How Gen Z Is Reviving U.S. Shopping Malls — Transcript

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1. 0:00I typically am an independent person, but I love going to
2. 0:03the mall with someone. I love going to the Apple Store and
3. 0:05buying an iPad with a friend, or I love going to Abercrombie
4. 0:08and getting a camouflage sweatshirt with a friend.
5. 0:10Despite a number of closures, U.S.
6. 0:13malls are making a comeback due in part to a surge in
7. 0:16younger shoppers.
8. 0:17Nearly 60% of shoppers, ages 18-to-34, say they shop at the
9. 0:22mall often or sometimes, compared with just 48% of
10. 0:2535-to 54-year-olds.
11. 0:28Members of Gen Z born between 1997 and 2012, are spending
12. 0:32money in physical stores at a similar rate to their
13. 0:35grandparents.
14. 0:36What retailers have learned is that that the store can be
15. 0:39used not just for traditional shopping, it can be used as a
16. 0:42mechanism to fulfill online orders and vice versa.
17. 0:46It's actually more convenient for me to just go to the
18. 0:48store, try on the item.
19. 0:50If it doesn't fit, I can just return it right then and
20. 0:52there, you know, instead of having to go to UPS, send it
21. 0:54back, waiting another 5 to 7 business days.
22. 0:57Malls are also pivoting from traditional department stores
23. 1:00to providing an array of entertainment options and
24. 1:02leisure activities.
25. 1:03Over the past decade, Macy's has closed more than a third
26. 1:06of its stores.
27. 1:07Born into a digital world and known for working, shopping
28. 1:10and dating online, Gen Zers spend on average six or more
29. 1:14hours on their phones daily.
30. 1:16One of the other funny things about Gen Z is that they're so
31. 1:19social media savvy that they love to post about experiences
32. 1:23they have, including shopping. One of the reasons
33. 1:25why they're going to malls is because they want to have the
34. 1:27bags they can show off on TikTok of the haul they had
35. 1:30from the mall, and if they shop online, they have a bunch
36. 1:33of cardboard boxes rather than branded bags.
37. 1:35The U.S. is home to an estimated 1,226 malls, 7% less
38. 1:41than 2017.
39. 1:42So can younger shoppers help save the traditional
40. 1:45brick-and-mortar mall?
41. 1:46CNBC went to Freehold Raceway Mall in New Jersey to find
42. 1:50out.
43. 2:02Lindsey Hyams is a 23-year-old from Marlboro, New
44. 2:05Jersey. Her shopping journey begins online.
45. 2:08I typically like to shop online first because I like to
46. 2:12get the experience of looking through a whole entire
47. 2:14catalog, a whole, entire website. My favorite app is
48. 2:17called Locker, so I can actually collect all the items
49. 2:20that I want on an app and then go into a store like
50. 2:23Aritzia, Zara, Abercrombie, American Eagle, and I can go
51. 2:27in and I can actually shop all of my photos or all of my
52. 2:30collections. But
53. 2:32it often ends at the mall.
54. 2:33Freehold Raceway is one of over two dozen new Jersey
55. 2:36malls with over 200 stores and restaurants.
56. 2:39When you come to the mall, what's your typical day like?
57. 2:42I always stop at Starbucks because I definitely need some
58. 2:45caffeine, a breakfast sandwich.
59. 2:47I typically do like to shop in the morning or like right
60. 2:50before the mall closes.
61. 2:51Gen Zers like Hyams, say they like to shop in person because
62. 2:54it allows them to touch and feel what they are buying, and
63. 2:56they avoid shipping charges.
64. 2:58There are about 69 million members of Gen Z.
65. 3:01They make up about 20% of the U.S.
66. 3:03population. The group has a spending power of about $150
67. 3:07billion.
68. 3:09Do you ever buy online and then pick up at the mall?
69. 3:12Yeah.
70. 3:12For Zara all the time.
71. 3:13Yes. I love doing that for Zara for two reasons, one,
72. 3:17it's free shipping.
73. 3:19Two, it comes really fast, so it's here in 1 to 2 days.
74. 3:23And then also if it doesn't fit, I could just return it.
75. 3:27Some of the top shopping destinations for Gen Z include
76. 3:30department stores like Macy's, Bloomingdale's and
77. 3:32JCPenney. Luxury retailers like Gucci and Ralph Lauren,
78. 3:35and specialty retailers like Express, Abercrombie and
79. 3:38Apple. In addition to speed, shopping in store comes with
80. 3:42other perks. I've heard from some people that have
81. 3:46researched Gen Z that some of it's also instant
82. 3:48gratification and looking for a quicker way to get what you
83. 3:51need. Does that ring true to you?
84. 3:53I'd rather just drive the 25 minutes and go pick up the
85. 3:55sweatshirt, or I'd rather go pick up the pair of jeans.
86. 3:58And it's an activity they can do with their peers.
87. 4:0060% of Gen Z respondents say they visit malls to socialize
88. 4:04or meet friends.
89. 4:05So many of the Gen Z shoppers I spoke to said there's
90. 4:08something about the mall and its simplicity that brings
91. 4:10back a lot of nostalgia.
92. 4:11The touching and feeling items, the walking around the
93. 4:14sights, the smells.
94. 4:15My cousin's coming home for college and our first trip is
95. 4:18going to Short Hills. We're going to go to Aritzia.
96. 4:20We're going to have our day.
97. 4:21We're going to get coffee. We're going to get lunch at
98. 4:23Bloomingdales. So for us, it's a place that we actually
99. 4:26can create experiences at.
