Is the shine off shopping malls? In the face of stiff competition from e-commerce sites and big box stores, these once-ubiquitous retail spaces have lost much of their economic and cultural clout in recent years. Amid this upheaval, however, some shopping malls have adopted innovative strategies aimed at winning back customers.
A traditional shopping mall can be defined as an enclosed site featuring “anchor” retailers such as department stores and a cluster of smaller speciality shops facing inward, not outward toward the street. Shopping malls are often multi-level and highly walkable, and they offer amenities such as food courts, hair salons, and movie theatres.
There were more than 1,500 shopping malls in America in 2005, a figure that dropped to around 1,150 by 2022, according to the Q3 2022 article, The Economic History of the Shopping Mall by the Federal Reserve Bank of Richmond. Today, depending on the terminology used, there are perhaps 700 large-scale malls left in the United States.
Shocking as this decline might be, there’s been a recent surge of public interest and spending at shopping malls, albeit mostly at higher-end centres. Social media, new shopping trends, and clever reuse of empty space are also helping rejuvenate a once-revolutionary retail model.
A century ago, downtowns dominated the retail landscape, featuring the grandest department stores and the widest selection of small shops. Retail outlets in urban cores were often quite distant from one another, however, and downtown parking was frequently inadequate or nonexistent.
Austrian émigré and architect Victor Gruen came up with a clever alternative to this arrangement. Gruen designed the Northland Center, a retail mecca that opened in 1954 in Southfield, Michigan, just outside Detroit. According to the Richmond Fed, it was the first shopping centre to pair a department store with smaller retail stores.
Gruen’s innovation was to bring the downtown retail sector to the suburbs but do it better: the Northland Center offered consumers ample parking, a multitude of stores in one place, and the opportunity to perform an array of chores (food, clothing, and hardware shopping, plus a visit to the hairdresser) in the same locale. Gruen would go on to design other malls as the retail concept he championed exploded in popularity.
The rapid expansion of shopping malls has been attributed to shifting demographics, as city dwellers moved to new suburban housing developments after World War II. This is only part of the story, as shopping mall construction was also fuelled by changes to U.S. federal tax laws. In 1954, eager to stimulate postwar building, Congress sped up the depreciation process for new construction projects, allowing developers to write off expenses faster. This coincided with the birth of the modern shopping mall and led to a wave of investment money flowing into new mall construction (accelerated depreciation rules gave investors a great tax break, and they could then sell the property for a profit down the road).
Between 1961 and 1970, some 240 shopping malls were built across America, states the Richmond Fed article.
While department stores served as the initial anchors in enclosed shopping malls, malls also sported eating and entertainment venues. In the process, shopping malls took on cultural as well as economic significance: “For countless Americans—especially those who came of age in the postwar years—malls were the new town square: a place to shop, eat, gather and meander. Envisioned as perfectly pristine, cast against the gritty danger of urban centers, the American mall became the image of suburban consumerism,” states the November 25, 2014, article, The Death and Rebirth of the American Mall in Smithsonian magazine.
By the late 1970s and 1980s, shopping malls were so ingrained in American culture that they served as the backdrop to prominent movies such as Fast Times at Ridgemont High, Bill & Ted’s Excellent Adventure, and even Dawn of the Dead (in which survivors of a zombie plague hide out in a mall).
From this peak, problems set in. By the mid-1980s, many first-wave malls were showing their age, with creaky infrastructure and a tired ambiance. Another problem was that supply exceeded demand; the forces that drove shopping mall construction produced a glut of such sites. Many communities ended up with multiple malls within a short distance of each other. Bigger and flashier malls survived this intense inter-mall competition at the expense of more low-rent operations.
The Great Recession of the late 2000s hit shopping malls hard. While many U.S. malls had relied on department stores such as Macy’s to serve as lures and anchors, middle-class consumers began patronizing more budget-friendly stores such as Kohl’s and Target, states the Richmond Fed article.
