Despite doomsday predictions for the department store sector, things are far from gloom and doom. The category is expected to grow by 22% globally in the next five years, and 90% of retail sales still take place in a physical store. EVP of General Growth Partners Scott Morey explained at L2’s ‘Winners and Losers in a Digital Age’ clinic why (select) malls continue to be winners.
Morey said curation, trust, and location continue to be factors that influence physical retail’s success or failure. He said General Growth Partners spends a lot of time deciding what the 100 retailers in each property should be. Furthermore, even though foot traffic to malls has declined, visits to the mall have not. Instead, shoppers are visiting fewer stores. For example, in 2007 the average shopper visited five stores in a visit to the mall. Now, that has declined to three. So while consumers are researching online instead of browsing at the mall (webrooming phenomenon), they are purchasing in stores.
Yet, some changes in the sector are inevitable. Morey said 15% of US malls will be shuttered in the next ten years, as brands like Gap are not doing massive store rollouts as they were before.