Mall Stats Drag in February—But Don’t Push the Panic Button
Mall numbers for February 2023 were anticipated to build on January 2023’s strong showing. But according to Placer.ai’s Mall Index Report for February, this didn’t happen. Indoor mall visits fell by 6% year over year, while visits to outdoor malls dropped by 6.7%. Open-air lifestyle centers fared a little better, with visits falling by 2%. “The numbers demonstrate that “the true ceiling of the sector is being limited by headwinds,” according to the report.
But when asked about the somewhat lackluster numbers, Ethan Chernofsky, senior vice president of marketing at Placer.ai, indicated a higher performance than what had been expected. “The comparison to a post-Omicron February that drove significant pent-up demand, and a February in 2020 that had an extra day was always going to present a challenge,” Chernofsky told Connect CRE. “The ongoing effects of inflation and other economic headwinds are significant and fairly limited declines are a strong sign of the segment’s resilience.”
Chernofsky also cautioned that minor declines in numbers should be expected to happen within a range of results, especially given the economic headwinds impacting retail performance, including inflation, gas prices and even weather. The Placer.ai report also noted that open-air lifestyle centers experienced its strongest month year-over-year since September 2022. Weekly visits also demonstrated growing improvements, the report noted.
For perspective, Chernofsky pointed out that before the pandemic, the mall narrative focused on the retail apocalypse and the “overmalling” of America. “The post-pandemic period has proven both of these components wrong, elevating the importance of brick-and-mortar within the retail environment and showing that well-oriented malls may be better positioned than ever before,” he said.
A longer-term perspective suggests that malls, especially top-tier malls, are experiencing improvements. Much of this is due to decisions that the top-tier mall owners have made in recent years.
“The shift to a greater focus on experiences, dining, health and fitness tenants and away from the more traditional overemphasis on apparel and beauty has made malls more interesting and enabled them to provide more comprehensive experiences,” Chernofsky commented. Additionally, mall owners are committed to the “right” audience, as opposed to “any” audience, which was the case in the past. “This enables them to maximize visits and drive the ideal audience for their respective tenants,” Chernofsky said.