Polarisation of shopping malls continues

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Shopping mall operators in the US are proving an interesting investment opportunity for some of the country’s hedge funds who see them as worthy of their attention. But don’t think this is because they view them as growth stories whose values will increase. It is the complete opposite. They are placing bets on expectations that some of the weaker mall operators will fail.

Lakeside: differentiating from the pack.

The country is littered with shopping malls of which many have aged badly as a result of a lack of investment and face increasing level of empty units as well as greater numbers of low rent operators. The pressure comes from retailers’ increased online sales and customers preferring to go to the more high-end malls. The market is increasingly polarised with those at the low-class end under severe pressure.

In the UK Intu Properties runs a number of high profile shopping centres including some extremely popular developments including the Trafford Centre, Lakeside and the Metrocentre. They have enjoyed ongoing investment and therefore remain attractive to both retailers and customers.

Hence the company this week stated it was enjoying the trend of some retailers – such as Zara and New Look – upsizing and upgrading their stores – at these very shopping malls. But often such moves involve the closure of a store at another nearby location where there the brand might have a smaller unit in a less attractive mall.

Such actions are being replicated throughout the UK with many brands as they seek to have fewer stores but ensure each is a large attractive flagship that sits well alongside growing online sales. As this theme plays out it will drive further polarisation between the better malls at one end and those at the drab end that suffer from under-investment, are in secondary locations, and which have sadly muddled along for years.

Glynn Davis, editor of Retail Insider

K3 Retail deliver multi-channel solutions that enable retailers to create joined up shopping experiences for their customers whether they choose to buy on-line, direct, in-store or via mobile. It has over 20 years’ experience delivering award winning solutions, to more than 175 internationally recognised retail brands.