How malls are meeting the needs of a new digital age in a post pandemic world.

At Seaker, we know you’re busy so here’s the TL;DR:‍

US malls are seeing strong occupancy and some surpass pre-pandemic foot traffic according to a recent Coresight Research study.

Resurgence is concentrated at top-tier malls versus mid and low-tier.

Malls have high sales productivity because they capture a greater share of sales than their share of space.

Omnichannel and Brand Synergy are trends that are driving the resurgence of American malls.

Retail experts, it's time to hold that requiem for malls. According to a recent Coresight Research study, instead of fading into obscurity, many US malls are finding their feet again, reporting strong occupancy levels and even surpassing pre-pandemic foot traffic levels. Let's dive deeper into this retail evolution, shall we?

Before we get too engrossed in this comeback story, it’s important to understand the tiers in the mall universe:

• Top-tier malls: Where luxury meets the latest direct-to-consumer (DTC) brands. Picture these in the glitzy markets where an average Joe flaunts an income north of $200,000, yet the consumers shopping the mall have diverse economic backgrounds..
• Mid-tier malls: Steady and resilient, these have your classic anchor retailers, boasting little to no vacancies. These malls have legacy brands yet not too many new and upcoming national offerings. These are nestled in areas where an annual paycheck hovers around the $100,000 mark.
• Low-tier malls: The underdogs, characterized by vacant anchors and dwindling sales, catering mainly to a less-affluent crowd.  Often these malls have been out positioned by newer assets and a lack of reinvestment leads to increased vacancies.  This is where the doom and gloom press comes from.

Now, while the overall retail leasable space occupied by malls shrunk from 5.7% in 2014 to 5.5% recently, the mall’s impact is far from waning. Contrary to their space share, malls contributed to a whopping 12.9% of consumer expenditure on retail and services in early 2023. Simply put, malls are offering more bang for the buck because they capture a greater share of sales than their share of space.

In the glamorous world of top-tier malls, 2022 saw occupancy rates luxuriating at a healthy 95.1%. That's just a smidge below what they enjoyed pre-pandemic.

COVID might've thrown malls a curveball, but their recovery arc tells an inspiring story. Evidently, retailers are clamoring for that prime real estate again, expanding their bricks over clicks.

Interestingly, DTC brands and the newly coined Digitally Native Vertical Brands or DNVBs (yes, that’s what we’re calling them now) are queuing up for their mall space. Why? As they grapple with e-commerce giants and soaring customer acquisition and online marketing costs, a physical store presents a golden opportunity to offer consumers a tactile brand experience.

In a fascinating twist, a synergy is emerging between online and offline worlds. Many brands attest to a potent halo effect when they mark territory in both digital and physical domains. This dual presence facilitates easy product research online and informed purchase decisions in-store. As consumers swot up online, they're keen to seal the deal in person.

Supporting this behavior, a recent International Council of Shopping Centers survey revealed a neck-and-neck race: 97% of Gen Z participants reported shopping at physical stores, while 95% reported shopping online.

A convergence of factors fanned the resurgence of malls in 2022. With the aforementioned changes in buying behavior, travel bans lifted and wanderlust reaching fever pitch, consumers eagerly indulged their shopping cravings — we call this “The Champagne Effect”. Data sampled from 120 malls by Coresight Research, via Placer.ai, painted a rosy picture. Top-tier mall traffic climbed by 12% in 2022 against 2019, while their less ritzy counterparts marked a 10% uptick.

Reports of the mall’s demise turned out to be greatly exaggerated. Malls, whether top-tier or not, have not just survived but have shown an impressive ability to evolve and resonate with contemporary consumers. Their story is one of adaptability and the timeless appeal of in-person shopping experiences. As the landscape of retail continues to shift, it's clear that malls will always find their place in the sun—or at least under the bright fluorescent lights.

We at Seaker do see a clear formula for success. Revinestment into shopping centers attracts best-in-class tenants who drive foot traffic from desirable consumers and brings success to the Tenants.  This enables landlords to raise base rents and thus increase NOIs. Simple stuff, right?

Now we want to hear from you! Are your shopping center stores experiencing a lift in foot traffic? How is your brand benefitting from combining digital and physical channels?

Find out how Seaker can help your Brand identify its most opportune locations at malls and beyond by reaching out to questions@theseakergroup.com.

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