Interest rates are up. Consumer confidence is down. And most malls are thriving.
From 2021 to 2022, retail sales at malls increased 11% to over $800 billion while foot traffic at top-tier malls—where the average shopper makes over $200,000 per year—saw even higher increases. That’s per a recent report from Coresight Research, which also discovered that the pariah that was promised—e-commerce—has not only failed to kill the great American retail experience but is helping it thrive as sales associates and vendors large and small are using the omnichannel to attract customers, enhance sales, and reduce customer acquisition costs.
“Occupancy rates are the No. 1 indicator of a mall’s health,” said Coresight CEO Deborah Weinswig to CNN, adding that top-tier malls saw over 95% occupancy while the next lower tier enjoyed 89% occupancy. Not bad. As once-venerable mall and retail stalwarts such as Hot Topic and Bed Bath & Beyond come and go, opening valuable retail space for hungry vendors is not necessarily a bad thing for restaurant and eatertainment lessors.
Flocking to the mall has been a rite of passage for generations of American teens and today’s generations are no different. Almost 66% of Gen Z consumers go to the malls for the social aspect, not to target specific retailers, restaurants, or the opportunity to get their ears pierced or pick up the latest video game.
Consumers Still Have It All at the Mall
As automation and mobile-based ordering and foodservice apps become more prevalent, food courts are evolving from sticky grids of barely controlled chaos to more urbane-bordering-hip locales of community, consumption, and connecting. As restaurant vendors work to reduce square footage while increasing efficiency, today’s mobile and kiosk-based technology are more inviting, personalized, and convenient to the contemporary mallwalker.
“Convenience, value, and accessibility are three of the biggest motivators for shoppers when making purchase decisions amid rising costs,” said Michael Della Penna to The Food Institute. Penna is chief strategy officer at InMarket, a data firm focused on malls and retail.
“Many malls are experimenting with more interactive experiences including kiosks, touchscreens, video walls, VR, and services including new food bespoke options and concepts like celebrity-anchored restaurants,” such as Mark Wahlburg’s Wahlburger and Jimmy Buffett’s venerable Margaritaville.
New-school, interactive technology combined with the old-school tradition of young people— perpetually bored, hip, and looking for others to be bored and hip with—are fueling the resurgence of spaces once dominated with names like Glass Block, J.C. Penney, Nordstrom, and more, whose food courts still feature neon and aromatic staples like Cinnabon and Orange Julius.
“These developments combined with traditional food courts means QSRs, along with mall operators, are thinking more strategically about placement within the mall and even expanding beyond the mall,” Penna added, using digital space and the omnichannel to continue to proffer products and services, provide deals, and encourage consumers old and new to reconsider—and rehabilitate—the American mall in the wake of inflation. Especially during the holiday season.
“Physical retail isn’t going anywhere—in fact, these recent spikes in mall traffic will only continue to be heightened heading into the holiday season.”
Penna says that QSRs in particular need to focus on providing outsize value and increased product diversity, citing Chick-fil-A’s meal deals and Dunkin’s “Free Coffee Mondays” as standouts where consumers can nab a quick bite (and a quick blast of indulgence-fueled serotonin) while spending time with their friends or simply doing a bit of mallwalking.
Finally, the mall is an exceptional option for QSRs to feature limited-time offerings (LTOs) and seasonal favorites.
“QSRs like McDonald’s, Sonic, and Chick-fil-A who are constantly innovating new products, are bringing classics back to market when appropriate (think McRib, Pickle Slushy) to keep their menus fresh and build loyalty among their diners,” Penna said.
“As shoppers are faced with numerous options every time they stop by a food court, it’s the QSRs who understand these motivating factors and the levers of product, price, place, promotion that will not only attract diners, but ensure they stop by for a quick and delicious meal break while they’re completing their shopping hauls.”