Malls Aren't Going Down Without a Fight

Summary

Podcast Summary: WSJ Your Money Briefing

Episode: Malls Aren't Going Down Without a Fight
Date: November 22, 2017
Host: Annemarie Fertoli
Guest: Esther Fung (Wall Street Journal Reporter)

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Episode Overview

This episode of "WSJ Your Money Briefing" explores how malls are fighting back against the wave of online shopping by ramping up their holiday offerings. Host Annemarie Fertoli speaks with WSJ reporter Esther Fung about the tactics mall owners are using to attract shoppers, how much they're spending, and whether these efforts are paying off. The conversation also touches on the risks associated with this aggressive spending, and how malls are measuring success in a rapidly changing retail landscape.

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Key Discussion Points & Insights

1. Malls Step Up Holiday Attractions

• Enhanced Experiences: Malls are going beyond traditional decorations and photos with Santa. Larger and more affluent malls are investing in creative attractions to entice visitors.
  • “Some, particularly in the south, they might be bringing out temporary ice skating rinks…and they're making them outdoor ice skating rinks, which brings up the novelty.” — Esther Fung [01:07–01:23]
  • New features include winter castles and open-air skating under the stars, aiming to make the visit a memorable destination for families.

2. Competing with Online Retailers

• Physical Advantages: Malls are leveraging their physical spaces to offer experiences that e-commerce simply cannot replicate.
  • “It sounds like they're really ramping up what they can offer in terms of physical space that online retailers like Amazon can't.” — Annemarie Fertoli [01:45]
• Building Loyalty: The goal is to build customer loyalty and establish the mall as a go-to place for family outings, not just shopping.
  • “The idea is to encourage them to come out…create customer loyalty…not so much to make them spend all their money in the mall.” — Esther Fung [02:01–02:20]

3. Big Investments in Decorations and Experiences

• Rising Budgets: There has been a significant jump in how much malls are willing to spend to enhance the holiday atmosphere.
  • “In the past some of these mall owners would spend perhaps $70,000 on mall decorations. But…some of the top mall owners…can spend as much as half a million on these decorations.” — Esther Fung [02:41–03:02]

4. How Success Is Measured

• Beyond Sales per Square Foot: Traditionally, malls measured success by sales per square foot, but now they are focusing more on foot traffic due to the reality of “showrooming” (people trying in store, buying online).
  • “They realize that a lot of sales that should be attributed to these four walls don't get recorded…so they're not too fixated on that anymore.” — Esther Fung [03:30–03:46]
  • “Owners are now putting traffic counters and reminding their tenants that hey, you're still getting foot traffic, you're still getting eyeballs here. Keep your lease here.” — Esther Fung [04:06–04:16]

5. Is It Working?

• More Foot Traffic, Uncertain Profitability: Early reports from owners indicate a rise in visitor numbers. However, profitability remains a concern, as increases in expenses may offset gains in sales.
  • “They do mention that they are hopeful that they would get more sales…But…they are concerned about profitability. You're getting all these sales, but at what cost?” — Esther Fung [04:28–04:56]
  • Retailers may see high year-over-year growth but could face “painful conversations” about profitability when renewing leases.

6. Risks of Overspending

• Calculated Gamble: Mall owners are keenly aware of the risk of overinvesting without a guaranteed return, but feel a need to be aggressive to survive.
  • “Mall owners definitely consider that as well. But in this current environment, they have to be more aggressive. They're not going down without a fight.” — Esther Fung [05:30–05:40]
• Social Media as ROI: Malls are increasingly using social engagement (Instagram, Facebook mentions, center hashtags) as a way to justify expenditures beyond direct sales.
  • “…they also look at the number of social media mentions that they get…That is also something that they are using to justify all this expenditure.” — Esther Fung [05:44–06:00]

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Notable Quotes & Memorable Moments

• “The goal isn't so much to make them spend all their money in the mall…The idea is to encourage them to come out.”
  — Esther Fung [02:01–02:20]

• “Some of the top mall owners…can spend as much as half a million on these decorations.”
  — Esther Fung [02:48]

• “You're getting all these sales, but at what cost? They could have high year on year sales growth, but if their expenses are also increasing…they might have some painful conversations next year when it comes to renewing the lease.”
  — Esther Fung [04:48–05:05]

• “They're not going down without a fight.”
  — Esther Fung [05:38]

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Timestamps for Key Segments

• [00:23] Introduction and main theme
• [01:04] Creative holiday experiences in malls
• [02:01] Experiential advantages vs. online retailers
• [02:41] Spending on decorations and attractions
• [03:30] Measuring success: foot traffic vs. sales
• [04:28] Early results and concerns about profitability
• [05:30] The risk of overspending; using social media impact as a measure of ROI

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Conclusion

This episode highlights the increased creativity, investment, and determination of malls to fight back against the digital shopping revolution. As budgets swell and tactics diversify, the battle is as much about building social relevance and enduring loyalty as it is about immediate sales. Mall owners are clearly signaling: “They're not going down without a fight.”

