Understanding the Mall Market

Brick and mortar retail has long been central to urban living, but over several decades we have seen fundamental changes in the location and style of retailing. A massive locational change occurred as vibrant downtown retail streets were often boarded up as retail followed the middle class to the emerging suburbs, where the shopping mall became the new main street. The unique character of ‘mom and pop’ retail was increasingly replaced by corporate chains with cookie-cutter concepts. Malls have become the new suburban city centers, but, if we are honest, without the character of the old downtown streets.

To make the mall cool again, it must become relevant to the community beyond shopping itself. On the old downtown streets was an eclectic mix of businesses that together reflected the character of the city. Retail was not segregated from community life; it was part of it.

Mall developers have understood this disconnect and tried to rectify it, most often by adding restaurants and more retail outside the main mall. These do little to create the community of a main street because nobody lingers in the parking lot.

For malls to thrive, they will have to stop being assembly line products. They will have to adapt to and reflect the community to become an integral part of it. Leasing mall space by showing basic demographics like the population and income of the mall trade area just won’t cut it.

Many of the developments in trade area analysis have been oriented towards retailers. After all, they are relatively mobile while the mall is not. The total trade area demographics might be useful as marketing materials, but to increase mall traffic, you must look inside the trade area. With mobility data, even with its substantial sampling issues, you can begin to look within the trade area, paying particular attention to:

• Are there neighborhoods where mall visits are unexpectedly low, especially ones which are close by? Understanding the demographics of those areas may specifically point to reasons why they don’t come to the mall. Analysis of individual block groups within the trade area is vital – and there are tools like Panorama segmentation and Dimensions specifically engineered to find underlying patterns. Are there demographic and behavioral reasons why the mall is not popular? And if so, can the leasing of the mall be oriented towards satisfying those needs? Often this will mean considering the alternatives to your mall that are siphoning off demand.
• Understand that income does not directly translate into retail expenditures by delving into the financial state of the households in your trade area at the highest level of detail possible. Higher income neighborhoods within your trade area are not necessarily your best targets if they are burdened by heavy debt and have little discretionary income. Again, detailed consumer finance and expenditure estimates can be of considerable help here in understanding the internal dynamics of your trade area.
• Mind the gap! Try to build a leasing strategy that attracts retailers in categories where there are significant retail gaps, while avoiding adding retailers in saturated categories. Some vendors have void analysis, others will demonstrate the fit for any chain within your center.
• For regional malls especially, community can only be developed if the mall houses the main types of retail traditionally viewed as neighborhood. We have seen many malls where dense housing is built surrounding the mall, but because it lacks a grocery store, those residents go elsewhere to shop.

Finally, malls must understand that they are essentially oases with large moats which may or may not contain alligators. Large, poorly lit parking lots are probably the biggest reason to avoid the mall. While we understand that ingress and egress from major thoroughfares is the dominant reason for mall parking design, there are simple steps that can be taken to make that parking lot more inviting and safer. Dedicated and well-lit pathways that separate the pedestrians from the parking space hunters are key: if you have to cross the moat, you are much more likely to do so if there is a bridge across it.