What: Coresight explores the most recent metrics related to American malls in order to understand the forces at play and where they do.

Why it is important: While, just like department stores, they were predicted to disappear at the heyday of the pandemic, it seems that they are currently reinventing themselves as Coresight even sees them as a key tactical tool for brands in order to reduce CAC and boost sales.

According to data from ICSC (formerly the International Council of Shopping Centers), malls accounted for 12.2% of gross leasable brick-and-mortar area in 2022. Malls punch above their weight in terms of the channel’s share of total retail sales: ICSC estimates that 14.1% of US total retail sales went through malls in 2022, up from 13.7% in 2021.

This suggests that malls have higher sales productivity in terms of gross leasable area than other retail formats such as open-air shopping centers (which account for 55.8% of total retail gross leasable area but saw 38.6% of total retail sales flow through the channel in the fourth quarter of 2022, according to data from ICSC). High sales productivity is especially true at top-tier malls, which offer a more affluent customer base and are located in desirable areas for retailers to maintain their brand image while attracting foot traffic—generating higher sales.

Retail sales at malls totaled $728.9 billion in 2021 and $818.7 billion in 2022, according to ICSC—representing an 11.2% year-over-year increase. Occupancy rate is also higher in 2022 than in the previous years and tends to revert to 2019 levels, especially in top tier malls.

Coresight identifies a number of factors supporting growth for malls, and their forthcoming full report discusses these in detail:

•    A multichannel presence can produce a halo effect for brands, boosting sales and reducing customer acquisition costs. A number of brands and retailers report that establishing an offline presence supports online sales growth in new stores’ catchment areas.

•    Collective brand synergy in physical retail can increase sales. Brand synergy is the idea that brands generate more value by being in close proximity to other high-value or sought-after brands, which brands leverage to identify new locations that are likely to be successful.

•    Top-tier mall operators have the financial resources to continually reinvest in and renovate malls to meet evolving demand for high-quality experiences.

•    Malls can drive sales and improve the customer experience through investment in omnichannel. Mall owners’ investments in building out omnichannel capabilities can enable a more convenient shopping experience for consumers.

The state of American malls