The Challenge
The Outcome
This report analyzes mall-based consumer behavior and looks at the different functions played by the various shopping center formats within the wider retail landscape.
Read White PaperFrom the pandemic to inflation to a general consumer sentiment downturn, the past few years have thrown plenty of challenges at the mall space. In the face of a rocky economic landscape, how are visits to shopping centers changing? Where do pockets of optimism shine, and what can demographic insights reveal about the segment?
This white paper looks at recent location intelligence data to understand the current state of the Placer.ai Mall Indexes, which include class-A Indoor Malls, Open-Air Lifestyle Centers, and Outlet Malls. The report reveals how visitation patterns differ based on region; explores visitor demographics to the various mall formats; uses visitor journey data and daily and hourly foot traffic patterns to understand the urban/suburban mall divide; and uncovers how seasonality can impact mall dwell times. Keep reading to find out how mall trends have changed over the past year.
Retail growth was muted for much of 2023 as lingering economic challenges kept many would-be shoppers at home. Still, some pockets of optimism shine through the year-over-year (YoY) visit trends. Visits to all three mall formats experienced visit growth in January 2023, helped by comparisons to the previous year’s Omicron wave. But even after the Omicron comparisons faded in February and March, YoY visits held relatively steady – foot traffic to Indoor Malls and Outlet Malls stayed on par with 2022 levels while visits increased for Open-Air Lifestyle Centers. And while YoY visits dipped in the middle of the year, June visits rose once again as consumer sentiment improved. Traffic then dropped in July and August as concerns over savings heightened.
But even as the economic headwinds hampered visit performance within the wider shopping center space, some formats performed better. Since the start of 2023, Open-Air Lifestyle Centers consistently stayed ahead of the pack – perhaps thanks to the format’s higher-income audience, which will be explored in the next section.
Open-Air Lifestyle Centers may attract the most affluent shoppers – but top-tier centers from the two other formats still drive audiences with significant disposable income. Diving into the trade areas of the various mall types and comparing the malls’ captured and potential markets indicates that all three formats attract a relatively high-income crowd.
A chain's potential market consists of the chain’s trade areas – the census blocks where visitors to the chain’s venues come from – weighted according to the population size of each census block group in the trade areas. The chain’s captured market consists of the census blocks in a chain’s trade area, weighted according to the actual visit share to the Point of Interest (POI) from each census block. Analyzing the three mall formats’ trade areas using STI: Popstats 2022 data showed that the median household income (HHI) in the potential markets of the three formats was higher than the nationwide median for 2022. In the captured market of all three malls, the median HHI was even higher. This means that many of the top performing malls are located within relatively affluent communities (hence the relatively high potential market median HHI) and attract the higher-income shoppers within those areas (as shown by the even higher captured market median HHI).
Of the three mall types, Outlet Malls had the lowest median HHI both in its captured market and potential market. Outlet Malls also had the smallest gap between their captured market and potential market median HHI. So although visitors to Outlet Malls still tend to come from higher HHI neighborhoods than the nationwide baseline, the data does indicate that this type of shopping center may be more accessible to a wider visitor base. At the same time, the HHI data also suggests that Outlet Malls’ audience may be more impacted by inflation – which could explain the format’s recent challenges.
Just as median HHI patterns across mall formats could be impacting the varied performances, regional median HHI could also help explain regional disparities in mall visit trends. Taken together, Indoor Malls, Open-Air Lifestyle Centers, and Outlet Malls have seen the strongest 2023 YoY visit trends in the West, where the median HHI in states like California, Washington, and Utah is significantly higher than the nationwide benchmark. The mall sector in the relatively affluent Northeast also performed well, with mall visits between January and August 2023 up 0.3% relative to 2022.
Meanwhile, the Midwest – which has fewer high-income states than the coasts, but more than the South – saw its mall visits dip 1.9% YoY. And in the South, where the median HHI in a large share of states is below the nationwide benchmark, visits dropped by 3.2% relative to 2022.
Some of the dip could be due to last year’s relative overperformance in the region. The drop may also stem from the lower-than-average median HHI in certain Southern states, with inflation continuing to take a heavy toll on lower-income households. Once the wider economic situation stabilizes, these trends may reverse – regions with lower YoY growth in 2023 could perform particularly well in 2024 as pent-up demand in the South and Midwest drives shoppers back to malls.
While looking at YoY visitation trends brings out differences between the mall formats – with Open-Air Lifestyle Centers outperforming its counterparts – diving into seasonal visit patterns highlights similarities. Comparing 2023 monthly visits to a monthly average baseline (the average number of visits per month between January and August 2023) reveals that visits tend to drop in the winter months and rise in the summer months across all mall formats.
Still, the seasonal fluctuations are not uniform across the mall space. Outlet Malls, which have predominantly outdoor layouts and fewer indoor experiential offerings (such as movie theaters or bars) see the steepest drop in the winter and the most substantial boost in the summer.
Open-Air Lifestyle Centers are also mostly open-air, but this format tends to incorporate various enclosed establishments beyond retail shops, including gyms and restaurants, which drive visits during the colder months. So while Open-Air Lifestyle Centers see more pronounced seasonal patterns than Indoor Malls, the variance is less extreme when compared to Outlet Malls.
