Mall Retailers And Investors Should Be Excited For This 1 Surprising Reason

A recent eMarketer.com article shed some light on how one key customer segment helped boost Holiday Season 2014 sales.

Class-A Malls, which typically have sales of $600 per square foot or more, have had an outstanding run during the past year.

However, who would have predicted that young, female, Internet-savvy Millennial shoppers would have contributed in such a substantial way to these four top performing REIT bottom lines in 2014?

A Quick Look Back

Investors were rewarded from the largest, $64 billion cap Simon Property Group Inc SPG, to the smallest, $5.3 billion cap Taubman Centers, Inc. TCO.

The two top performing mall REITs were $27.6 billion cap General Growth Properties Inc GGP and $13.7 billion Macerich Co MAC.

Why Millennials Are Crucial To Mall Success

For starters, Millennials are the largest age cohort in the U.S. as shown by the graph above.

What Makes Millennials Different Consumers?

• Most notably, Millennials are the first generation to have access to the Internet during their formative years, according to a recent White House report.
• Sixty-one percent attended college vs. just 46 percent for Baby Boomers.
• The oldest Millennials were just 27 when the Great Recession began in December 2007.
• Their early adult lives were partially shaped by the experiences of establishing careers when job opportunities were scarce.

Related Link: Does Blackstone's Latest Shopping Center Announcement Raise More Questions Than Answers?

Young Female Shoppers & Malls

A Teen Vogue survey of young female shoppers (16 to 26) came up with some very positive news according to eMarketer:

• 65 percent of respondents said they would do the majority of their holiday shopping in-store, compared with 35 percent who said they would shop mostly online. (In particular, these respondents enjoyed visiting malls).
• 75 percent of respondents cited the main reason was "they like to see and feel the products they're purchasing."
• For 44 percent of female millennials, the social aspect of shopping at the mall was the driver for why they shopped holiday gifts there: "They wanted an excuse to hang out indoors with friends."
• 37 percent said: "They went shopping at malls for holiday gifts so they could spend quality time bonding with their mothers."

The "holiday spirit" created by: festive decorations and displays (75 percent), Christmas music playing (53 percent), and "the chance to collect festive shopping bags decorated with snowmen, snowflakes, reindeer and the like (46%)," were other reasons cited why these young shoppers were attracted to the mall experience.

Bottom Line

"The best news of all for retailers is that these shopping trips, which originate so that shoppers can purchase gifts for others, result in shoppers buying something for themselves 77% of the time, the Teen Vogue survey found."

If malls continue to attract this younger Millennial cohort -- while also catering to Baby Boomers and seniors -- it appears there are reasons for shareholders to be optimistic regarding sales per SF trends for Class-A malls moving forward.