Forefront Communications

Cheddar: Not Dead Yet: Malls Show Signs of Life Amid Strong Holiday Spending

Amanda Perrucci

Amanda Perrucci

Reports that signal the death of the American shopping center have been greatly exaggerated ? if the latest statistics from the holiday shopping season are to be believed ? but the mall of tomorrow is increasingly becoming a new kind of innovation hub for brands, and offering an altogether different experience for shoppers.

Holiday retail sales grew more than 5 percent over last year, according to the MasterCard SpendingPulse survey. And it wasn’t just the likes of Amazon ($AMZN) that reaped the benefit. Driven by cheap gas and fatter paychecks, in-store sales were up 3.3 percent over 2017 in the survey, a number confirmed by Refinitiv’s own market data, which estimated a year-over-year increase of 3.2 percent for brick-and-mortar stores. That’s slightly down from what analysts saw in the first half of the year, but any growth over 3 percent is “robust and shows the consumer is still engaged,” said Jharonne Martis, director of consumer research at Refinitiv.

Black Friday made news for the 24 percent increase in online spending it delivered, but brick-and-mortar retailers tend to fare better as the holiday season goes on, according to half a dozen retail analysts interviewed by Cheddar. A survey of shoppers on Super Saturday ? the somewhat frantic final Saturday before Christmas ? found that 85 percent planned to buy gifts in a physical store. Forty-one percent planned to shop in-store exclusively, according to the survey data from the International Council of Shopping Centers.

The confidence is translating to bottom lines, too. Mall real-estate-investment-trusts, which is how many shopping center operators structure themselves, showed 2 to 3 percent year-over-year growth during Black Friday weekend, according to data from the research group Thasos Group. The Thasos Mall REIT Foot Traffic Index, which analyzes data from five leading mall REITs, showed growth of about one percentage point in the early days of the season pre-Thanksgiving, in which many sales were already in full swing.

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