Photo: Canva
US Shopping Malls Teeter Between Success and Failure While Asian American Malls Thrive
Mixed reports about the state of U.S. shopping malls indicate at least one thing for certain — the future of the American shopping mall is not guaranteed.
Nick Egelanian, the president of retail development company SiteWorks, which tracks mall performance in the U.S., calls what’s currently happening in the mall market a “continuation of the last phase of a 40-year decline.” As a result, “In 10 to 15 years, there will presumably be at most 150 to 200 of the highest-performing specialty shopping centers left in the country,” according to Malls.com.
Egelanian told The Wall Street Journal that “the total number of U.S. malls has declined from an estimated 2,500 in the 1980s to about 700 today,” and he believes that number will only get lower. Only shopping malls with premium entertainment, dining, and luxury stores will be able to outlast the rest.
Business Insider agreed and added that “in 2020, Coresight Research projected that 25% of the country’s approximately 1,000 malls would close shop in the following 3-5 years. In April, analysts at UBS projected that 40,000-50,000 American retail stores would shut down by 2027.”
But all is not doom and gloom.
In its The State of the American Mall report, Coresight Research shared that “physical retail has bounced back, with 2022 seeing more store openings than closures for the first time since 2016, and retail sales at malls grew more than 11% in 2022 to nearly $819 billion.”
CNN also stated that “malls are not going extinct, they are merely adapting to a new environment. In fact, many have reported robust occupancy levels and bigger crowds than before the pandemic.”
In recent years, the meteoric rise of e-commerce has led many to speculate that traditional shopping malls will become obsolete, especially for a generation deeply entrenched in the digital realm. Rather than becoming adversaries, online and offline retail experiences are complementing and enhancing each other. This harmonious integration, epitomized by the emergence of omnichannel marketing, has rejuvenated physical stores. Today’s retailers also have a unique edge — they can harness digital tools not just for proliferation but for brand consolidation.
The wild card in this discussion is the rise of Asian American malls, according to NBC News.
The Diamond Jamboree mall in Irvine, California, is fully occupied, according to leasing manager Helen Wang, while the Pacific East Mall in the San Francisco Bay Area is almost filled to capacity after recent renovations, per leasing executive John Luk. Meanwhile, Tangram mall in Queens, New York, has leased over 75% of its spaces since its opening last year, with more than 35 businesses operating and additional openings planned for the winter.
Every weekend this past summer in Orange County, California, thousands of people gathered at seasonal night markets in front of Asian Garden Mall in Westminster. This led to live performances, outdoor dancing all night, and large social gatherings. “At American malls, you kind of just go shopping,” one young shopper said. “Here you come for the entertainment.”
An associate professor of urban studies and planning at the University of Maryland, Willow Lung-Amam, said, “Asian malls have survived because they cater to a need for community.” And it’s this sense of community that ultimately keeps the Asian Garden Mall healthy. When lockdowns forced them to close, many people in the nearby communities continued buying from stores in the mall, including business owners buying from each other.
But not everything is perfect at the Garden Mall. Many customers are older-generation Asians who enjoy the lower prices, while younger generations want it to evolve into a luxury mall and less of a mom-and-pop collective.
All of this adds up to an uncertain future where shopping malls will either become part of American history or part of its thriving future.
Discussion Questions
Do you think shopping malls will fail or succeed in the coming years? What other factors come into play and how can shopping malls improve their retail presence?
Poll
Loading …BrainTrust
Bob Amster
Principal, Retail Technology Group
Carol Spieckerman
President, Spieckerman Retail
Every year someone puts out a doom and gloom piece about the extinction of malls or stores. The predictions never come to pass. The UBS piece which suggests all those stores will close is absurd analysis that isn’t grounded in any understanding of how people actually shop. Yes, there is churn in malls and stores – good ones survive while bad ones close – this has always been the case and it demonstrates a healthy market that is responsive to demand. But new concepts open, including more outdoor malls and lifestyle centers. Physical stores and spaces are far from doomed.
The rate of growth or decline of malls is not tied to just a changing environment. As the original concept of the mall was conceived, there have been too many malls built in the first place. Many of the numerous malls that have closed, or are closing, should not have been in the first place. Malls require a threshold minimum population density of each specific socio-economic levels from which to draw in order to thrive. On top of this basic requirement, a mall has to ‘invite’ the guest to come, beckoning a mixed use of shops, entertainment, and appealing eateries. We are seeing the normalization of the mall concept: just the right number of the right type of mall and it is not in the thousands.
