Online shopping is dominating mindshare, but has yet to gobble up market share. Even though the rise of online shopping has made way for sad headlines like “An Ode to Shopping Malls,” Foursquare has found a category of shopping malls doing very well.
While consumers are getting lured online by cost savings and the convenience factor, there’s still ample data on foot traffic into physical stores, said Foursquare CEO Jeff Glueck. In fact, he’s found that the rise in online shopping has largely affected middle-market malls. Malls serving high-end and low-end customers are actually seeing growth.
“Malls are really a tale of two stories,” he said. “High-end malls are doing very well. They’re new and have experiential footprints. People go there for the food courts, trampoline parks, coffee shops and all these things that social animals want.”
The traditional, indoor, multi-story malls with just long rows of chain stores don’t offer much of an experience. So you’re seeing this bifurcation. When people talk about the decline of retail, they’re really talking about that classic middle market mall store that’s neither a great boutique nor very high end. It’s kind of stuck in the middle, according to Glueck. Players like Kmart and Sears are “getting squeezed in this barbell economy.”
Getting a picture of the ‘real world economy’
Foursquare is a location technology platform that analyzes consumer footprints and supplies data to 100,000 advertisers, analysts and developers. Through billions of consumer check-ins, Foursquare uses technology that detects when a phone walks into 100 million places around the world.
“Our customers rely on us to have insights into how consumer behavior in the real world is changing. For all the attention on Amazon and e-commerce, consumer spending still happens in physical places like grocery, autos, retail and restaurants,” he said. “[We] drive new customers into stores, make apps smarter and measure whether advertising is working and inspiring consumers to go into storefronts.”
“We’re getting a picture of the real world economy through foot traffic. We can profile a significant chunk of the economy not just through our own app users, but through a network of other apps that use our technology or partner with us,” he added.
Through its technology, Foursquare has been able to predict how Chipotle’s (CMG) E. coli crisis led to a 30% decline in same-store sales, that Apple (AAPL) sold between 13 million new iPhones during the 6S launch weekend and that McDonald’s (MCD) reported a stellar quarter after launching all-day breakfast.
The death of the mall? Not so fast.
Despite Glueck’s bullishness on brick and mortar stores, physical retailers are amid an existential crisis. Last year, more than 8,000 U.S. retail stores shut down in the U.S. A 2017 Credit Suisse report predicts that 20%-25% of all malls will close over the next five years.
The Westfield Group plans to cut its U.S. malls from 35 to 25 by 2019, and is focusing on upgraded, luxury spaces. Take, for instance, its Century City mall in Los Angeles. The mall operator invested $1 billion over two years to unveil a sparkly, shiny plaza complete with an Eataly and boutique-style confections like Randy’s Donuts and Smitten Ice Cream.
“People are eating out more so that trend toward bars and restaurants is increasing even as some of the retail shopping categories are giving way to e-commerce,” said Glueck. Second and third-tier malls will become trampoline parks, pottery studios, educational centers or small business incubators and co-working spaces, he said.
Foursquare hopes to be the partner of choice for retailers trying to understand foot traffic data and what happens to stores “as they rejigger and shrink their footprint.”
Melody Hahm is a senior writer at Yahoo Finance, covering entrepreneurship, technology and real estate. Follow her on Twitter @melodyhahm.
This story is a part of Yahoo Finance Presents: The Retail Revolution, March 5-9, 2018.
