by Exactly one year ago, I wrote of the seeming revivals of malls, train heists and piracy. We’ll call this column Throwback Tuesday, because since mid-February 2024, yet more evidence has emerged that, indeed, the mall is making something of a comeback and that, more generally, some storied retailers are investing again in bricks and mortar. I don’t really have an update on train robberies or the Yemeni pirates.
Despite fundamentals cited by some big-name retail chains when filing for bankruptcy, including high interest rates, sluggish consumer demand and worse-than-sluggish housing starts, malls and shopping centers actually had a pretty good year in 2024. Respectively, these retail formats in the U.S. saw increases in foot traffic of 1.5% and 1.7%, respectively, compared to 2023, according to the Mall Index data from Placer.ai.
The Mall Index is an example of opportunistic AI integration in utilizing “tens of millions of devices” and machine learning to estimate foot traffic in malls, shopping centers and outlet malls throughout the country.
Income levels of shoppers predicted the increases. Open-air shopping centers attract the most affluent consumers less likely impacted by inflation. On the flip, outlet malls, which saw traffic dip by about half a percent, typically attract those with lower household income levels, according to Placer.ai.
A deeper dive into the numbers reveal a few interesting caveats. First, weekday traffic during the holidays was way up at indoor and outlet malls during the season. These surges were, respectively, 63% for indoor and 66% for outdoor compared to the non-holiday season daily averages. And shoppers stayed longer during the holidays compared to the rest of the year.
These numbers come as good news for mall denizens JCPenney and the SPARC Group, which last month merged to form Catalyst Brands. SPARC Group owns bankrupted mall staples such as Aéropostale, Brooks Brothers, Eddie Bauer, Forever 21, Lucky Brand and Nautica. The deal is being backed by Simon Property Group, the country’s largest owner of shopping centers. Also backing the new venture are Brookfield Asset Management, SHEIN and the company that proudly makes nothing, Authentic Brands Group.
Catalyst Bands, which weds several high-profile companies profoundly interested in the vitality of the American mall, claims revenues of more than $9 billion from about 1,800 store locations.
You might remember that JCPenney filed for bankruptcy just as Covid was gripping the nation, in May 2020. Simon Property and Brookfield Asset Management, which owns several malls, acquired JCPenney out of bankruptcy in what was a $1.8 million deal.
Down Mexico way
Meanwhile in Mexico, “brick-and-mortar stores have proven resilient,” according to reporting from Bloomberg, in part because the country’s largest private retailer, giant discount chain Coppel, is pouring money into new stores. Grupo Coppel has earmarked nearly $725 million for 100 new stores, 66 store renovations and upgrades to its six distribution centers this calendar year.
The new stores would push the family-owned chain’s store count to just under 2,000 in more than 600 cities and towns throughout the country. Offering credit at interest rates as high as 90%, Coppel’s primary demographic is low-income. But the company is aiming for the middle class, according to Agustin Coppel Lukin, chairman and CEO.
Coppel sells furniture, appliances, electronics and clothing. Like its major competitor, Grupo Elektra, Coppel has a banking arm, BanCoppel.
Online shopping exploded across Latin America during the pandemic, yet brick-and-mortar bounced back because many Mexicans refuse to fully embrace e-commerce.
“The retail store accompanied by credit is a very virtuous lever,” Claudio Pizarro, a professor at the University of Chile, told Bloomberg. “The Mexican client is rather conservative, very distrustful” of not having a physical place to go.
Motown mojo
As Home News Now reported earlier this month, Detroit’s Gardner White will launch the GW Home brand concept in the downtown area this spring. By calling it a brand concept, the 14-store chain is hinting of more locations to come, but it isn’t saying how many.
The new store will be Gardner White’s first in downtown Detroit since the early 1980s, a 15,000-square-foot store not far from the chain’s original store location that opened in 1912 on Fort Street.
“Having their new storefront on Woodward Avenue across from Hudson’s Detroit is a big part of reestablishing a vibrant downtown shopping district,” said Detroit Mayor Mike Duggan.
Lastly, a vote of confidence in bricks and mortar, including malls, from that long-time champion of face-to-face, even in-your-face retailing: Ikea. The Swedish giant not surprisingly chose the Mall of Scandinavia in Sweden’s capital, Stockholm, with which to launch a new urban store format.
The Mall of Scandinavia sees 13 million shoppers annually, making it the most visited shopping center in the country. At 27,000 square feet, the new store is part of the vertically integrated company’s strategy of smaller urban retail spaces that are more convenient for customers than its superstores.
“By embracing smaller, urban store formats, we can bring the Ikea experience closer to more people,” said Tolga Öncu, retail manager at Ingka Group, Ikea’s largest retailer with locations in 31 markets. Ingka Group accounts for 90% of Ikea’s retail sales.
In October 2024, Inter Ikea Group reported a 5.3% dip in retail sales for fiscal 2024, finishing at $49.3 billion.
Irish meatballs
Convenience is Ikea’s focus also in Ireland, where additional Tesco supermarkets are getting “click-and-collect sites” for Ikea purchases. After ordering online, Ikea customers can use the designated Tesco locations to pick up their Ikea orders of more than 200 euros with no additional delivery fee.
Inaugurating in May 2023 in Ireland, the “click-and-collect” option is rolling out to seven more Tesco stores, giving Ikea 28 Tesco store locations in all. To use the service, customers go through the standard checkout process online, then opt for their local Tesco as their collection point. When they arrive at a set date and time, an Ikea delivery driver is there with their purchase.
“We’re incredibly proud of our partnership with Tesco Ireland,” said Jayne Owen-Gauld, Ikea’s market manager for Ireland. “The positive reception has been fantastic, resulting in us expanding the service to seven more communities.”
If you’re able to visit a Tesco, I recommend the lemon pound cake, which would go great with an Orange Julius smoothie. To quote Robin Sparkles from 2006, “Everybody loves the mall! Everybody come and play. Throw every last care away (I love my hoop earrings!). Let’s go to the mall today.
