Major retailers like Macy’s, Gap Inc., Abercrombie, and Williams-Sonoma, Inc. all have one thing in common, each company is escaping regional malls and opting for upscale stores or focusing on online portals. The shift in the retailers’ strategy is based on the shopping habits of consumers.
What is happening is that companies no longer need a store in a regional mall especially with online as an option for shoppers. Instead, retailers are opting to place stores in an “A” mall, or a high-end mall. Consequently, properties that are “B” or “C” properties are losing tenants and shoppers to “A” malls, which have sales of $500 per square foot or more.
An example of this new migration is Restoration Hardware abandoning three Denver-area stores across several malls. Now, the furniture chain is located in a four-story, 70,000 square foot gallery with a rooftop garden in an upscale shopping center that also houses high-end retailers like Burberry and Brooks Brothers.
According to the Wall Street Journal, owners cite that an excess of retail real estate and “demographic changes [have] redirected population and income growth away from malls built years ago" are responsible for the decline.
Shoppers are more likely to bypass smaller, local malls that tend to carry basic items that can be easily purchased online and are choosing “A” malls for amenities such as the events, gyms and upscale restaurants.