Mall Sales Spike by 11% Last Year, Reaching $819 Billion in 2022 - Three Key Factors Explained in a Recent Report on Their Resurgence, Going Beyond Simple Nostalgia.
Malls Surge Ahead: Top-Tier Outperforms in Sales and Traffic
In a surprising turn of events, new research reveals that sales at malls have soared more than 11% to reach an impressive $819 billion in 2022, contrary to predictions of their impending decline. This growth is particularly noticeable among top-tier American malls, which are outperforming their counterparts.
Coresight Research, a renowned market analyst, attributes this growth to a phenomenon known as the "halo effect". This term refers to the reinforcement of sales through a mall's presence both online and offline, as well as brand synergy and investments in customer experience.
Top-tier malls, defined as those located in affluent areas where the average shopper makes over $200,000 a year, boasted a 12% traffic growth in 2022. These malls have managed to maintain a 95.1% occupancy rate in 2022, although it is still below pre-pandemic levels (95.5% in 2019).
On the other hand, low-tier malls are facing a different reality. These malls, with a less affluent demographic on average, have seen declining sales and an occupancy rate of 89.1% in 2022, also below pre-pandemic levels (91.6% in 2019). The decline is largely attributed to the closure of low-tier malls, a trend that has been ongoing since before the pandemic.
The success of top-tier malls can be attributed to their focus on offering a high-quality, experience-driven retail environment. They attract a mix of popular brands and experiential concepts, which increase customer dwell time and purchase rates. Top-tier malls also invest in entertainment offerings, such as indoor playgrounds, cinemas, and branded culinary experiences, boosting foot traffic by about 25% and dwell times by 22%.
Moreover, malls anchored by tenants like KFC, Uniqlo, McDonald's, and coffee chains create a "foot traffic engine matrix" that maximizes visit frequency and shopping duration. Shoppers are gravitating toward brands that deliver clear value and quality, not just the lowest prices. Both value-driven and premium brands are seeing traffic growth, indicating a bifurcation in retail demand favoring well-located malls with strong brand offerings.
Despite concerns about overdevelopment and ecommerce, leasing volumes and rents in premium malls remain stable or growing, reflecting landlord leverage and retailer demand for prime spaces. Meanwhile, low-tier malls face higher vacancy and store closures due to weaker fundamentals and less attractive tenant mixes.
In conclusion, top-tier malls leverage superior locations, tenant mix, and experiential retail formats to attract and retain shoppers, outperforming low-tier malls that struggle with vacancies and less compelling offerings. This trend continues despite the growth of ecommerce and prior fears of retail decline.
[1] Coresight Research Report, 2022 [2] Coresight Research Report, 2021 [3] Coresight Research Report, 2020 [4] Coresight Research Report, 2019
- The impressive growth in mall sales, reaching $819 billion in 2022, is partly due to the "halo effect" of technology, intertwining online and offline sales.
- In the realm of business and finance, top-tier malls are making headlines in news and lifestyle sections, posting a 12% traffic growth in 2022.
- Sales in the entertainment sector have witnessed a boost at top-tier malls, which offer indoor playgrounds, cinemas, and branded culinary experiences to attract and retain customers.
- While ecommerce continues to grow, sales at well-located malls, anchored by popular brands and experiential concepts, are defying expectations, as both value-driven and premium brands see traffic growth.
- Amid concerns about overdevelopment and the growth of ecommerce, investments in development and technology are crucial for the survival and success of top-tier malls, ensuring they stay ahead in sales and traffic.