Malls will continue to succeed, but there are still plenty of old, run-down malls that will go away. We have been talking about the death of malls for many years, and while there is certainly still a glut of retail space in the US, mall operators have been working to transform their properties into more compelling entertainment attractions. As noted in the article, the trick is to create an environment that has more than just shopping to attract visits and encourages people to stay.
E-commerce isn’t replacing malls, it’s being selectively integrated into the mall experience. Developers and mall operators have been largely left out of the e-commerce economy and that is set to change as third-party providers jump in to close the gap. 2024 will usher in a new era of mall and lifestyle center development that promises to create a unified, omni-commerce experience. The key word is “unified” since malls operate more efficiently as a brand collective rather than a hodgepodge of separate entities. Different, not dead.
Mall, like retail, have evolved since the 60’s. From main streets to strip centers to outdoor malls to enclosed malls, outlet centers and entertainment/mixed use centers. If there is one truth, it is that change is certain. The trend is for multi-purpose living communities to replace traditional inside out centers. In A and B locations we will see more housing developments and in third tier locations we will see conversions to warehouses and regional fulfillment centers for ecommerce. Regardless, the real estate is too valuable not to reinvent the use of the space.
The A and B level malls will succeed and the C and D level malls will fail. The difference is that A and B level malls have good brands, entertainment and restaurant venues that attract traffic. The malls with dying brands and no compelling other draws will disappear. There is a huge difference between good and bad malls and it will be the “survival of the fittest.”
Which is a most appropriate forecast since “survival of the fittest” did not mean ‘the strongest’ but of those best able to adapt to external changes.
Upscale malls and vibrant, mixed-use malls will thrive as consumers seek prestige and belonging. Uninspiring malls that don’t evolve will continue to fade away.
Inflation rates and malls’ omnichannel options also affect consumers’ willingness to visit malls.
Multisensory experiences like live fashion shows, beauty makeovers and cooking shows can make malls entertaining and relevant.
The shopping mall is being reimagined for the modern age, as retail stores are being refreshed and renovated with new concepts, designs, and experiences. For over a decade, we have heard about the retail apocalypse and the death of shopping malls false narratives.
What is most certainly true is that retail Darwinism and its evolutionary impacts are in play. Aged shopping malls will either be repurposed or closed permanently. There is plenty of investment in the shopping mall space, as the transformation includes malls now incorporating hotels, sports fields, and offices.
The 40 year decline of the mall is well documented. As is the post-pandemic bounce back. As is the premise that malls now have to serve as community centers, offering performances, social gatherings and entertainment. As is the premise of the symbiotic relationship between ecommerce and physical retail. So I guess I don’t understand the doom and gloom nature of the article. I’m almost surprised that there wasn’t a reference of some kind to a “mall apocalypse”.
Evolution can be unpredictable. Twenty or thirty years ago I don’t think Target was referred to as a department store. Today it stands as the “modern department store”. The “modern mall” of 2033 may not look like the mall of 2003 or 2023, but it will still be a mall.
Absolutely, Jeff. “The “modern mall” of 2033 may not look like the mall of 2003 or 2023, but it will still be a mall.” These discussions take a picture of what we have today and assume that is the future. Nothing could be further from reality. The one thing we can predict is that what we now call successful malls will be very differnet in ten years.
WOW! As I am writing, the “Share Your Opinion” survey is very telling.
The question, “Do you still visit a shopping mall?”
Sixty percent say, “No, don’t need to anymore.”
Another 20% say, “Yes, but only if it offers something I can’t get anywhere else.”
Can mall shopping build a future on that kind of response?
Gene, thanks for flagging this! How are we staying informed on the relevance of malls if we aren’t visiting malls? Or only run in for a personal need? Malls might ‘fail’ for me personally, but ‘succeed’ for many other people. Or conversely, I might love visiting the mall, but they still fail for many other people.
Here at 2:44 it 38% and 15% spending zero to very little time in malls. Shall we just rely on Neil’s photo postings?
Part of the success of a mall is having retailers that meet the needs of their customers. That requires different stores for different locations, demographics, and customer profiles. Some malls do better as “entertainment” and social venues. Others do better with the type of retailer. Understand your customer and “do local” well. One size does not fit all!
My, my….things must have changed a lot in the past two weeks: the Question on Sept 12th was “Is talk of “dying shopping malls” an oversimplification ??”
Then again, the answer was “yes” then, and it’s “yes” now.