Definition
Mall Stores
Mall stores refer to retail outlets located within a shopping mall, aside from the anchor tenants. These stores typically lease smaller spaces compared to anchor tenants and rely heavily on the foot traffic generated by these larger, highly visited anchor tenants such as department stores or large chain retailers. Mall stores often face higher rental costs, but benefit from reduced advertising expenses due to the inherent foot traffic driven by anchor tenants’ marketing efforts.
Examples
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Clothing Boutiques: For example, a small clothing boutique in a mall benefits from the traffic brought in by a large department store anchor tenant. The boutique may pay higher rent compared to standalone shops but can allocate less budget for advertising.
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Specialty Stores: A store that sells specialized kitchenware in a mall may operate alongside several other themed stores but draws customers passively from the shoppers visiting the mall’s big-name anchors.
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Electronics and Gadgets Shops: Smaller shops selling mobile accessories or specialized electronics within malls leverage the high audience volumes brought in by major electronic stores or multiplex cinemas.
Frequently Asked Questions
What are mall stores?
Mall stores are individual retail units within a shopping mall but do not include the large anchor tenants that typically draw the most visitors.
Why do mall stores pay high rent?
Mall stores often pay higher rents due to the prime location within the mall and the high foot traffic generated by larger anchor tenants.
How do mall stores benefit from anchor tenants?
Mall stores benefit from the increased customer traffic drawn by anchor tenants, reducing their need to invest heavily in advertising.
Do mall stores have to advertise?
While mall stores might still engage in advertising, their advertising costs are usually lower compared to standalone stores due to the draw from anchor tenants.
What type of stores typically exist in a mall?
Typical mall stores include boutiques, specialty shops, electronics stores, food courts, and service providers such as beauty salons or travel agencies.
Anchor Tenant
An anchor tenant is a large, key store in a shopping mall whose presence draws significant traffic, beneficial to the smaller stores around it.
Foot traffic refers to the number of people walking by or visiting a particular store or area, which is crucial for mall stores’ success.
Leasehold Improvement
Leasehold improvements are changes and upgrades made by the tenant to leased commercial real estate, often seen in mall stores adapting spaces to their brand image.
Tenant Improvement Allowance
Tenant improvement allowance is the amount of money a landlord allocates to the tenant for making alterations or improvements to the rented space, commonly available for new mall store setups.
Online Resources
References
- Fuerst, Franz, Daron Acemoglu, and Matthew E. Kahn. “The Economics of Shopping Malls.” Journal of Real Estate Finance and Economics, vol. 42, no. 1, 2011, pp. 1–20.
- Brown, David. “Retailing in Malls: From Stores to Digital Spaces.” Retail Development Journal, 2019.
Suggested Books for Further Studies
- “The Shopping Mall High” by Paco Underhill - A comprehensive look into the dynamics of mall retail locations and their operations.
- “Shopping Center Management” by Megan Taylor - This book covers the essentials of managing shopping centers, including factors affecting mall stores.
- “Principles of Retailing” by Jillian Dawes Farquhar and John Reardon - An insightful guide on retail management and operations in different environments, including malls.
Real Estate Basics: Mall Stores Fundamentals Quiz
### What constitutes a mall store?
- [ ] A standalone retail store in a separate building.
- [x] A retail store located within a shopping mall excluding the anchor tenant.
- [ ] An online retailer serving mall-based stores.
- [ ] The main department store in a mall.
> **Explanation:** A mall store is a retail outlet within a shopping mall that is not an anchor tenant. They benefit from the foot traffic drawn by the anchor tenants.
### Which of the following is NOT a typical example of a mall store?
- [ ] Clothing boutiques
- [ ] Specialty stores
- [x] Large department stores
- [ ] Electronics and gadget shops
> **Explanation:** Large department stores are typically anchor tenants and not considered mall stores. Mall stores are smaller retail units within the mall.
### What is one primary benefit for mall stores being located in malls?
- [x] Reduced advertising expenses due to foot traffic from anchor tenants
- [ ] Minimal rental expenses
- [ ] Zero competition within the mall
- [ ] Exclusive contracts with mall owners
> **Explanation:** Mall stores benefit from reduced advertising expenses since anchor tenants help in drawing customer traffic into the mall.
### Why do mall stores often have higher rents?
- [ ] They receive limited customer traffic
- [x] The prime location and foot traffic from anchor tenants increase demand
- [ ] The stores require extensive space
- [ ] They operate on a seasonal basis
> **Explanation:** The ideal location within the shopping mall and high foot traffic make these spaces more expensive owing to higher demand.
### What is an anchor tenant?
- [ ] The smallest store in a shopping mall
- [x] A large store that draws significant traffic to a mall
- [ ] An online retailer for mall stores
- [ ] A vendor from the food court area
> **Explanation:** An anchor tenant is a large, key store in a shopping mall pulling significant customer traffic, beneficial to smaller surrounding stores.
### Which factor drives reduced advertising needs for mall stores?
- [ ] In-store promotions
- [ ] Mall management-funded advertisements
- [ ]) Seasonal sales events
- [x] Foot traffic generated by anchor tenants
> **Explanation:** The increased foot traffic generated by anchor tenants decreases the direct advertising needs for mall stores.
### What are the typical lease characteristics for mall stores?
- [ ] Fixed rent for all store types
- [ x ] Generally high rents due to prime location
- [ ] Lower rent than standalone stores
- [ ] Varies seasonally based on mall traffic
> **Explanation:** Mall stores generally pay higher rent due to their prime location and the benefits of foot traffic in the mall.
### How does being close to an anchor tenant benefit a mall store?
- [ ] It decreases operational costs
- [ ] It ensures exclusive promotional events
- [x] It increases foot traffic from shoppers visiting the anchor tenant
- [ ] It mandates less store management
> **Explanation:** Proximity to anchor tenants attracts more foot traffic into their vicinity, which benefits the surrounding mall stores.
### Which of the following best describes foot traffic?
- [ ] Car and vehicle movement in the parking lot
- [x] The amount of people walking by or visiting stores
- [ ] Promotional event participants
- [ ] On-shift employees within the stores
> **Explanation:** Foot traffic refers to the number of people walking by or visiting stores in a specific area, impacting the sales volume.
### What kind of store layout adjustments are considered leasehold improvements?
- [x] Tenant-initiated modifications like custom shelving and lighting
- [ ] Security and maintenance improvements by the mall
- [ ] Landscaping work outside the mall
- [ ] Digital marketing strategies for online sales
> **Explanation:** Leasehold improvements refer to renovations or modifications done by the tenant to customize the leased space to their operational and brand needs.