A decade or so later, the world was rocked by COVID-19, which was declared a pandemic in March 2020. Public places, including shopping malls, either closed or instituted regulations such as mandatory masking and social distancing. Mall attendance plummeted.
Economics and illness aside, shopping malls also faced huge challenges in the form of big box outlets and e-commerce.
Unlike shopping malls, big box outlets feature only a handful of mammoth retailers such as Walmart, IKEA, and Home Depot. The big box shopping experience is purely utilitarian: consumers arrive, acquire products, and then depart in their cars. Big box outlets aren’t designed for lingering, and standalone big box stores usually lack food courts and similar amenities.
Spartan as they are, big box outlets and standalone big box stores became hugely popular with the public. Such sites are extremely accessible (customers can park in front of the big box store of their choice and avoid navigating the sometimes maze-like corridors of shopping mall interiors), and prices are low because products are stocked in such massive quantities.
If big box stores offered a physical alternative to traditional malls, the internet opened up a digital shopping option. Back in 1995, American consumers made $2.11 trillion worth of in-store purchases versus $0.05 trillion in online purchases. While in-store spending rose over the decades, e-commerce soared, topping the $1 trillion mark in 2021, according to Capital One Shopping Research. In 2025, in-store spending stood at $6.087 trillion in America, while e-commerce represented $1.431 trillion in spending.
Sales data indicates a sharp generational divide. While 60 percent of Baby Boomers (defined by Capital One Shopping as people born between 1946 and 1964) prefer to shop in-store, this holds true for only 37 percent of Gen Z adults (people born between 1997 and 2012).
Rather than trying to resist e-commerce, shopping malls have learned to embrace it. A new shopping habit has emerged in which consumers discover products online, often on a retailer’s website, but purchase them in a store.
“Online ads and social content have a powerful effect on creating retail desire, but they also provide an incomplete sensory experience that no virtual try-on can match. Following an engaging online interaction with an equally satisfying physical shopping experience, traditional retailers evolve from bricks-and-mortar to ‘clicks-and-mortar,’” reads the article, The Fall and Rise of the American Shopping Mall, published April 22, 2025 in Total Retail magazine.
Influencers on TikTok and Instagram, in particular, frequently post content from shopping malls, highlighting products and discussing their overall retail experience.
Malls can also reinvent themselves by tapping into ethnic diversity with a broader array of stores and food options, and by repurposing space. Some malls have filled the gaps left behind by shuttered department stores with gyms or outlets such as Dave & Buster’s (a blended sports bar, restaurant, and arcade chain), notes the Richmond Fed article.
Research and advisory firm Coresight Research is downright giddy about the future of traditional shopping malls. “American malls are entering a structurally stronger phase, with improving occupancy, rents and net operating income (NOI), although this growth is increasingly concentrated in top-tier, well-located assets,” reads the May 2026 Coresight Research report, The American Mall Renaissance. By “top-tier,” the company means malls located in affluent areas that offer luxury retail brands (such as Gucci, Louis Vuitton, and Hermès) and new direct-to-consumer brands.
In-store shopping returned in force once COVID-19 restrictions were lifted, a trend that benefited top-tier malls. Year-over-year visits were up two percent at top-tier U.S. malls in 2025, and down 1.6 percent at their non-top-tier competition.
Thanks to increased visits, occupancy at top-tier malls rose from 92.8 percent in 2021 to 95.5 percent in 2025 (occupancy at non-top-tier malls also increased, from 87.0 percent in 2021 to 90.0 percent in 2025).
In addition to luring shoppers, high-end shopping malls are working hard to reclaim their position as social hubs as well as retail centres.
“While apparel remains a core component of the tenant mix, top-tier mall operators such as Simon are increasingly adding dining, entertainment, wellness, residential, EV showrooms, hotels and, in some cases, office or community spaces to create more diversified consumer destinations and revenue streams,” reads the Coresight Research report.
Given these developments, it looks like “hitting the mall” will remain a popular retail and recreational option long into the future, despite ongoing challenges.
