Consumers Still Dicey On Mall Visits

Consumers Still Dicey On Mall Visits

With an existential crisis in the balance, all eyes have been on mall reopenings this week and consumers’ reactions to them. So far, the jury is still out as to whether shoppers are ready to return to the mall.

Business intelligence firm tracked traffic and sales for eight reopened malls through May 11 and compared the numbers to similar data from 2019. The results showed historic lows: Traffic was down 79.2 percent on average at the eight malls.

The data showed that the number of shoppers increased as May progressed at a growth rate of 2.4 percent, indicating a possible slow-building recovery. “A granular look at the data shows there were mixed results at the eight malls, which are located in eight of the states that reopened, including Texas, Indiana, Georgia and Tennessee,” according to Placer. “At Haywood Mall in Greenville, South Carolina, traffic decreased for two consecutive days, then jumped 31 percent on May 11, while the Mall of Georgia in Buford, Georgia saw two days of smaller declines followed by a 2 percent increase on May 11.”

There were, however, some positive signs for the future of the format. Reuters reported that IKEA’s shopping malls business is poised to enter the United States in the next couple of years.  Gerard Groener, managing director of IKEA’s mall shopping arm Ingka Centres, which has 45 shopping centers in Europe, Russia and China, said the company has been scouting locations and has entered negotiations with several of them. New York, Los Angeles, San Francisco and Chicago locations are among the target locations.

“We are in a very active search. Maybe it’s a good time to buy now. I’d say it’s more a buyers’ market than a sellers’ market currently in the U.S.,” Groener told Reuters.

There was also evidence that space and density could serve malls well. Kantar Consulting, which has been studying the U.K. retail reopenings, found that “small box” retailers, such as Trader Joe’s, could suffer more than bigger companies as a result of capacity restrictions and social distancing measures. A similar pattern has occurred in the U.S., according to Simon Johnstone, director of retail insights for Kantar, as reported in Winsight Grocery Business.

“The problem is the smaller stores are hamstrung by the distancing guidelines, whether they are governmental or their own guidelines for social distancing. They are limiting five people to 1,000 square feet in their stores. So because of that smaller box size, it’s going to be a more difficult place to go,” Johnstone noted, adding that the relative struggles of smaller stores could be more acute in dense areas with more plentiful shopping options.

Wall Street seems to think malls will make it. According to The Motley Fool, shares of mall-focused real estate investment trust Simon Property Group were up 12 percent on May 18. Following closely behind was Macerich, up 11 percent, and Tanger Factory Outlet Centers.

“Malls reopening is good news,” said The Fool’s analysis. “A vaccine that would make consumers feel safe in a mall (and eliminate or at least reduce social distancing requirements and safety protocols) would be even better. Thus, it's not surprising that Wall Street got super excited about Moderna's (potential vaccine) news and pushed the mall REITs sharply higher. Only it's too soon to really know if there's anything worthwhile that will come from this. Mall REITs remain a highly volatile sector and news like this only highlights that volatility, which will often be driven by nothing more than investors' emotional swings.”



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.