Malls have rebounded thanks to an unlikely source: Gen Z

Gen Z hasn’t crossed over into the metaverse just yet.

Retail experts say these young shoppers have helped malls bounce back after the downturn brought on by the pandemic, in part because the digital space has turned Gen Z into a generation that expects instant gratification. The immediacy of touching, trying out and buying products may be the thing driving them to physical stores.

“This digitally savvy generation is used to having things immediately that they can download, access, watch,” said USC Marshall School of Business Assistant Professor Stephanie Tully. “And so from that perspective, the desire to get physical products immediately makes sense and would explain interest in brick-and-mortar.”

Gen Z — people from the ages of 16 to 26 — prefer in-person as much as online shopping, if not more, according to a 2023 report by the International Council of Shopping Centers. According to the trade group, about 97% of survey respondents said they shop at brick-and-mortar stores; 95% said they shop online for the convenience.

“Gen Z shoppers are bringing back the mall shopping center experience,” said Kristin Grove, senior vice president of national retail leasing at the global real estate firm JLL. “They want a sense of community. They want to bridge the gap between the social media that they’re doing, and meet and shop in-person.”

The trade group’s study didn’t inquire about other generations’ shopping habits. But a 2022 report by the marketing agency CM Group, now Marigold, and the retail consulting group F’inn found that 47% of Gen Z respondents said they prefer to shop in store over online — more than any other generation.

“Despite being the first digitally native generation, virtually all Gen Z customers shop in-store and prefer physical retail at similar rates to previous generations,” Ali Esmaeilzadeh, executive vice president at Brookfield Properties, said about shoppers at that company’s Glendale Galleria.

There is good reason for malls to bank on Gen Z, which makes up 40% of global consumers with spending power clocking in at $360 billion.

For 23-year-old Nicole Tan of West Hollywood, online shopping is for browsing while in-person shopping is for buying.

“I like to try things on,” she said as a song from the K-pop group New Jeans played in the background at the Westfield Century City shopping center. “If I see ads on social media and there are sales online, I’d maybe buy stuff online, but I usually like to shop in-store.”

Teens have long been the lifeblood of malls, with films such as “Fast Times at Ridgemont High” and “Clueless” depicting shopping centers as a beehive of excitement and activity. But the popularity of online shopping and recent economic turmoil took a toll, with many retail centers either closing altogether, being converted into office space or apartments or taking on unconventional tenants such as grocery stores.

With the easing of pandemic restrictions and the slowing of e-commerce, some malls have been revived by targeting teens and young shoppers who want more than just a place to spend money: a place to hang out, dine and meet friends.

And then there is the loneliness factor.

“There’s a lot of data showing that Gen Z is a particularly lonely generation and that it needs more social interactions,” Tully said. “[Gen Z] would benefit probably more so than other generations from going out and having those experiences in-person.”

According to the International Council of Shopping Centers survey, 60% of Gen Z respondents said they would rather spend their money on experiences than material items, which means that refining the in-person shopping experience is front of mind for retailers.

Westfield Century City and South Coast Plaza in Costa Mesa, among other major Southern California malls, are focused on maximizing “hang time,” Grove said — the amount of time customers spend there.

“It is usually a combination of not just retail … but also great food and beverages and opportunities to do things like [take care of] daily needs,” she said. “You’re multitasking and doing some other things, not just shopping.”

Louis Schillace, senior general manager of Westfield Century City, said that in addition to shopping outlets, the mall houses a gym, an escape room, movie theaters and fine dining restaurants — keys to attracting diverse visitors.

“When you think about Gen Z and how they use the space, it gives them another opportunity to choose this space as their place to go for a night out,” he said.

Tan, who works at a talent agency across the street from Westfield Century City, said she often goes there not to shop, but to grab dinner with a co-worker or go for a walk.

“I do more leisure non-shopping things at the mall,” she said.

About 70% of Gen Z survey respondents said that retail centers and stores offer fun places to gather, according to the ICSS report.

The malls that are thriving have the financial resources to reinvest in and renovate their spaces to meet the evolving demands of today’s shoppers, according to a 2023 Coresight Research report. And malls that cannot make those investments are suffering for it, experts say.

Shuttered stores populate the Puente Hills Mall, best known as the Twin Pines Mall from the 1985 movie “Back to the Future,” in the San Gabriel Valley. And the University of California recently announced plans to acquire the former Westside Pavilion, once a popular L.A. mall that was later converted to office space.

Tully said turning malls into multipurpose destinations where Gen Z flocks will become increasingly important for their survival as online retailers offer shipping, delivery and return options that could disincentivize people from going to the mall to shop.

“There could be drones that deliver things to us,” she said. “Who knows what is going to transform with AI? But one thing you will not be able to have [delivered] are those [in-person] types of experiences.”

Successful shopping centers also must bring in the kinds of brands that are trendy among Gen Z shoppers, as well as socially and environmentally conscious retail stores those customers are likely to support, Grove said.

Gentle Monster — a South Korean sunglasses brand that grabbed the attention of Gen Z in recent years thanks to collaborations with the likes of K-pop superstar Jennie of Blackpink — opened a boutique at South Coast Plaza in late 2022.

Hundreds of shoppers flocked to the opening of America’s first physical store of Princess Polly, an Australian fast fashion boutique popular among Gen Z and millennials, at Westfield Century City in September 2023.

“When we open a store like Princess Polly and we see the reaction, it was clearly generational,” Schillace said. “When we saw the lines of 500 Gen Z-ers waiting for the doors to open, the connection was there.”

More than half of Gen Z survey respondents said they were interested in supporting brands that prioritized mental health, according to the ICSS report. About 47% said they cared about brands that address sustainability and racial and gender equity.

“I try to shop small, independent brands or brands in line with my ethos,” Tan said.

Brands such as Victoria’s Secret and Abercrombie and Fitch went through highly publicized reckonings over body and racial inclusivity in the 2010s as maturing Gen Z students watched from their various social media platforms. As these legacy brands undergo major rebranding to appeal to the new generation of shoppers, those preaching body positivity and diversity such as Fenty Beauty, American Eagle Outfitters Inc.’s Aerie brand and Skims have found commercial success.

“I think that’s all attributable to a really educated new generational shopper,” Grove said. “That’s the future.”