There are few more enduring symbols of American consumerism – or American culture in general – than the shopping mall. The first modern, fully enclosed mall, the Southdale Shopping Center, was built in Edina, Minnesota – designed by an Austrian immigrant named Victor Gruen, who hoped to combat what he saw as the asocial nature of American suburbia and the haphazard quality of the country’s city planning. As Malcolm Gladwell wrote in a 2004 New Yorker article, Gruen imagined the mall as the center of well-planned and comradely city: “The Minneapolis downtown you would get if you started over and corrected all the mistakes that were made the first time around.”
A few miles away from Endina sits the largest mall in the country, The Mall of America, which will be celebrating its 20th birthday on Saturday, and represents the apotheosis of Gruen’s vision. The 520-plus-store mall features an amusement park in its center, and could fit 7 Yankee Stadiums or 32 Boeing 747s inside, if you were so inclined to try. And for this latest milestone, Buddy Valastro, star of the TLC show “Cake Boss,” will bake an 8 foot by 4 foot birthday cake modeled after the mall’s interior. But the mall’s operators, Triple Five Worldwide, will be celebrating with something more lucrative than a birthday cake — a $200 million expansion which will add a second hotel to the complex, even more shops, restaurants and additional parking underground.
But elsewhere in the country, many malls have suffered under the weight of the recession and ever-increasing competition from ecommerce outfits. When the economy first began to buckle in 2007, the media was awash with reports that the American shopping mall was in danger of a slow extinction. In late 2007, the Economist ran a 2,500 word story on the “rise and fall of shopping malls.” The article warned that overbuilding threatened the industry and that insufficient demand for these shopping centers meant that they would begin to cannibalize each other. As the recession grew more severe and trenchant, headlines like “Recession Turns Malls into Ghost Towns” appeared in the Wall Street Journal detailing the epidemic of abandoned and desolate “dead malls” blighting suburbs across the country.
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Indeed, vacancy rates for regional malls remain high — around 8.9%, according to the most recent report from Reis, a real estate research firm. Ryan Severino, an economist at Reis, says that mall operators are more used to vacancy rates of 5% or 6%, and that new mall construction is almost unheard of these days. The City Creek Center in Salt Lake City, which opened in March, was the first new mall constructed in the country in more than six years.
But as places like Mall of America show, high vacancy rates and lack of new construction don’t tell the whole story. While some are portraying them as a quaint relic of the 20th century, malls actually accomplish much of what is thought to be necessary for traditional brick and mortar retailers to fend off competition from price-slashing ecommerce outfits in the 21st. Malls have always been about more than the efficient delivery of goods. They’re about shopping as an experience. They’re about spending a Saturday out of the house, with friends and family, perusing goods, eating sweets, and people watching.
Helene Kradowsky, who’s 2009 documentary, Malls R Us, examined the cultural significance of malls in America and across the globe, doubts that malls will suffer the same fate as once-thriving big-box chains like Borders or Best Buy for this very reason. She argues that for the past thirty or even fifty years, malls provided the only communal space that many Americans had access to. And even if young people are spending more and more of their time interacting on social media, there still isn’t anything that can replace the physical, communal space that malls provide. “There’s been a lot of discussion about how stores are being hurt by online shopping,” Kradowsky says, “but I really question whether young people are forsaking physically getting together. There’s nothing like being in the same place with your friends and meeting new people.”
And Kradowsky’s instincts are backed up by the numbers. The International Council of Shopping Centers, an industry trade group, periodically releases demographic statistics on attendance and spending at malls. In both 2004 and 2006, the group found that young people ages 14 to 17 still spend more time at malls than any other age group. While it is true that young people are spending less money at malls than they once were, there’s reason to believe that this is an effect of the recession rather than one driven by the culture evolving past shopping malls.
Severino says that more than anything, the changing economic profile of America has changed the mall business. Malls that cater to affluent customers with stores like Bloomingdales or Nordstrom’s are actually doing quite well. It is malls that service middle or low income communities that are struggling — not because consumers don’t want to shop there, but because they can’t afford to. “There’s really been a hollowing out of retail in the middle because in this recession, upscale consumers really haven’t had to cut back,” he says. However, “the people in the middle have been trading down. That’s why you’ve seen retailers like Gap and Kohl’s struggle because they’ve lost the middle of the market which has been trading down, while affluent customers are sticking with their usual brands.”
Given this dynamic, its no surprise that newspapers can be filled with headlines about dead malls that are half empty while mega malls like the Mall of America are embarking on expensive expansions. While certain stores within malls will struggle to compete with ecommerce, the mall itself is actually well positioned to survive and remain a large part of the future of retail. America is and has always been a commercial culture, for better or for worse. Shopping is a cultural activity for us. It’s how we come together, interact and socialize. The goal for brick and mortar retail is to figure out how to capture that desire for interaction and socializing and turn it into sales.