Shopping centers in America were first introduced in the early 1900s and developed with consumer interest in mind – a place for people to get their shopping needs met in one designated location. On October 8, 1956, the first shopping mall opened for business, moving the shopping experience away from shopping centers and strip malls and toward malls.
Consumers flocked to malls more frequently as the years passed, steadily increasing the overall percentage of retail spending occurring in malls. A Brief History of Malls reports the unparalleled advancement of the mall industry on consumer spending, “by 1960, there were 4,500 malls accounting for 14% of retail sales. By 1975, there were 16,400 shopping centers accounting for 33% of retail sales. In 1987, there were 30,000 malls accounting for 50% of all retail dollars spent.”
The 1980s brought the height of success for the mall industry with retail spending at malls dominating the overall retail spending expenditure in America. Malls were defined as the central location of how and where to shop. Malls also served as the core driver of retail spending, positively impacting the economic development of businesses in malls and the spending expenditures of their host city.
“In many neighborhoods, the mall is an economic engine, hiring hundreds, if not thousands of workers and providing a significant amount of dollars to the local tax base,” states CNBC. “When malls die, local tax revenue is cut, unemployment rises, ties to tourism decrease and businesses are forced to close their doors.” The influence malls have on the local economy and workforce is hard to ignore. However, not all malls are closing for good; many malls in America are striving to succeed by shaping the mall experience with new service offerings.
When malls don’t evolve to meet consumer needs, they start to die. Despite the once-insurmountable success of the mall industry, the 21st century and rise of technology brought a strong shift of changes in consumer behavior, severely impacting the success of how existing malls operated. Consumers with access to online shopping can find the products they need fast and easily, that can be shipped and delivered within less than a week. Nowadays, consumers need malls to provide additional value offerings that they cannot easily get online.
Influences such as the rise of Amazon, online shopping, the Great Recession, and the COVID-19 pandemic have all impacted in-person retail spending. The Economic History of the Shopping Mall – and its Future, stated “Moody’s Analytics reported that the vacancy rate for regional malls in the United States spiked to a record 11.4 percent in the first quarter of 2021, up from 10.5 percent the previous quarter. This was the largest increase on record, surpassing the 0.8 percentage-point increase in the first quarter of 2009 during the Great Recession.” These are the results from malls that have not kept pace with current consumer demand.
The New York Times reported that there are 1,150 enclosed malls in the United States. While this might not be an issue for consumers, as alternative ways of spending are in high demand and easy to find, a city with a closing mall is detrimental for many different communities that depend on them. CNBC reported the significance of malls on the local tax base, stating how malls contribute to approximately $400 billion in local tax revenue annually. In short, thriving malls support their communities with tax revenue that is used for city services for the community, infrastructure, roads, public safety and other services vital to the community.
Successful malls re-developed their land to provide new incentives that encourage consumers to ditch online shopping for a shopping and entertainment experience that can only be found in-person. Malls that adapt to the changing retail landscape develop additional offerings, a combination of on-site retail stores and mixed-use developments, including a mix of office, residential, and commercial sites, to their mall development.
Trevor Pollard, Senior Vice President, Design and Innovation at Westfield, explained the trend of mixed-use mall development as reported by Retail Spaces. “It’s the core of business in every other country,” Pollard said. “You have housing, hotel, offices, retail. It’s all mixed. In the U.S., we are segregated, you have a shopping center and it’s surrounded by parking lots. How do you create a real destination?” Malls that are evolving are addressing this issue.
Malls with a mix of greenery, entertainment venues, restaurants, office spaces, retail, housing opportunities, arts & entertainment, and many other mixed-use opportunities cater to defining the mall as a destination for entertainment and living, and not just a place to shop.
The Irvine Spectrum District, located in Irvine, CA, attracts 17 million visitors annually with its retail shops, entertainment venues, restaurants, office spaces, and housing developments. The Spectrum is an example of a thriving mall that is adapting to consumer behavior and purchasing trends that are in high demand by consumers – and the businesses, consumers, and city have all reaped the benefits.
Irvine Standard defines The Spectrum as “upscale apartments and new homes connected to jobs, dining, entertainment and shopping with a vibrant mix of convenience, quality and fun.” They even stray away from referring to the Spectrum as a mall, instead coining the term “lifestyle center” as it offers more than just shopping, a continued trend found in other thriving malls. Malls that follow suit can expect the same results.
Shopping malls can succeed when they evolve. More developers are looking at the trends of thriving mixed-use malls as the future of the mall experience. Malls are not only important for the local economy and the local city, but they also boost tourism, prioritize local businesses, open opportunities for businesses outside of the retail sector, and offer the community additional outlets of entertainment.
Mixed-use mall developments are the new anchor factor leading malls (and their cities) to success. They are how you create a sense of place and a real destination.