100. 4:33After living through two major economic crises, the Great
101. 4:36Recession and the pandemic, Gen Z is budget conscious and
102. 4:40prefers discount retailers like TJ Maxx and Target,
103. 4:43dollar stores like Dollar General, and fast fashion
104. 4:45retailers like Zara.
105. 4:47The group also frequents thrift stores and Facebook
106. 4:49Marketplace. But they can also be heavily influenced by
107. 4:53what they see online, with 85% of respondents from one
108. 4:56survey saying social media has an impact on their
109. 4:58purchasing decisions.
110. 5:00Abercrombie & Fitch, a staple of 90s fashion known for dimly
111. 5:04lit stores and controversial marketing tactics, has seen a
112. 5:07turnaround in part by leaning into that online experience.
113. 5:10The company includes its namesake chain, and Hollister.
114. 5:13You know, the
115. 5:14kids still like to come to the mall, so even though they may
116. 5:16start their purchase online or on their phone, they do
117. 5:20complete it a lot of times in the mall.
118. 5:22Sometimes they'll find us on social, they'll click into our
119. 5:24apps, or they'll click into the mobile web and start
120. 5:26looking around. They'll save a basket, and then they'll
121. 5:28come into the store and say, "Okay, I have these 4 or 5
122. 5:31products I want to check out. I'm going to try them on.
123. 5:33I'm going to feel them. I'm going to touch them".
124. 5:35In-person sales are a bigger business for Hollister, which
125. 5:38caters to Gen Z.
126. 5:39Digital sales at the Abercrombie brand make up 60%
127. 5:43of revenue in fiscal year 2023, compared with 30% at the
128. 5:47Hollister brand.
129. 5:48The company said teen customers prefer to visit in
130. 5:51store. Shares of Abercrombie & Fitch are up about 75% this
131. 5:55year, well above the S&P 500.
132. 5:58What we want to do, what we try to do is that whenever
133. 6:00they lift their head up from the phone, you know, these I
134. 6:02have teens, they're always staring down at the phone,
135. 6:05whenever they lift up, we want it to be a seamless move
136. 6:07into that store. So, when you think about the photography
137. 6:11that we see online, we want to bring that into the stores.
138. 6:13We have video online, we want to bring that into the stores.
139. 6:15We want those stores to be light and bright, easy to
140. 6:18navigate.
141. 6:19The top clothing brands for Gen Z include Nike, American
142. 6:22Eagle and Lululemon.
143. 6:29For decades, mall culture was a dominant part of life for
144. 6:32American teens.
145. 6:33Cult classic films like "Fast Times at Ridgemont High",
146. 6:36"Mallrats", and "Clueless" epitomized the meet and
147. 6:39hangout culture of that era.
148. 6:42Malls were also a place for teens to get a job.
149. 6:44Teen employment in the 1970s, 80s and 90s was almost double
150. 6:48what it has been in recent years, but times have changed.
151. 6:52Today, almost half of Gen Z teens said the place where
152. 6:55they can be found almost constantly is online.
153. 6:58Over half of U.S. teenagers say they spend at least four
154. 7:01hours a day on social media.
155. 7:03About a third of Gen Z respondents reported poor
156. 7:06mental health in a recent survey, compared with just 14%
157. 7:09of Gen Xers and 7% of baby boomers.
158. 7:12Shopping for some of them might be an opportunity to go
159. 7:17into a store, have a real life experience.
160. 7:20Many Gen Zers considered the mall a third space that isn't
161. 7:23work or home. Gen Z is becoming an important audience
162. 7:26for malls and for retailers.
163. 7:28These teens and twenty-somethings are starting
164. 7:30to make money. They're getting jobs, they're
165. 7:32graduating from college, and they're entering their career
166. 7:34years. To try to attract Gen Z shoppers, Simon Property
167. 7:38Group, the nation's biggest mall owner with about 195 U.S.
168. 7:41malls and shopping centers, recently launched an ad
169. 7:44titled, 'Meet Me at the Mall' on Netflix, TikTok and
170. 7:47Instagram. The ad, heavy on 80s nostalgia, depicted young
171. 7:51adults dancing and roller skating at the mall.
172. 7:53Other mall owners are leaning into experience and
173. 7:56entertainment venues like Dave & Buster's.
174. 7:58Clearly, what you've seen is a move towards more experiential
175. 8:02offerings food and beverage, hospitality, etc..
176. 8:05That shift is happening as big anchor stores like Macy's,
177. 8:08Lord & Taylor, JCPenney and Sears have downsized or
178. 8:11disappeared from malls entirely.
179. 8:13One of the biggest changes coming to U.S.
180. 8:15malls in the coming years is that Macy's is closing so many
181. 8:18of its stores across the country, and that's a huge
182. 8:20footprint in a lot of these malls.
183. 8:22For mall owners, that could be an opportunity to replace
184. 8:25that space with a store or an experience that will appeal to
185. 8:29a younger shopper. But it's not a guarantee if they don't
186. 8:31come up with something trendy or unique, that mall traffic
187. 8:34could die off. An estimated 2,000,000 square feet of mall
188. 8:37space was demolished in 2022.
189. 8:40A lot of people say malls are dead, or malls are dying.
190. 8:43They don't have any relevance. What would your
191. 8:45response be?
192. 8:46I definitely don't think that they're dying.
193. 8:48I think that malls are just evolving.
194. 8:50Every time I go to a mall, they're definitely thriving.