This year has been difficult for consumers due to inflation, price spikes, and high gas prices. A recession is defined as two consecutive quarters of economic contraction -- declining real GDP, according to the Dallas Federal Reserve Bank.
The U.S. economy fell 1.6% in the first quarter of 2022 and fell 0.9% in the second quarter, which would typically indicate a recession, but according to the White House, an official determination based on a holistic look at the data indicates that we have not yet fallen into a recession.
However, there is still reason to believe 2023 may see a recession. Economists are not in full agreement about the chances of a recession, but those that do believe there will be a recession believe that it will be mild.
All of these reasons have made consumers buy a little less and spend a little less, which fuels the possibility of a recession.
Malls Have Helped Define American Consumerism
Malls were once the pinnacle of American retail, with the first mall opening in 1956 and with the American middle class starting to move to the suburbs. Malls became increasingly popular as spaces for suburban people to eat and socialize and started to pop up all over. By 1960, there were 4,500 shopping malls, according to Placer.ai. Malls hit their peak popularity in the '80s and early '90s when the Mall of America, the largest mall in the U.S., opened in Bloomington, Minn.
Because of how many malls there were, the market became oversaturated. By the early 2000s, many department stores had already begun closing some of their locations, and online shopping grew in popularity in the 2010s. Even the Mall of America was unable to pay its mortgage payments in June 2020 for the second month in a row.
Was Covid-19 the Last Straw for Malls?
Indoor and outdoor malls alike were struck hard by covid in 2020, with foot traffic decreasing to nothing in mid-March and only picking up a bit in early May. In the summer of 2021, the delta and omicron variants lowered foot traffic again, and then 2022's inflation fears, as well as a volatile market, hurt the chances of malls returning to pre-pandemic popularity.
Year-over-year comparisons for mall visits have shown that malls have been able to withstand covid to some degree. April 2022 saw only 1.8% fewer visits than in 2019 and open-air malls were down 4.8% year over year. But by July 2022, indoor malls saw a negative 3.5% visitors, while outdoor malls were down 2.7%.
Not only have less people been going to malls, they have been staying for less time too, which is likely a result of covid fears and catching the virus.
More malls are closing or becoming "dead", which is when stores move out of malls in droves, leaving it open but with very few shops. In addition, more department stores are closing in favor of online retail, which doesn't help malls stay open. Delivery options have skyrocketed in popularity since the pandemic, with Amazon (AMZN) coming out on top.
Malls often include entertainment options such as movie theaters, or, in the case of The Mall of America (MOA)its own indoor amusement park, Nickelodeon Universe, which hosts more than 30 rides. The MOA also has VR experiences, arcades, and a Crayola Experience.
Some are trying new methods to breathe life into malls again. In 2021, CBL Properties announced the opening of the Hollywood Casino by Penn National Gaming in the York Galleria Mall in York, Pennsylvania. The casino is 80,000 square feet and was opened in the mall's lower level, acting as an attraction to draw people to the mall and potentially shop there as well.
In September 2020, Centennial, a real estate investment firm that owns many malls, launched a platform called ShopNow!, where consumers can use an AI-powered search engine to browse every store within the mall to see the store's inventory. The customers can then make purchases from multiple stores into a single cart, then personal shoppers will go throughout the mall to collect the customer's items and then have the orders ready for delivery or a pickup by the customer.