as they once did, which could be driving an increase in visits to retailers and shopping centers located closer to home in more residential areas. Pandemic-era migration patterns that boosted smaller markets with fewer retail options may have also contributed to the rise of suburban shopping as new residents began visiting the local shopping centers.
Urban on the Up
But despite the success of suburban shopping centers during the pandemic, it is still too soon to count out urban malls – as consumers settle into the new normal, foot traffic data indicates that there is plenty of room in the retail space for both types of venues.
Analysis of year-over-year (YoY) retail foot traffic since the start of 2023 reveals that urban shopping centers have fared better than suburban ones. This may be because cities were more impacted by the pandemic – and so 2023 YoY visits to urban shopping centers are being compared to a lower baseline than for 2023 YoY suburban shopping center visits. Or perhaps, consumers that live in urban centers are earning more and are therefore more resilient to the effects of inflation. The smaller visit gaps to urban malls could also indicate that the pandemic-era urban exodus may be over – in the current inflationary climate, many affordable metro areas are becoming vibrant commercial and employment hubs.
Big Boxes Weigh In
Diving into the aggregate performance of the urban and suburban venues of leading retailers – Target and The Home Depot – also reveals that there is plenty of demand for both retail formats. it’s not just malls that experience different visit patterns in urban and suburban settings. Zooming in on two specific markets – Minneapolis, MN where Target is based, and Atlanta, GA, the home of Home Depot – shows how foot traffic to suburban and urban stores in the same DMA can vary.
Comparing 2022 and 2019 visits per venue revealed that Home Depot in the Atlanta DMA experienced greater year-over-three-year (Yo3Y) visit per venue growth at urban stores while Target in Minneapolis-St. Paul, followed the inverse pattern. In the current inflationary environment, Home Depot’s greater visit per venue increase at Atlanta locations could be due to the relative affluence of city residents who were less likely to delay home improvement projects. Target likely experienced stronger visits per venue to suburban stores at least in part because these regions are suitable for large format stores with greater visitor potential. Meanwhile, Target’s smaller-format stores – primarily in urban settings – can accommodate fewer visitors at any given time. Perhaps the Minneapolis traffic trends also partially explain why Target is closing its small-format store in Uptown Minneapolis while expanding the concept elsewhere.
Room for Regional Retail
Since the early days and months of the pandemic, suburban shopping centers have experienced larger visit growth than urban ones. However, in the throes of the recent inflationary crisis, urban malls are showing resilience to consumer cutbacks on mall visits. Big box retailers that operate outside of the mall format are not immune to these factors, but may also consider how store size and other prevailing consumer trends impact visits.
For updates and more data-driven foot traffic insights, visit Placer.ai.