The Fun Mall of the '80s Is Dead — Today's Mall Is Only About the Money

The decline of the nostalgic mall is bringing in a new era for retail giants like Target.
Updated June 6, 2024
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The mall, once the epicenter of social gatherings and retail therapy during the '80s and '90s, is dramatically transforming. With the advent of online shopping and shifting consumer preferences, the traditional mall is fading into the background.

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The economic realities of the modern era have taken a toll on these nostalgic havens. Major department store brands like Macy's and J.C. Penney have faced closures and financial struggles. The decline of anchor tenants like Sears further exacerbated the challenges. Even well-known retailers like Bed Bath & Beyond, Tuesday Morning, and Christmas Tree Shops succumbing to bankruptcy added to the woes of malls nationwide. But can the mall survive in any form? 

The shifting landscape: Not all malls are created equal

While the narrative often portrays a gloomy picture for malls, not all shopping centers are experiencing the same fate. data reveals that top-tier malls have maintained relatively stable foot traffic, particularly those in wealthier areas — the wealthiest customers frequent malls, with open-air lifestyle centers becoming preferred destinations.

This news is especially positive for companies like Simon Property Group, known for owning high-end malls in affluent regions. However, the situation is less optimistic for Pennsylvania Real Estate Investment Trust (PREIT), which holds a mix of properties. Facing financial challenges, PREIT has opted for a "prepackaged" bankruptcy, aiming to emerge with a healthier financial stance.

PREIT's bankruptcy plan, backed by 100% of its first and second lien lenders, proposes a reduction of approximately $880 million in debt and an extension of loan due dates. The company has secured commitments for new financing, signaling intent to perhaps emerge again as a privately held entity.

The future of malls: Targeting a retail renaissance

Amid the struggles of traditional malls, an unexpected beacon of hope has emerged: Target. The retail giant has charted a new course for malls, redefining the shopping experience and potentially reshaping the future of retail spaces, and maybe even helping you save money while shopping.

Target's approach involves hosting stores within its stores, featuring well-known brands like Starbucks and Ulta. This strategic move diversifies Target's offerings but also presents a symbiotic relationship. Ulta benefits from reduced rent costs, while Target gains increased foot traffic. The outcome? Target's resurgence and Ulta celebrating robust sales figures following this innovative collaboration.

This retail evolution aligns with Target's broader strategy of becoming a one-stop destination for various consumer needs. By creating a diverse, multi-use experience, Target aims to transform traditional malls into dynamic, mixed-use districts.

Ulta's glimpse into the retail revolution

Ulta Beauty's recent financial success provides a good example of a positive outcome emerging from this retail paradigm shift. The specialty beauty retailer reported a rise in third-quarter sales, demonstrating that consumers are willing to invest in beauty products, even in economically uncertain times.

Ulta's strategic positioning within Target stores and its commitment to offering a wide range of beauty products have contributed to its resilience. The company's third-quarter results exceeded Wall Street expectations, with earnings per share reaching $5.07 and revenue hitting $2.49 billion.

The growth was not limited to a specific category, emphasizing the overall strength of the beauty sector. Skincare emerged as the fastest-growing segment, experiencing double-digit growth, while fragrance and bath products achieved growth in the low double-digits.

CEO Dave Kimbell emphasized the enduring appeal of the beauty category in various economic environments. He highlighted data from Euromonitor, indicating consistent low- to mid-single-digit growth in the U.S. beauty category over the past decade, except for the Great Recession and the pandemic in 2020.

Kimbell pointed out that customers view beauty as not just a discretionary purchase but an integral part of their wellness routine. This insight reinforces the idea that retail is evolving beyond mere transactions to encompass broader lifestyle considerations.

The road ahead is a blend of tradition and innovation

As malls navigate these transformative times, the synergy between established retail giants like Target and niche brands like Ulta offers a glimpse into the future. The success of this collaborative model suggests that the mall's evolution involves a delicate balance between preserving elements of tradition and embracing innovative strategies. The new model makes it economically viable for both the lead store and the tenants to get more foot traffic while saving money on expenses and helping stores get ahead financially.

Bottom line

While the arcade-filled malls of the past may be fading, the mall's future appears to lie in reimagining its purpose. By integrating diverse offerings, focusing on high-end experiences, and adapting to changing consumer habits, malls have the potential to reinvent themselves. The story of Target and Ulta serves as a testament to the resilience and adaptability of the retail industry, pointing towards a future where the mall is not just a relic of the past but a dynamic space that continues to shape our shopping experiences.

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Author Details

Georgina Tzanetos Georgina Tzanetos is a former financial advisor who has been active in financial media for the past six years. She holds a master's in political economy from NYU, where she studied distressed labor markets.