Sharp decline in footfall at shopping malls. The industry experiences double-digit drop

In the third quarter of 2024, traffic in shopping centers and malls dropped by 12.4% compared to the same period in 2023. This is according to the latest report from the technology company Proxi.cloud. Decreases can be observed in all provinces. The number of unique customers also decreased – by 9.9% YoY. Experts commenting on these data believe that due to changes in consumer buying behaviors and an economic slowdown, it is hard to expect major changes by the end of the year.

Malls and shopping centers are still experiencing a decline in customer traffic. As per the latest report from tech company Proxi.cloud, in the third quarter, traffic in these facilities dropped by 12.4% compared to the same period in 2023. The data comes from an analysis of the behavior of over 1.5 million users. Traffic in over 710 outlets was analyzed.

“One of the reasons for the decline in traffic was certainly the overall economic situation affecting the financial condition of households. Inflation in recent months has significantly reduced their purchasing power. We spend less, buy more sensibly and pay more attention to prices. The average Polish shopping basket has also changed. Lower expenditures are made on entertainment and hobbies, and substantial amounts were previously spent on them in shopping centers,” comments Tomasz Przewoźnik from the WSB University Merito.

As Dr. Maria Knecht-Tarczewska from the Wrocław University of Economics points out, the position of shopping centers as places where customers spend their free time seems unshakeable. “Minor declines in footfall can be explained, among others, by higher prices of goods and services available in shopping centers, the growing popularity of e-commerce, and increased competition in the modern retail space market,” explains the expert.

Looking at more detailed data, one can see that in the third quarter, attendance in shopping centers and malls has decreased YoY in all provinces, the least in Świętokrzyskie – by 4.7%, Mazowieckie – by 5.5%, and also Opolskie – by 8.4%. On the other hand, we have Podkarpackie – 21.3%, Warmińsko-Mazurskie – 20.5%, as well as Podlaskie – 18.1%, with the highest numbers.

“It can be expected that such a picture of things is affected by the diversified socio-economic situation in different parts of the country. Random factors may also matter, such as possible renovations of some shopping galleries. The varying pace of expansion of discount stores in different regions may also affect the dynamics of traffic in shopping malls,” assesses Sylwia Kaska from the technology company Proxi.cloud.

Dr. Andrzej Szymkowiak, a professor at the Poznań University of Economics and Business, believes that provinces with a smaller decrease in attendance, such as Świętokrzyskie or Mazowieckie, may offer more attractive shopping centers with a wider range, which attracts customers. Meanwhile, larger declines in Podkarpackie or Warmińsko-Mazurskie could be due to fewer modern outlets or lower purchasing power of residents.

“The offer of individual centers is key here. The more diverse and tailored to the needs of the local community, the greater the chance of maintaining traffic. Looking at these comparisons, one can be partly surprised, but without an in-depth analysis of local markets, it is difficult to give an unequivocal assessment,” warns Dr. Andrzej Szymkowiak.

In recent months, there have been reports in the media that the European Football Championships (14.06-14.07), and to a lesser extent also the Summer Olympic Games (26.07-11.08), could attract many consumers to these types of retail facilities. Ultimately, it is clear that the impact of these events on footfall was less than expected.

“The European Football Championships could contribute to the increase in mall traffic, but this effect could have occurred even before the start of the third quarter. June is a month when there were still matches of the Polish national team in the tournament. In this month we observed an increase in the number of customers in malls and shopping centers by 5.9% compared to the same period in 2023. These visits may have been caused by sports-themed events organized by galleries, a desire to buy fan attributes or grocery shopping for social gatherings in hypermarkets located in galleries. On the other hand, when it comes to the Olympic Games, there is no evidence to confirm a positive translation of this event to footfall in these types of facilities,” says Sylwia Kaska.

The report also shows that in the third quarter, the number of unique customers in malls and shopping centers fell by 9.9% compared to the same period in 2023, and this in all provinces, the least in Mazowieckie – by 6.1%, Opolskie – by 7.1%, and also Wielkopolskie – by 7.4%. The biggest declines occurred in Podkarpackie and Warmińsko-Mazurskie – by 14.4% each, and also Świętokrzyskie – by 13.5%.

“This is presumably due to the fact that we are talking about relatively poor regions of Poland and where the saturation of large shopping centers is not high. Since consumers have painfully felt raging inflation and high prices for months, this has affected the poorest Poles the most in practice. This, in turn, caused a tendency in their purchasing behaviors to reduce spending and limit it to the essentials,” analyzes Tomasz Przewoźnik.

Meanwhile, in the third quarter, the frequency of purchases, measured by the average number of visits, increased YoY in two provinces – Świętokrzyskie (Q3 – 2.89, previously – 2.63) and Mazowieckie (Q3 – 3.35, previously -3.33). In the rest, minor declines are visible. The average duration of a visit has also been shortened – by 18 seconds (Q3 – 46:48, Q3 previous year – 47:06) and the average total visit time – just over 5 minutes (Q3 – 2:26:52, previously – 2:31:58).

“Year-on-year changes related to the average duration of a single visit and total time are minimal and should not be noticeable for galleries and shopping centers. This shows that the habits of customers who still attend these types of facilities remain unchanged,” predicts Mateusz Nowak from Proxi.cloud.

The expert from WSB University Merito also notes that the largest traffic declines apply to the largest malls and shopping centers. For comparison, for example, retail parks of relatively smaller areas (approx. 5,000 sqm) have not felt the loss of visitors. What’s more, the overall decrease in the number of visitors to these types of retail facilities has not necessarily resulted in lower sales, as indicated by data from the Polish Council of Shopping Centers for July of this year.

“The results of the PRCH report “The market of retail facilities in Poland” show that in the first half of 2024, tenants’ turnovers increased by 4.2% compared to the same period in 2023. It’s worth noting that the largest increases were recorded in the sectors of entertainment – by 11.4%, health and beauty – by 10.9%, as well as gastronomy – by 5.9%,” informs Dr. Knecht-Tarczewska.

Moreover, the Wrocław UE expert adds that these categories are gaining popularity in multifunctional shopping centers. They satisfy not only the need to make purchases, but also customer expectations in terms of socialization, which is why they are frequently visited by customers.

“The main factor that will decide whether to further increases or decreases will be the economic situation of Polish society. If it improves, then it can also be expected to see smaller declines in footfall or reach YoY in Q4. However, it should be stressed that predicting these indicators at this stage is very difficult,” highlights Sylwia Kaska.

According to Tomasz Przewoźnik, the general climate will not improve dramatically during this period. Added to this is the aspect of the effects of the flooding that hit a significant part of the southwestern regions of Poland. This may also have a slight impact on the buying behavior of consumers affected by its effects.

“Trade in Q4 is largely driven by holidays, and we usually try not to economize on them. But will grocery shopping move even more to discount stores? And will we buy gifts even more often and more eagerly online? If so, then declines in shopping center visits will also be visible in the fourth quarter of this year,” concludes the expert from WSB University Merito.