Transforming Malls for Financial Success

We've heard for some time now that traditional brick-and-mortar malls are facing a decline with the uptick in online shopping. However, some experts claim the “death of malls” has been widely exaggerated. According to Coresight Research’s The State of the American Mall report, more malls opened than closed in the last year, the first time that has happened since 2016.

Mall operators have had to make significant adjustments over the last few years to survive in the face of the massive e-commerce industry and shifting consumer preferences. One crucial point many mall operators caught on to is that consumers prioritize holistic entertainment experiences over one-and-done shopping excursions. A recent Moody’s analysis on the financial health of malls revealed a phenomenon known as the “Cheesecake Factor,” in which 93 percent of loan applicants backed by malls with a Cheesecake Factory are current on their payments vs. the 72 percent of those without this particular restaurant serving as an anchor tenant. In other words, people want to shop at a place where they can also eat at a top chain restaurant, as well as engage in other fun activities.

Using this new line of thinking, how can “dying” malls revitalize, become entertainment hubs, and meet the needs of the latest and ever-changing consumer? Here are some tips for mall operators as they look to evolve.

Make Your Mall a Destination Location

Remember, everything a consumer can purchase in a retail store is something they can order online from their couch. One of the best ways to transform the mall experience is by adding unique, gamified experiences to empty stores. Gaming venues, laser tag arenas, or bowling alleys are excellent replacements for departed anchor tenants. Younger audiences would also appreciate mall carousels and playgrounds, while more seasoned shoppers may gravitate towards massage chairs.

For smaller spaces, virtual reality and escape room experiences can be more compact and great ways to infuse malls with new attractions for all ages. Many people will likely come for the experience and add a shopping trip to the adventure.

Fill Gaps in the Shopping Experience   

Mall operators should look for opportunities to rent out stores to different types of retailers and provide a diversified shopping experience. For example, they can fill the void in home goods shopping left by the closure of Bed, Bath & Beyond with other players in this space. Also, consider adding gyms, grocery stores, massage parlors and nail salons — businesses that entertain the consumer in person.

It’s also essential to “think small” and not overlook small business retailers in your local community that could use an expanded store space. Offering discounted rent to a few local small businesses could be an excellent way to fill empty storefronts and give back to the community. Your local chamber of commerce can easily connect you to small business owners needing retail space.

Create an Inviting Atmosphere

Another critical element for mall success is having contemporary branding, a modern design, and maintaining clean, well-kept bathrooms and seating areas. The more inviting and contemporary the surroundings, the less likely shoppers are to leave prematurely, boosting foot traffic and encouraging a more relaxed and enjoyable shopping experience.

Prioritizing safety measures is another crucial point for shoppers and retailers, especially during high-traffic periods when we’ve seen a rise in theft. Retailers, mall operators and their security teams must collaborate on robust strategies throughout the year to maintain a safe customer environment.

Malls are well on their way to continue to see a spike in interest as long as they're adaptable and flexible to the changing consumer. By becoming overall entertainment hubs, they can meet the needs of all types of people and continue to grow their bottom lines.

Raphy Soussan is a partner at Mazars, an international audit, tax and advisory firm.