Are malls dead, or on the comeback trail? How are different retail sectors bouncing back, and is brand loyalty changing in Covid’s wake?
We found it's impossible to limit the story around what’s happening with malls down to their individual geography. Truly, there is as much at-play from a demography standpoint in 2023 as there is from location alone.
In the Department Store sector, value seems preferred over brand, but the shift is slow. In the Sportswear sector, more established urban brands seem to be doing better. In the Children’s Apparel sector, value is again an issue, and there is a clear demographic divide among patrons of stores of different tiers.
Below, we provide the framework for this report.
We used Unacast Insights to look at foot traffic data from the start of Q1 2022 through the end of Q1 2023 in order to analyze how different retail sectors and brands are performing in malls around the United States.
To focus our study, we zeroed-in on six brands spanning three retail sectors, and contrasted head-to-head performance around key metrics, including foot traffic trends, origin of visitation, capture rate, return rate, and the demographic composition of visitors. Below are the sectors, locations and brands that we examine in this report:
Sector: Department Stores
- Brands: Neiman Marcus and Dillards
- Location: Scottsdale Fashion Square, Scottsdale AZ
Sector: Sportswear Retailers
- Brands: Nike and Columbia Sportswear
- Location: Mall of America, Minneapolis, MN
Sector: Children's Apparel
- Brands: Abercrombie Kids and Kidz
- Location: The Florida Mall, Orlando, FL
We will review each sector, brand set, and location one at a time, beginning with Department Stores.
Dillards and Neiman Marcus, Scottsdale Fashion Square, Scottsdale, AZ
Scottsdale Fashion Square is an upscale luxury shopping mall located in the downtown area of Scottsdale, Arizona. It is the largest shopping mall in Arizona with approximately 2 million square feet of retail space, and is among the top 30 largest malls in the country. It has consistently been one of the most profitable malls in the United States.
The Neiman Marcus department store is located at 6900 E Camelback Rd near the southwestern limit of the mall. The Dillards department store is a little further up, towards the middle of the western part of the mall. Neiman Marcus appears to have some dedicated parking areas. Dillards would be a shorter trip from the very center of the mall, but the total walking distance differential is probably less than 40 steps.
Quick facts: The Dillards department store averages about 1,700 visits per day. The average visitor stays about 22 minutes. One in 5 visitors on average return to the store each quarter. Nearly 2 in 5 people who come within 500 feet of the Dillards store will visit it.
The typical visitor to this Dillards is from Block Group 2, Census Tract 2183 in Maricopa County — a quickly growing Phoenix neighborhood with rapidly increasing levels of average median income. They are between 30 and 60 years of age, white, college educated, and they earn more than $50,000 per year; many of them over $100,000 per year. They tend to visit on weekends, between noon and 4 p.m.
While Dillards’ return rate, at 20%, is strong generally, it declined in Q4 of 2022 and Q1 of 2023 versus previous years. Total foot traffic though is up about 10% year over year, and capture rate in the 500 foot range is up to 48% in Q1 of 2023 versus 35% in Q1 of 2022. So people are still visiting Dillards, they just aren’t returning there quite as often as they used to.
Quick facts: The Neiman Marcus department store averages about 440 visits per day. The average visitor stays about 42 minutes. One in 3 visitors on average return to the store each quarter. About 1 in 20 people who come within 500 feet of the Neiman Marcus store will visit it.
The typical visitor to this Neiman Marcus is from Block Group 1, Census Tract 2173 in Maricopa County — a growing Phoenix neighborhood with an older population and a higher than average median income for the area. They are between 40 and 80 years of age, white, hold a college degree, and they earn more than $100,000 per year. They are almost as likely to visit the Neiman Marcus store any day of the week, but usually do so between 11 a.m. and 2 p.m.
While Neiman Marcus’ return rate, at 33%, is strong, it too saw a decline in return rate in Q4 of 2022 and Q1 of 2023 versus previous years — dropping to a low of 21% in Q1 of 2023. Total foot traffic here is flat to a little down year over year, and capture rate in the 500 foot range is also down a full percentage point (4.6% vs 5.6%) in the same period.
Dillards draws about 4x the total visitors that Neiman Marcus does, but only keeps them in the store about half the time, and does not draw them to return at the same rate as their upscale competitor.
Dillards’ visitor base is less affluent but represents a younger and growing demographic compared to Neiman Marcus' visitor base. All in, the Dillards store seems to be growing slightly, while Neiman Marcus is contracting slightly.
Nike and Columbia Sportswear, Mall of America, Bloomington, MN
Located within the Minneapolis–Saint Paul metropolitan area, The Mall of America is the largest mall in the United States, the largest in the Western Hemisphere, and the eleventh largest shopping mall in the world, covering a gross area of more than 5,600,000 sq ft. In the lower level of the eastern parking ramp is Mall of America station, the busiest transit hub in Minnesota and a tremendous source of foot traffic for mall tenants.
The large Columbia store is located in unit #412, in the West market area, due west of the Mall of America Transit Station, which sits on along the eastern limits of the mall. The Nike store is located in the northwest section of the mall, a bit longer of a walk from the transit station, and it’s also large at about 17,000 sq. ft. The Nike store is closer to parking than the Columbia store.
Quick facts: The Columbia Sportswear location averages about 1,600 visits per day. The average visitor stays about 48 minutes. About 1 in 25 people who come within 500 feet of the Columbia store will visit it, and 1 in 5 visitors on average will return to the store the next quarter.
