How Shopping Malls Make Money
How do shopping malls make money? Do they just collect rent? No, it’s not that simple.
The business model of shopping malls is straightforward: they invite well-known brands and big-name retailers to move in at extremely low rents. These established brands bring their loyal customer base, which drives foot traffic to the mall. Then, the mall charges unfamiliar, lesser-known merchants exorbitant rent—often collecting it upfront for several years, with no refunds if they leave mid-lease. Seeing big brands move in, these smaller merchants mistakenly believe they’ll make money, so they pay premium prices for storefronts, hoping to make a big splash. In reality, 80% of them struggle to stay afloat, and many close within two to three years. If they do manage to survive, the mall raises their rent, ensuring that at least 20% of these small businesses fail each year. This way, the mall both pockets their non-refundable deposits and continuously introduces new brands, giving customers a sense of novelty and keeping them interested in visiting.
Even without the internet, physical retail has always been like raising poisonous insects in a jar—a constant drive to cut costs and boost efficiency in each region, growing ever more cutthroat.