Claire’s just went chapter 14 in yet another example of how malls are killing their tenants.
While mall traffic is declining, lease rates in malls are still climbing. In classic marketing measurements, the CPM of malls have become unsustainable!
In the “olden days”, the cost of rent made sense because of the number of people that went through the malls. The CPM was very cost-effective considering the walled garden of consumers walking through the halls. They were guaranteed shoppers, all you had to do was get them into your store.
Now the challenge lies in getting people to the malls. With declining mall traffic, you’d think the rent would be adjusted to make the CPM reasonable. Unfortunately that is not the case. Now retailers in malls need to spend more on advertising to drive people into the malls PLUS pay the high lease rates. It is a losing proposition. Mall lease rates have continued to climb, driving the CPM into the unsustainable area.
Anyone looking at the cost-benefit analysis would point out the CPM of pretty much any other type of selling is significantly better than malls now. Either malls have to make major adjustments to their lease rates and work to build up the foot traffic, or they too will become a thing of the past.