Meanwhile, Indoor Malls exhibit the smallest seasonal fluctuations between January and August – although this format also sees a boost in visits during the warmer months as consumers look to escape the heat.
While focusing solely on visit numbers to Indoor Malls seemed to show relatively minor seasonal fluctuations, diving into the seasonal median dwell time reveals that this format also gets a substantial summer boost – particularly in warmer states. As the chart below highlights, each state has its own unique median dwell time range – shoppers in Florida and Texas spend more time in the mall, on average, than shoppers in Michigan or New York. But each state also has its own seasonal pattern, with hotter states such as California, Georgia, Florida, and Texas all seeing a marked increase in their indoor mall median dwell time in July and August.
The seasonal median dwell time data suggests that residents of states with cold winters – like New Yorkers and Michiganders – may prefer to take advantage of the summer sun and not waste the warm weather on Indoor Malls. But in states with year-round sunshine, such as California, Georgia, Florida, and Texas, consumers may favor extended mall visits during the peak of summer to beat the heat and enjoy some air conditioning with their retail therapy.
Looking at 2023 median dwell time on a YoY basis indicates that these trends may be strengthening. The median dwell time for Indoor Malls in July and August 2023 was higher than in 2022 for all states analyzed, with the biggest increases seen in California, Georgia, Florida, and Texas. Whether this increase is due to the rise in consumer confidence in June and July 2023 or the higher-than-normal temperatures remains to be seen. Either way, the rise in dwell time highlights the enduring appeal of malls as versatile spaces that offer more than just shopping.
Malls vary by format and location, but they can also be divided along urban and suburban lines. Over the pandemic, a shift toward suburban living took place as people sought out more space. But cities proved remarkably resilient, and shopping patterns evolved to meet the needs of both suburban shoppers and urban city dwellers.
Urban shopping centers’ YoY visit performance serves as a testament to this resilience. Between January and August 2023, visits to urban shopping centers grew by 3.0%, while suburban shopping centers received 1.7% fewer visits than in 2022. While some of this growth is due to suburban malls’ relative strength in 2022, the ongoing recovery of urban malls highlights its staying power.
And, critically, while suburban malls did see a YoY dip in visits, both urban and suburban malls experienced an increase in unique visitors – although urban malls did see significantly higher growth in that metric as well. The rise in unique visitors across the board suggests that while overall foot traffic may have decreased for suburban shopping centers, core customers remain engaged – even if they visit less frequently.
Urban and suburban shopping centers don’t just differ in their recovery rates – looking at the daily and weekly visit breakdown as well as visitor journey data indicates that they also serve a slightly different purpose. Urban shopping centers are more likely to see late-night shoppers, while suburban malls tend to receive more weekend visits. Urban mall visitors also tend to travel shorter distances than their suburban counterparts.
The driving force behind these trends is most likely accessibility: urban shopping centers are closer to where people live and work, making it easy to drop in after a workday. In contrast, suburban malls often serve shoppers coming from further away and so tend to attract more visitors on weekends when people have more free time to make a mall trip.
Post-mall visit trends further highlight the different functions played by suburban and urban malls, with suburban mall-goers more likely to follow their mall visits with stops at food establishments or additional shops. This behavior suggests that many suburban visitors view a trip to the mall as an opportunity for leisurely outings or excursions. Urban shoppers, meanwhile, who likely go out to eat or run small errands more regularly owing to the wider array of restaurants and shops near their homes and offices, were less likely to grab food or visit an additional store following their mall trip.
The larger trade areas and higher share of weekend visits and of shoppers visiting restaurants or other shops following their mall trip suggests that suburban visitors treat their mall visits as part of a larger outing. Urban malls’ larger share of evening visits, lower share of weekend visits, and smaller trade area indicates that city-based shopping centers might serve a more utilitarian purpose than their suburban counterparts.
While the function of malls has shifted in recent decades, shopping centers remain integral to the American retail landscape. Location analytics reveals that each mall type – Indoor Malls or Open-Air Lifestyle Centers, urban or suburban, California-based or Georgia-based – tends to serve a different consumer group. Examining foot traffic data, trade area characteristics, and visitation patterns for these retail destinations reveal consumer trends and highlights the unique role that each mall type plays in the wider retail space.
The shopping center space in the United States is extremely diverse. Indoor Malls, Open-Air Lifestyle Centers, and Outlet Malls attract audiences of distinct income levels, seasonal mall-based shopping behavior varies by state, and suburban and urban malls experience unique visitation patterns.
Analyzing the median HHI data across different mall types reveals that, while the wealthiest mall shoppers tend to visit Open-Air Lifestyle Centers, all mall visitors are wealthier than the national median. Audience median HHI may also impact regional trends – wealthier areas of the country experienced the greatest YoY visit growth to malls.
Malls see the most visits in the hot summer months, perhaps as people take vacations and want to freshen up their wardrobes. Dwell times are also longer, especially in hotter states, as people take advantage of the air conditioning.
While plenty of people moved to the suburbs over the past few years, urban shopping centers are thriving, with visits up YoY. But suburban malls serve their own purpose, attracting more weekend visitors looking for an outing, while urban visitors are more likely to visit malls during the week or after work.
