A Tough Outlook for Shopping Malls
It’s obvious that the coronavirus is having an impact on the overall retail economy. While we’ve seen some sectors, such as grocery and QSR combating concerns with strong performance, others are currently taking big hits as the virus continues to spread.
With an inevitable shutdown looming, what has the coronavirus spread already meant for shopping malls? We analyzed 11 of the top malls around the country to see just how much they’ve been affected by the virus thus far.
Trending in the Wrong Direction
When analyzing each mall from January 2019 to March 8th, 2020, we come across a pretty difficult situation. With the exception of the Natick Mall in Massachusetts, every location showed massive year-over-year declines during the second week of March. Although some malls, such as Westfield Garden St. Plaza in NJ and King of Prussia Mall in PA, displayed year-over-year weekly growth for the last week of February, the situation changed quickly when we moved into March, where both locations showed decreases of 17.1% and 7.5% respectively.
The Westfield San Francisco Center displayed the most significant year-over-year drop, with a 34.2% decline when looking at the first week of March, year-over-year. San Francisco has been at the forefront of virus concerns. Its airport has been hugely affected and it was one of the first areas to feel a heavy impact. And, we see similar results when looking at another largely affected area, Seattle. Year-over-year visits during the first week of March for Westfield Southcenter Seattle declined 23.8% year over year alongside impacts in other sectors, even those performing well elsewhere in the country.
Location does clearly matter in this case, yet the impact is going far beyond just areas that are hard hit. While we see larger traffic drops in highly populated areas and cities that have been more directly impacted such as San Francisco, Seattle and New York, there’s no denying the massive effect it's having on the entire county.
An Undeniable Impact
There was a glimmer of hope with some malls showing resilience during that last week of February into March, but there is an undeniable and overwhelming decline for each mall analyzed when looking at the second week of March. Even Natick Mall, which showed year-over-year growth for the end of February and early March, recorded a significant 21.2% decline in visits.
The Westfield San Francisco Center continued to struggle into the second week of March, with a 46.5% year-over-year weekly decrease, the largest of the malls analyzed. The Mall at Short Hills in New Jersey wasn’t far behind with a nearly 40.0% decrease and Galleria Mall in Dallas rounded out the (unfortunate) top three with a 36.6% decline.
The impact here is obvious, but with many of these same malls announcing closures shortly after the dates analyzed, it is unlikely that there will be any short term reversal of fortune.
Some sectors such as wholesale and QSR are seemingly doing okay amid the virus scare, but others are struggling, with shopping malls taking a very significant hit. With multiple cities beginning to close all non-essential stores, a severe traffic decline is imminent. And, with full lockdowns looming, shopping malls should prepare for a full traffic stop. The challenge here is that malls are such a significant part of the wider retail ecosystem signaling a heavier impact across mall dependent players like apparel, beauty, home goods and more.
Yet, just as important as their closure, will be their eventual reopening and how quickly they can return customers to these critical locations.
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