SKU’d Thoughts 39: Is Instagram the new anchor store for shopping malls?
The retail apocalypse narrative is still being echoed across the industry because of the steady stream of store closings. Coresight Research, a retail data analysis firm, estimates that as of October 2019, announced store closures have already exceeded the 2018 total. According to the firm, “US retailers have announced 8,633 store closures and 3,589 store openings. This compares to 5,844 closures and 3,258 openings for the full year 2018.” And there is a possibility of closures reaching 12,000 by the end of 2019. Chief among these closures are traditional retailers, like Macy’s, J.C. Penney and Bon-ton, that once served as “anchor stores” to drive traffic and business to smaller retailers in shopping centers across the country.
About three years ago, these traditional anchor stores closing their doors did not necessarily ring off an alarm because shopping center owners favored a mix of experience-based commerce, specialty retail, and fast fashion over the much larger department stores. However, times have changed and the concept of the shopping center has shifted to the digital realm. When consumers go to malls, they are now going with a specific destination in mind instead of the general window shop mindset.
Instagram has played a significant role in driving consumers to that specific destination and has become the defacto anchor store. The mobile app has a billion monthly users, who are highly engaged when it comes to retail. According to Adespresso, 70% of Instagrammers look up brands through the app and more than 200 million users visit a brand profile at least once daily. These Instagrammers are window shopping and discovering new items before visiting the retailer’s website or physical location.
To capitalize on its retail-minded users, the app launched Instagram Checkout, a shopping feature that allows users to buy directly from a retailer within the app. This move is an attempt to scale the app from being an anchor store that drives traffic elsewhere to being a personalized digital mall.
Instagram’s large and captive user base gives it an advantage over traditional retailers that once served as anchor stores for America’s malls. The app is well-positioned to drive value for retailers that partner with them (at a cost, of course) and its users so they can remain relevant as the retail landscape evolves.
Cross posted on Medium