Dive Brief:
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The late-pandemic recovery observed at malls this year is getting interrupted, mostly likely by high gas prices and other inflation-related changes in consumer behavior, according to research from foot traffic analytics company Placer.ai. In June, visits to outlet malls fell 6.7% year over year; to open-air lifestyle centers they rose 0.5% and to indoor malls they rose 1.5%.
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That’s in sharp contrast to earlier this year, when malls’ resurgence was greater. In April, for example, outlet mall visits rose 1.3%, lifestyle center visits rose 11.3% and indoor mall visits rose 19.1%, according to an email from Placer.ai.
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Across the board, malls have yet to recapture their pre-pandemic strength. Compared to June 2019, visits fell 14.3% at outlet malls, 9.4% at lifestyle centers, and 9.5% at indoor malls, Placer found. In April compared to 2019, visits were down just 5.1% at outlet malls, 4.8% at lifestyle centers, and 1.8% at indoor malls.
Dive Insight:
The mall’s dependence on the automobile — a mid-20th century symbol of freedom and suburban utopia — is a source of trouble when fuel prices spike.
The footfall decline at outlet malls in particular is illustrative of how discouraging high gas prices are when it comes to making a trip, according to the report from Placer.ai Marketing VP Ethan Chernofsky.
“While outlet malls would normally thrive when consumers are looking to save money as a result of inflation, the distance needed to travel to many outlet malls is limiting performance,” Chernofsky said.
The impact on purchasing is less clear. It could be that shoppers are buying more per visit in order to maximize each trip and save on gas, according to Chernofsky. But retail sales figures and other analysis indicates that consumers are pulling back on discretionary spending as food and gas take more from their pockets. And as Placer noted in an email, visits to all types of malls have been on a steady decline since April when prices shot up.
A decline in traffic to malls, of course, means a decline in traffic to their retail tenants. Wells Fargo analysts led by Ike Boruchow similarly noted marked traffic declines since April, with the largest year-over-year declines so far in June. Over the last five weeks, footfall to retailers is down an average 10% year over year, compared to “flattish” in the first quarter.
“Specifically, when looking across the space, we find a notable increase in promotional intensity primarily within the mid-tier apparel names—namely those that are mall-based and fashion-driven,” Boruchow said in a July 6 client note.
