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Mall Visits Remain Sluggish, But Could Gain Steam
Placer.ai’s May 2023 Mall Index Recap offered information that probably wasn’t too surprising. Specifically, economic headwinds continue to impact mall traffic. The data noted that year-over-year visit gaps for all three mall categories (indoor, open-air and outlets) grew, “marking the fourth month in a row of expanding YoY visit gaps and highlighting the current challenges faced by retailers.”
The cause of all of this is consumers who are waiting both for lower prices and easing interest rates. These consumers are also directing discretionary spending toward services.
But here’s some interesting news. The Placer.ai metrics note that month-over-month visits have remained mostly positive or flat over the past three month. Additionally, open-air lifestyle centers and outlet malls have experienced an increase in median length, versus May 2022. This points to a couple of things:
- Consumers are cutting back on their visits, but are spending more time at malls
- Outlet malls are experiencing the highest median visit length, increasing by 5.5% year over year
“We are operating in a challenging environment for retail, and this is going to have an impact on malls,” Ethan Chernofsky, Placer.ai’s senior vice president of marketing told Connect CRE. “Yet, the relatively small nature of declines and continued seasonality speaks to the ongoing demand and the unique draw that these retail centers continue to possess.”
The Placer.ai report said that the sales events has led to “significant traffic surges to the three mall categories.” Chernofsky added that the Memorial Day weekend sales especially benefited the outlet malls. “The success reinforces the power of outlet malls to drive major visit surges when retail opportunities overlap with the capacity to justify the longer trip,” he said. “They also possess a value orientation that could serve as an added draw in the coming months when the back to school season hits.”
The takeaway from the numbers isn’t that consumers are eschewing malls. Rather, they’re focused more on value, which explains the increased interest in outlet malls. Chernofsky is even more positive in the mall outlook, explaining that good retail space is hard to find. Additionally, retail centers are including newer tenant types in an effort to attract the “right” audience.
“As the wider economic effects lift, there should be a fairly rapid recovery, though that still places a large onus on a long term dilution of the impact of economic headwinds,” Chernofsky observed. “From a long-term perspective, there are many reasons for optimism, though the coming months will likely continue to present shorter-term challenges.”
- ◦Lease
- ◦People
- ◦Economy
