Malls and department stores could change in 2022, as e-commerce skyrockets – Footwear News
Despite a few difficult years, the mall as we know it is far from obsolete.
While mall traffic was on the decline even before the pandemic, recent data suggests potential for a comeback.
According to a recent report by real estate brokerage firm CBRE, open-air malls will be the most in-demand type of property in 2022, with drive-thru sites being single-tenant. The indoor mall is also seeing gains – foot traffic analysis company Placer.ai has shown that Black Friday visits to these sites are up 82.7% from 2020. Traffic is down from 2020. 2019, which Placer.ai says is in part due to the length and spread of the holiday shopping season this year.
Despite the slight increase in holiday traffic, the future of the mall is changing. And this represents a change in consumer behavior and needs.
âThere was what I’ll call an evolution of malls,â Berkeley Research Group chief executive Keith Jelinek told FN in an interview. “EThe overall experience has been that we have fewer people going to department stores.
Department stores like Macy’s JCPenney and Kohl’s have traditionally served as anchor points for foot traffic in major shopping malls, attracting shoppers with a wide selection of merchandise. In recent years, the focus on online shopping along with a brand push towards DTC channels has made department stores less attractive as a place to shop.
In 2012, BRG estimates that there were 72 different department store entities. In 2021, that number fell to 45 due to bankruptcies or acquisitions. This closure also had an impact on store locations. In 2012, there were approximately 8,300 department store locations in the United States. By 2020, that number had fallen to 6,300. And locations are expected to decrease even more through 2025.
For example, Macy’s announced plans to close 10 physical stores in January as part of its plan to close a total of 125 stores in lower-tier malls by 2023.
At the same time, retailers and shareholders are seizing a powerful e-commerce opportunity for their department stores. Saks’ parent company, Hudson’s Bay Co., split the retailer’s website and stores into two separate businesses in March to take advantage of its superior digital capabilities. Macy’s Nordstrom and Neiman Marcus would all be considering similar options.
“Ultimately it comes down to shareholder value”, Jelinek said of this recent trend. “So they need to be able to improve their return on investment for shareholders, and that’s the main reason they’re interested in it.
Describing how malls will change in the future, the retail industry veteran explained that the successful malls will be those that integrate experiences and entertainment into the shopping landscape.
“The mall will change to become not only a place where you go shopping, but it must become more of a place of discovery, creation and community gathering” Jelinek said, adding that these locations will also include several stores owned by brands, such as Nike or Adidas, as well as capabilities to fulfill online orders.
This change means that department stores will likely no longer exist as an anchor for foot traffic in these centers. On the contrary, they will also play a new role as a center of discovery. He even predicted an experiment in which brands that display their products in department stores could directly ship their products to consumers. This system would eliminate overheads, give brands more control over their relationship with consumers, and allow department stores to build relationships and ties with explorer shoppers.
So while they could be fewer in 2022, department stores will persist. They just might not be the primary drivers of traffic in a mall.
âThe department store will always be a place where a customer wants to have a wide selection of products,â Jelinek said. “EThey want to be able to go somewhere that they can touch and they can smell it and they can try something.