On Tuesday, March 15th 2022, we hosted Billy Taubman, President and COO of Taubman Centers, and Placer’s Ben Witten, Senior Solutions Engineer, for a webinar entitled “Mall Update: Yearly Review and What Lies Ahead.” Taubman is a major REIT that owns, manages, and leases 20 premier regional, super-regional, and outlet shopping malls throughout the U.S. Combining Billy Taubman and Ben Witten’s on-the-ground perspective with our data-driven understanding of the mall sector yielded valuable insights, some of which are summarized below. To access the full discussion, watch the video here.
“The best [malls] got better, and the mediocre ones got weaker.”
Since the COVID retail recovery began, some malls have been lagging behind while other malls have picked up substantial market share. And this market share is not just coming from other malls – consumers are also choosing to visit top malls instead of shopping at other retail venues or on e-commerce channels.
As things are still in flux, it’s difficult to determine whether the surge will stay long-term or whether top malls’ current success is a temporary reaction to the long months of isolation and to the accumulation of savings over the pandemic. Thus far, however, the boost appears to be sticking, and top malls are taking proactive measures – such as constantly evolving the merchandise mix – to retain their visitors once circumstances normalize.
“Tenants are consolidating their locations, and they’re willing to pay a lot more rent for [top malls] location than they were pre-COVID”
Many retailers, and especially mid-priced retailers such as Macy’s, Lane Bryant, and Tuesday Morning have been consolidating their store fleet over the past two years. As retailers continue to right-size, those who decide to hold onto the benefits provided by physical stores – including increased brand awareness, product discovery, and sales – have fewer venues to rely on, and therefore need to ensure the placement of every location really counts. Retailers are also increasingly recognizing the potential of brick and mortar storefronts for driving online sales.
Placing store-fronts in top performing malls is an effective way of raising a brand’s positioning within a market, driving both in-store and online sales. And since the supply of storefronts in such properties is limited, retailers who want to get the most brand marketing and sales boost out of their remaining venues will be willing to pay more for spots in top malls.
“Entertainment starts with the stores themselves.”
There appears to be a consensus that the top performing malls attract consumers by offering entertainment and experiences, but these options can be offered by the stores themselves. In many cases, if the store mix is right, the stores themselves can offer all the entertainment and experience shoppers are seeking.
While unique experiential offers may provide an added draw, many people still come to malls first and foremost to shop. There is no “one size fits all” formula for what the right mix of entertainment and stores in a mall needs to be. Stand-alone entertainment options may be right for some shopping centers, whereas elsewhere, these entertainment offerings would be a distraction to shoppers who go to the mall only to visit the stores. To successfully attract and retain customers, malls need a clear understanding of who their customers are and what type of experience – entertainment, store mix, dining options – their specific customer base is after.
For more insights into the present and future of malls, watch the full webinar here.