Mall-Killing Startups Now Opening Stores in Malls

According to a recent Wall Street Journal story, in an effort to remain viable and relevant, American malls have started leasing vacant space to internet-famous startups.

“[Malls] are looking beyond big chains and toward lesser-known retailers and startups that started online but have amassed customers and brand recognition,” the WSJ writes, noting that brands like Bonobos, Indochino, Warby Parker, and Untuckit (just no) have all opened IRL mall locations.

Besides answering a question no one was asking — “what would a mall look like if it was also a podcast commercial segment?” — the trend signals a potential shift in the way malls will operate moving forward (that is, if they’re still operating at all), as it means allowing shorter term leases, as well as embracing the volatility that necessitates them.

“The risk for landlords in embracing younger retailers is that their tenants have shorter track records and might peter out. Clothing retailers Boston Proper and Nasty Gal Inc., for example, opened physical stores but eventually closed.” At the same time, these brands “offer novel products that resonate with web-savvy customers, particularly millennials, a massive group of potential customers landlords are eager to cultivate,” making the risk worth taking, for some.

And while startups’ mall footprint is still relatively small, it’s almost 10 times larger than it was just five years ago, and it’s likely to keep getting bigger.

As one Citi Research analyst is quoted as saying, “Five years from now, we won’t be debating whether ‘e-tailers’ are taking share from ‘brick-and-mortar retailers,’ because they are all the same.”

You can read more about it at The Wall Street Journal.

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