American Malls Are Making a Comeback | SoFi (2024)

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Are malls having a comeback? ›

Although U.S. malls were hit hard over the past few years, as lockdowns and rising costs contributed to a significant drop in foot traffic, shopping centers have proven resilient, a new white paper from data analyst Placer.ai concludes.

Key Insights

Mall visits are returning to pre-COVID levels. Weekday/weekend visit distribution has reverted to 2019 norms, but hourly visit patterns have shifted. Experiences of all kinds can draw visitors to malls. Pop-ups, whether short or longer term, are a powerful tool to drive traffic.

Retail experts are saying that Gen Z'ers have played a crucial role in overall mall growth and their rebound in the past few years. This generation of young shoppers often expects instant gratification, which is a key reason they prefer in-store shopping.

According to a 2023 Jones Lang LaSalle report, mall vacancies are at their highest levels in the past 15 years, exacerbated by COVID-19 pandemic lockdowns, the proliferation of online shopping, and closures and bankruptcies among popular mall retailers and major department stores that have historically anchored the ...

Foot traffic in top-tier malls was up 12% in June 2022 compared to the same period in 2019. Their less ritzy counterparts saw a comparable 10% hike. For context, “top-tier” refers to upscale malls nestled in affluent neighborhoods where the average shopper earns more than $200,000 annually.

The Big Picture

The future mall is walkable, accessible by car, bike, and train, and we will see an even bigger increase in retail around airports, bridging the gap between the retail, food and travel industries.

“Gen Z shoppers are bringing back the mall shopping center experience,” said Kristin Grove, senior vice president of national retail leasing at the global real estate firm JLL. “They want a sense of community. They want to bridge the gap between the social media that they're doing, and meet and shop in-person.”

Shops without products

Customers still browse a physical store, but rather than putting products in their basket, they simple scan a code. Once they've finished their shop and paid, the products are immediately delivered, often arriving at your house before you – promising delivery in less than 60 minutes.

Following its debut in the 1950s, the US quickly fell in love with Gruen's creation. Malls allowed people to shop in warm and friendly environments without needing to venture into the city. They brought numerous retailers and services together in a single location, something main streets and cities could rarely offer.

Thus, McDonald's earned the top spot in dcdx's latest report, titled Gen Z's Top 25 Most Magnetic Brands.

Does Gen Z like Walmart? ›

Nevertheless, Gen Z remains a highly cost-conscious cohort. Among retail categories, discount and off-price retailers comprise the preferred shopping destinations of 48% of survey respondents. These stores include brands like T.J. Maxx, Marshalls, Kohl's, Walmart and Target.

Members of the Gen Z years were born between 1997 and 2012. So as of 2023, the Gen Z age range is anywhere from 11 to 26. They are commonly referred to as the first fully “digitally native” generation.

In August 2022, the firm reported that mall occupancy in the U.S. dropped five percent (89.6 to 84.5 percent) during the first quarter of 2022. This past October, Nick Egelanian, president of retail consulting firm SiteWorks, told The Wall Street Journal that in ten years a mere 150 malls will remain open in America.

Top-tier malls, known as Class A malls, are pivoting toward an experiential model, replacing department stores with grocery stores, casinos, gyms, ice skating rinks and, in some cases, even residential apartments. The shift in strategy has been working.

By some estimates, there were as few as 700 large shopping malls left in the U.S. in 2022. Malls had an 8.7% vacancy rate at the end of 2022.

Mall brands from the early 2000s are making a comeback. Business Insider asked analysts what brands have the most potential for turnaround in 2024. Gap, Victoria's Secret, and Bath & Body Works were among the retailers mentioned.

Just when we thought the era of physical retail was over, brick-and-mortar stores are making a surprising comeback. Despite the surge of online shopping, physical retailers have found ways to adapt and thrive.

Mall traffic has bounced back to near pre-pandemic occupancy levels, with customers embracing the experience-focused model. Mall owners are also capitalizing on the omnichannel strategy bolstering stores' online presence in addition to their brick-and-mortar stores, creating a halo effect for retail sales.

E-commerce's explosive pandemic growth appears to be moderating, with a growing number of shoppers returning to in-person shopping for items like clothes, food, and furniture. Some experts believe that e-commerce has peaked and is in decline, while others think it's still going strong.