Transcript

[Charles Schwab Announcer]

This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. Washington Wise from Charles Schwab is an original podcast that unpacks the stories making news in Washington. [e-mail] WashingtonWise

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this Is yous Money Matters from the Wall Street Journal.

[Annemarie Fertoldi]

Welcome to youo Money Matters. I'm Annemarie Fertoldi in New York. If you're a consumer, you may be debating whether you want to shop online or head out to brave the crow at brick and mortar stores this holiday season. Well, mall owners are trying to sweeten the deal for you. They're bringing out all the bells and whistles and lots of decorations as they try to compete with online retailers to turn a profit this season. Joining me now in our studio to talk about just how much they're spending is Wall Street Journal reporter Esther Fung. Esther, malls typically do different things around the holidays to try to drum up traffic. Pictures with Santa, holiday lights, trees, wreaths. But you found that some are doing even more than usual this year. How are they getting more creative to get shoppers in the do?

[Esther Fung]

So it's the larger and the more

well off centers that have the resources to become more creative. Some, particularly in the south, they might be bringing out temporary ice skating rinks and they're also, they're making them outdoor

ice skating rinks, which brings up the

novelty because sometimes the ice skating rinks over there tend to be indoor. And I've heard that lots of people like skating under the stars, so that's a big plus.

There are others that include winter castles in their malls and having pictures taken with Santa is a given. I think every mall has it.

[Annemarie Fertoldi]

That's sort of a mainstay now. It sounds like they're really ramping up what they can offer in terms of physical space that online retailers like Amazon can't. I guess the hope is that they have somewhat of an advantage at least there in creating a destination for shoppers to want to come to and stay.

[Esther Fung]

That's right. It's all about the experiential offerings that they bring to the table. And also their goal is to create customer loyalty and to encourage people to think of their centres or their malls when they think about doing something as a family. So the goal isn't so much to make them spend all their money in the mall. They're very clear that some of them are definitely going to do online shopping this season, but the idea is to, is to encourage them to come out.

[Annemarie Fertoldi]

And what did you find out about how much more mall owners are spending. Are they spending more than they have typically in the past?

[Esther Fung]

So I've read that in the past some of these mall owners would spend perhaps $70,000 on mall decorations. But in my talks with some of the retail consultants, they said that some of the top mall owners, they can spend as much as half a million on these decorations. So they're putting up a fight and they want to make sure that they can still draw people out during this season.

[Annemarie Fertoldi]

Sounds like it. I'm speaking with Wall Street Journal reporter Esther Fung about how much mall owners are spending this holiday season. And you're listening to youo Money Matters. Welcome back everybody. Esther. Mall owners are certainly aware of the challenges they're facing from online retailers how is affecting their expectations for this holiday season.

[Esther Fung]

So they still hope, of course, that people would still spend in their malls or spend in their outdoor centers. The metric that they usually use to gauge how successful they are would be sales per square foot. But a lot of these owners now realize that a lot of sales that should be attributed to these four walls don't get recorded because people may go to the store, try on something and they may end up buying online. So they're not too fixated on that anymore. And the idea is to draw foot traffic a lot more.

Owners are now putting traffic counters and reminding their tenants that hey, you're still

getting foot traffic, you're still getting footfall, you're still getting eyeballs here.

Keep your lease here.

[Annemarie Fertoldi]

Esther in terms of what mall owners are doing and how much they're spending this holiday season, what do we know about whether it's working? Is it translating into more traffic and sales?

[Esther Fung]

So yes, the owners tell me that it does translate to more foot traffic, at least from what they've seen so far. As for sales, they do mention that they are hopeful that they would get more sales this time. But for the retailers themselves, one of the things that they are concerned about is profitability. You're getting all these sales, but at what cost? They could have high year on year sales growth, but if their expenses are also increasing and they realize maybe it's not as profitable as before, they might have some painful conversations next year when it comes to renewing the lease you actually anticipated.

[Annemarie Fertoldi]

One of my next questions about the danger of overspending. That has to be a concern for mall owners as they try all they can do to draw in shoppers. I imagine they must be thinking, what if I spend too much and I don't make back at least what I spent to get shoppers to come here and spend.

[Esther Fung]

Mall owners definitely consider that as well. But in this current environment, they have to be more aggressive. They're not going down without a fight. And while they would like to see a huge increase in sales because of all their efforts, they also look at the number of social media mentioned that they get when they put up some of these events. How many pictures are taken on Instagram, shared on Facebook with of course their centers hashtags. That is also something that they are using to justify all this expenditure.

[Annemarie Fertoldi]

And a way for them to get into the online space too.

[Esther Fung]

Exactly.

[Annemarie Fertoldi]

All right. I've been speaking with Wall Street Journal reporter Esther Fung. Esther, thank you so much.

[Esther Fung]

Thank you.

[Annemarie Fertoldi]

And thank you for listening to youo Money Matters. I'm Annemarie Fertoldi in New York.

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