The average consumer has no idea how much goes into maintaining the shopping centers they visit on a weekly basis, let alone their annual profits and losses. However, in order to understand retail more generally, it’s important to look at the mall level first and foremost. This is where consumers go to shop, after all! What makes malls profitable in the first place? What tactics do they use to stay profitable? And what happens when things go wrong? Here’s everything you need to know about shopping malls and their financial workings from top to bottom.
The History of Shopping Malls
From Frank Winfield Woolworth’s innovation in 1879, to today’s sprawling, often-overwhelming retail spaces, shopping malls have come a long way. The American inventor created his Woolworth’s Great Five Cent Store with affordable goods meant to be purchased on credit. While Wal-Mart made Woolworth’s business model obsolete, its legacy lives on. For much of America, a trip to Walmart or Target is still considered part of a routine visit to the mall – but only because many shoppers also take time to browse dozens of other stores while they’re there.
How Do Shopping Malls Make Money?
Shopping malls may be synonymous with commerce, but it’s likely that when you think of one, you don’t associate it with profit. The more fun and exciting image of a mall as a place to hang out and meet up with friends probably far outweighs any mention of a business-minded brain looking for a new revenue stream.
The Future of Shopping Malls
Retail sales are expected to increase 2.5 percent compared to 2016 which is faster than inflation and slightly better than previous years. With more storefronts becoming vacant—and online shopping continuing to dominate—retailers face new challenges when it comes to their bottom line and staying competitive. Here’s a quick look at some of trends influencing retail profitability in 2017…
Why Should I Invest in a Mall?
Many people believe that malls are obsolete and will eventually disappear, but according to data from CoStar Group, nearly 400 million consumers shopped in a mall during 2017. In other words, malls are still doing just fine — not only for themselves but also for individual investors who have bought into retail real estate over time. Even so, it’s crucial for small business owners to understand why malls are still relevant — and what you can do with that knowledge to boost your own bottom line. Here’s what you need to know about why malls remain profitable enterprises.
What Are the Benefits of Investing in a Mall?
As malls continue to experience a decline in foot traffic, many are cutting back on their hours and investing in new technologies to attract customers. However, even in these trying times, there’s no denying that they provide value to investors, and have been a go-to real estate investment strategy for decades. In fact, owning a piece of an American shopping center can be quite lucrative—if you do it right. So why do investors choose malls as part of their portfolios?