Will Shopping Malls Make a Comeback in 2021?
Suffice it to say, 2020 was hardly anybody’s year.
When it comes to business, shopping malls — with their enclosed spaces and classification as nonessential retail — are among the retail categories that faced the most pressure.
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According to market research firm Placer.ai, despite several years of waning foot traffic and uneven momentum, mall visits in 2020 were off to a solid start pre-coronavirus pandemic.
But as the global health crisis touched down in the United States in March, visits to malls across the country came to a near standstill amid government orders mandating the temporary closures of nonessential stores. And even as restrictions were loosened in the months that followed, widespread layoffs and furloughs coupled with fears of store safety kept many cash-strapped, anxious consumers at home.
When Placer looked at data for 16 “top-performing” indoor malls around the U.S., it noted that visits for the first 11 months of the year were down 49.3% year over year. However, the same malls, per Placer data, saw visits in January and February up 7.2% year over year.
While overall visits will likely rebound to growth in 2021, according to Placer, “the overall experience is heading for a significant change.”
And that’s not necessarily bad news. In fact, it could mean quite the opposite.
“Key mall tenants, from department stores to beauty brands like Sephora are testing what outdoor locations could mean,” Placer explained. “But, at the same time, product brands like Nike and DTC companies like Warby Parker are finding a growing value in the opportunities generated by malls.”
Therefore, in addition to a return to the norm with visits, Placer said it expect malls and shopping centers to continue “seeing a significant shift in their tenant mix” — a trend that predated the pandemic and was, at least, partially responsible for the recovery malls were enjoying at the start of the year.
“From co-working spaces and fitness chains in malls to department stores and classic indoor retailers in strip centers, the cross overs that were already being seen in 2019 will likely pick up pace even more in 2021,” said the Placer report. “What’s best with this particular trend is that it will likely drive more success for more centers and malls. The differentiation created by such a change will enable a greater degree of diversity for customers limiting direct competition between centers and creating more complementary regional mixes.”
Throughout the pandemic, outlet malls and other outdoor shopping centers in general appeared to sidestep some of the struggles of their indoor counterparts as consumers heeded the recommendations of health officials who suggested that the outdoors were relatively safer when it comes to limiting the spread of COVID-19.
An August report from S&P Global Market Intelligence found that foot traffic at malls and outlet centers in the U.S. steadily climbed since May with visits to outlet centers coming in “slightly higher” than 2019 levels for the same week.
Even with promising vaccine news afoot, retail experts have suggested that some of the behaviors consumers developed during the pandemic will persist long after — meaning a revival of interest in outlet centers could also linger post-COVID, driving sustained momentum across a range of malls.
“Shoppers are itching to get out and spend money in 2021 — which will likely work in malls’ favor,” Placer said. “And with many malls evolving — adding gyms, for example — there’s reason to think that shopping malls will stage a comeback.”
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