The typical visitor to this store is from Block Group 2, Census Tract 253.01, Hennepin County, Minnesota, a smallish, predominantly white but mixed-race community to the south of the Mall of America. They skew younger (40% are aged 18 to 40), they have completed high school and have some college education, and they earn roughly $50,000 to $75,000 per year. They are most likely to visit on weekends between the early afternoon and early evening.
This Columbia Sportswear stores’ return rate was dropping precipitously in Q1 of 2023, but previous years' trends show this is likely to rebound Q2 through Q4. Total foot traffic here is flat to a little higher year over year, while capture rate in the 500 foot range was identical in Q1 2022 and Q1 2023.
Quick facts: The Nike location averages about 1,100 visits per day. The average visitor stays about 43 minutes. About 1 in 33 people who come within 500 feet of the Columbia store will visit it, and 1 in 4 visitors on average will return to the store the next quarter.
The typical visitor to this store is from Block Group 2, Census Tract 208.01, Hennepin County, Minnesota, a smallish, mixed race community to the northwest of the mall. The average visitor to the store skews a little younger than the average visitor to rival Columbia’s location, but it is of similar education level and economic means. They also favor visits on weekends, from about noon to 4 p.m.
At 16.3% in Q1 2023, this Nike location’s return rate was identical to 2022. Previous years' data indicate this will increase through Q2 and Q3, topping at perhaps 40% going into Q4. Total foot traffic here is up almost 15% year over year and shows signs of growing, with March 2023 visitation to the store even surpassing 2022’s annual high in December.
From a demographics standpoint, the two brands’ visitors are quite similar. Columbia Sportswear draws about 500 more visitors per day but that is changing. Nike is gaining ground in 2023 and boasts a broader catchment area and a stronger return rate, indicating that the location’s business is on the rise.
For the moment, Columbia Sportswear remains the bigger draw at Mall of America, but shifting data points around age, income level and points of origin seem to indicate that this will change in the coming quarters and years.
Abercrombie Kids and Kidz, The Florida Mall, Orlando, FL
The Florida Mall is a super regional enclosed shopping mall located south of Orlando, Florida. With 1,699,571 sq ft of gross leasable area and 294 retailers, it is one of the largest single-story malls in the United States and the largest shopping mall in Central Florida. The Florida Mall features a 105,000 sq. ft. dining pavilion containing 25 restaurants. The Florida Mall is a draw for entertainment and middle tier mall retailers, as the nearby Mall at Millenia services most upscale shopping in the area.
The Abercrombie Kids store is in the eastern portion of the Florida Mall and approximate to plenty of parking. The Kidz location is in the north-central part of the mall, tucked among some fast casual food locations. Each is about the same distance walk from the attached Florida Hotel and Conference Center, and somewhat removed from department store anchors, including Dillards and J.C. Penney.
Quick facts: The Abercrombie Kids store gets about 560 visitors per day on average. The typical visitor stays about 55 minutes. About 1 in 25 people who come within 500 feet of the store will visit it, and 1 in every 3 or so visitors will return to the store again the next quarter.
The typical visitor to this store is from Block Group 2, Census Tract 175.01, Orange County, which is Apopka, Florida. Apopka is a small but densely populated community to the northwest of the Florida Mall. Abercrombie Kids’ typical visitor is in their 20s to 40s, they probably have not completed college, and earn less than $75,000 per year. They are most likely to visit on Saturdays and Sundays between 1 p.m. and 5 p.m.
Total visitation to the Abercrombie Kids store was up about 45% from 2022 to 2023, while return rate (the frequency at which people made a return visit in the next quarter) while return rate peaked at 45% in Q2 of 2022, dropping to 18.7% in Q1 of 2023, after the seasonal holidays. Capture rate within 500 ft. of the store is a little higher entering 2023 than the overall 2022 average.
Quick facts: The Kidz store averages about 820 visits per day. The average visitor stays about 34 minutes. About 1 in 20 people who come within 500 feet of the Kidz store will visit it, and 30% of visitors on average will return to the store the next quarter.
The typical visitor to this store is from Block Group 1, Census Tract 142, Orange County, Florida, a predominantly Hispanic community to the south of the Florida Mall. The average visitor to the store is between 18 and 40 years old, does not have a college degree, and earns less than $75,000 per year. They favor Saturday visits, between noon and 6 p.m.
This location’s return rate is down nearly 50% in Q1 2023 compared to Q1 2022. That said, total foot traffic here is up almost 50% year over year and shows signs of growing, with March 2023 visitation to the store crawling within 15% of the recent December 2022 high. In short, new customers are coming, but old customers don’t seem to be returning.
Typical customer profiles are similar in terms of education and average median income but skew quite differently in terms of racial composition. Both stores have growing foot traffic but neither is doing a good job of getting customers to return, perhaps indicating a shift in consumer spending relative to middle and higher tier children’s apparel options.
In the Department Store sector, value competitor Dillards is outdrawing Neiman Marcus nearly 4:1 in our head-to-head comparison. The demography of customers is also very different; one is growing and the other declining.
In the Sportswear sector, a large store space in a prime location still doesn’t seem like it will be enough for Columbia to maintain their lead over Nike in the Mall of America. A younger visitor is willing to travel farther and more often to the more urban brand; it’s tough to see that changing.
Finally, in the Children’s sector, it seems parents at multiple tiers are shifting their brand loyalties and resultant spending patterns in search of greater value as we enter 2023. Kids drive an enormous amount of spending; this indicator should not be ignored.