Once a popular go-to for holiday and weekend shopping as well as casual hangouts, malls have continued to see a decline in foot traffic and are now often considered a thing of the past. In recent years, an estimated 1,170 shopping malls shut down between 2017 and 2022. Research also shows that by 2028, fewer than 900 malls will remain open, and roughly 87% of them could shut down over the next decade. Based on these statistics, it’s clear that malls aren’t as in demand as they once were.
Shopping malls continue to experience a difficult time competing against outside forces beyond their control, such as the rise of ecommerce giants like Amazon and Walmart, which have expansive marketplaces with thousands of sellers, a fluctuating economy that took a drastic hit due to the COVID-19 pandemic, and shifting consumer interests and demands that have become increasingly influenced by what’s trending on social media.
Overall, malls have become left behind due to these shifts, with little hope of returning to their glory days. As society continues down a path that puts online consumption at the forefront, shopping malls will continue to experience difficulty and struggle to recover. Keep reading below to learn more about the driving forces behind these shutdowns.
The Rise of Ecommerce and Social Media
What started as a bookstore in 1994 and has now turned into the largest online seller in the world, Amazon shows no signs of slowing down its reign over the ecommerce space anytime soon. The ecommerce giant is home to hundreds of millions of products sold by household brands, independent business owners, and third-party resellers. It’s estimated that Amazon sells about 12 million or more products every day. That figure only increases during its exclusive Prime Day sales event and other major shopping holidays, including Black Friday and Cyber Monday.
In addition to selling a wide variety of goods in categories such as fashion, beauty, home goods, and electronics, Amazon continues to act as a major source of convenience for shoppers. In years past, consumers primarily had to rely on shopping malls to get what they wanted, which can often become overwhelming, costly, and time-consuming. And there’s no guarantee what they want is available in-store either. Thanks to sites like Amazon, shoppers can now save time and money by ordering the products they want online without stepping foot inside a mall.
Due to this convenience, as well as other perks that platforms like Amazon offer, such as free shipping for Prime Members and Lightning Deals, shoppers are incentivized to continue using these sites to get consistent shopper benefits. Even major retailers like Walmart and Target, who have physical locations, are taking up market share from malls because they too have a large online presence, since a majority of their in-store products can be purchased online, while also offering exclusive deals and perks.
Shopping malls have also had a difficult time competing with social media, partly because of apps like Instagram and TikTok. Both platforms have launched their own shopping segments within the last few years, which allows users to shop for a variety of products on these platforms and have it shipped directly to them. With this feature, consumers now have the convenience of instantly placing orders right from their phones without having to go to a mall to shop.
Major Department Store Closures
Similarly to shopping malls, department stores have also experienced a significant decline. These closures have also affected the amount of foot traffic malls used to get because these retailers are usually the largest ones that are situated within or near shopping malls.
Earlier this year, Macy’s confirmed that they’re closing 66 locations throughout the United States this year as part of their “Bold New Chapter Strategy,” which aims to bring back the company’s “sustainable, profitable sales growth” it once had. JC Penney also announced that it’s closing an additional number of stores this year, which comes after their initial closure of 200 locations since filing for bankruptcy back in 2020. Kohl’s is another major retailer that has also experienced a decline, closing 27 locations across the country this past April.
These closures have affected malls that once relied on these department stores to bring in a large number of customers. Without them, malls have had a difficult time making up for this lack of in-store traffic unless other department stores were to step in and replace them. And it’s unlikely this will happen due to their already declining profits and demand.
The Impact of the Pandemic
The COVID-19 pandemic has had a lasting impact on businesses and their operations, with some being unable to recover. Due to city and statewide lockdowns, many in-person businesses lost out on major profits that would’ve otherwise kept them up and running. Businesses reportedly experienced a 40% drop in revenue within the first two months of the National COVID Emergency, and close to 100,000 businesses that closed down temporarily ended up going out of business.
Malls experienced a similar fate and had to grapple with turning a profit, since the stores that were located in these establishments were also forced to close. With shopping malls and department stores already struggling beforehand, the pandemic only accelerated their decline.
For health and safety reasons during this period, consumers also heavily relied on online shopping to get the products they needed without leaving their homes. And thanks to its convenience, many discovered the benefits of fully shopping online, and continue to rely on it as a means to get what they want.
Too Many Options
With millions of brands available to buy from online, malls have had a hard time competing. Due to big-box retailers like Amazon, Walmart, and Target, as well as social media shops, and the rise of fast-fashion and direct-to-consumer brands that sell their products online, consumers are constantly being bombarded with thousands of options to choose from. They no longer have to physically go to a store like H&M or Zara, since these brands sell their inventory online, and shoppers can easily look for alternatives to the products they want when browsing the web.
Having endless options contributes to consumers not needing to be loyal to a single store, brand, or mall, since there’s already so much out there to choose from, and they can save time and money in the process. When shopping online instead of in-store, consumers can also easily compare prices across brands, something that would take much longer to do by going from store to store in a mall.
Experiences Over Products
In recent years, consumers have preferred spending money on experiences rather than products. The COVID-19 pandemic also affected how people want to spend their money moving forward, with many discovering that they would rather put it towards things like traveling, entertainment, or health and wellness, which are often seen as more valuable and meaningful. According to a recent study done by Mastercard, 59% of people prefer putting their money towards experiences instead of shopping. In this same study, 46% percent said they enjoyed sharing these experiences with their loved ones.
With this shift in consumer preferences, shopping malls have struggled to maintain steady footing since they are primarily a go-to source for shopping and consumption. Because of this, malls have had a tough time remaining a priority for consumers who would rather spend their money on things that bring them the most joy.
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