Wednesday, February 21, 2024
HomeAi in GamingThe Twin Cities has too many malls. There's one key to survival.

The Twin Cities has too many malls. There’s one key to survival.

Shelby Henderson took a twirl around the roller skating rink, stopped to take a photo in a life-sized doll box and grabbed a Barbie-inspired cocktail. It was a different night out at the mall than what she was used to.

“I loved it. The atmosphere. It was unique,” she said as she enjoyed the Mall of America’s new Malibu Barbie Cafe.

The modern-day mall, once home to the teenage “mall rats” of the ’80s and ’90s, has evolved into a playground for high-end shoppers, adults looking for a night on the town and families on the hunt for a day of kid-friendly activities.

At least the malls that are successful have.

While shopping habits have been changing for more than a decade, the pandemic, like it did for other aspects of retail, sped up the transformation.

As a result, the Twin Cities and metro areas across the U.S. have too many malls. Those that are not changing — or don’t have the money to — will fail, industry experts said.

In September, none of the Twin Cities’ top malls had better foot traffic than they did in 2019, according to research firm Placer.ai. But while the Mall of America, Rosedale, Ridgedale and Eden Prairie were down less than 10%, Maplewood Mall lost nearly 23% and Burnsville Center 55%.

“People aren’t shopping in malls as much anymore unless it’s one of the good ones,” said Lee Peterson, an executive vice president at Ohio-based WD Partners, which offers consulting and development services for retailers such as Walmart.

Only the top-tier malls are snagging new tenants, and the trend toward high-end retail and entertainment is evident in the recent renovations and leasing strategies at Southdale Center, the nation’s first fully enclosed mall; the Mall of America, the country’s biggest mall; and Rosedale Center.

Malls that have invested in experiences and upscale vendors will likely see the most shoppers this holiday season.

Tenant occupancy rates at top-tier malls have bounced back more — at about 95% in 2022, compared with about 89% at other malls, according to a report released over the summer by Coresight Research. The successful centers feature luxury retailers and successful online brands such as men’s apparel company Untuckit and eyeglasses company Warby Parker that are trying to expand their brick-and-mortar presence.

Research released in September from Placer.ai also indicates top-tier U.S. malls attract visitors with median household incomes that are higher than the nationwide median income.

“The key for any shopping center to succeed is to drive visits, but there is a vast difference between driving visits of any kind to ensuring that the right audience is coming,” Ethan Chernofsky, Placer.ai’s senior vice president of marketing, said in an email. “Malls, and especially top-performing malls, have been making changes to their tenant mix and evolving the overall experience in these locations to better attract and extend visits from high-earning audiences.”

In the end, there will be fewer malls across the country, like what happened in Columbus, Ohio, where more than half of the area’s centers have closed since the 1990s, Peterson said. The only mall he would consider to be doing well, the Easton Town Center, has stores such as Gucci and Louis Vuitton, a Legoland Discovery Center and a Tesla showroom.

“They focused on the high-end consumer on purpose because the writing is on the wall,” Peterson said.

Quite frankly, he said, there are more convenient ways for people to shop.

Even in the 2010s, there was already a shift for the progressive malls to go beyond just being a place to buy stuff to being a social hub, said John D’Angelo, a managing director based in Deloitte’s San Francisco office. That need accelerated after the pandemic.

“We’ve all got this newfound sense of community and gathering,” D’Angelo said. “People are fundamentally social so being out, being part of a community, is certainly something that the mall as a destination fulfills.”

Many of the malls D’Angelo works with that are well located and have been renovated are already seeing higher occupancy numbers and rental rates than they did before the pandemic.

At Eden Prairie Center, a Scheels opened in 2020. Even at Burnsville Center, the mall’s new owners want to incorporate high-end elements like what’s found at international malls, and part of the group plans to open an Asian food hall at the mall as part of a way to reinvigorate it.

At Southdale Center in Edina, owners started making changes several years ago as it pushed to stay competitive. Apartments and a hotel were added near the center, a multi-level Restoration Hardware was built in an outlot, and a Life Time fitness complex was attached to the center.

Owner Simon Property Group announced this summer it would redo the mall’s facade and upgrade its interior as it adds more “luxury and aspirational brands.” Next year, Kowalski’s Markets and mini golf destination Puttshack are expected to open in the former Herberger’s.

“Luxury is more than a retail niche,” said Judy Tullius, general manager of Southdale Center, in an email. “It’s a growing part of our business that’s here to stay.”

The pandemic put on hold a larger $200 million redevelopment of Rosedale Center in Roseville, which is supposed to include apartments, hotels and offices.

But Rosedale has added vendors that other malls do not have, including Smack Shack; Black Coffee and Waffle Bar; and steakhouse Baldamar. Next year, Dick’s Sporting Goods is scheduled to open where Herberger’s once stood.

“Twenty years ago, it was all apparel. That’s all you saw,” said Rosedale Center General Manager Lisa Crain. “And now you see a much different merchandise mix that appeals to many different groups.”

The Mall of America has continued to add new concepts from a new Toys ‘R’ Us to bakeries such as Nothing Bundt Cakes, the Barbie cafe and entertainment options including laser tag venue Tactical Urban Combat and games destination the Fair on 4.

“I definitely noticed a huge change 10 years ago when we renovated [the Mall of America] because it really changed the environment where people were able to come and have that shopping, dining, entertainment experience,” said Jill Renslow, executive vice president of business development and marketing at the Mall of America.

Henderson, 29, of Minneapolis, said going to the mall — especially one as big as the Mall of America — can be a hassle compared with shopping online so having experiential places like the Malibu Barbie Cafe gives her a bigger incentive to make the trip.

“The fact that there is an attraction like that, it kind of makes it more fun,” said Henderson, who received an invitation to visit the cafe as a local social media content creator. “Like ‘OK, maybe we can spend a Saturday. Let’s actually go shopping in person.'”

New stores

Twin Cities malls have opened new stores as the holidays approach. Here’s a rundown on what’s new at some of them.

Mall of America: Toys ‘R’ Us, Malibu Barbie Cafe, Just Cozy, Kappa Toys, Slice Brothers Pizza, Nautical Bowls, Wink World, Wilson Sporting Goods

Southdale Center: Just Cozy, Niko Niko Boba, Legacy Toys

Rosedale Center: The Game Show Studio, Eyebobs, Hollister, Windsor

Ridgedale Center: Legacy Toys (new location), Jaxen Grey, Warby Parker, Janie & Jack, Tempur-Pedic, The Social Kitchen & Libations

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Leah Sirama
Leah Sirama
Leah Sirama, a lifelong enthusiast of Artificial Intelligence, has been exploring technology and the digital realm since childhood. Known for his creative thinking, he's dedicated to improving AI experiences for all, making him a respected figure in the field. His passion, curiosity, and creativity drive advancements in the AI world.
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