Apple and Mall Operators

For those of you around my age: We use to go to malls for the video arcade, toy store and food court. Today, people are going to the mall for Apple products; mall operators are seeing to it.

According to a real estate research company, the mere presence of an Apple Store alone increases a mall’s sale by ten percent. So this gives Apple a heck of an advantage. Not only can they get a low rental rate from mall operators, they can turn up pressure for neighbors to pay more, in hopes to prey off Apple’s foot traffic. Back in the old video arcade and toy store days, your major department stores paid near nothing, while small businesses paid the majority of mall rentals. Apple goes even further. Apple bargains to pay no more than 2% of sales in rent. Some tenants pay as much as 15% of their sales. Mall operators generally charge rent based on the retail tenant’s sale expectations.

But there’s another factor in play: The disappearance of smaller businesses that were once staples of shopping malls. Is it just me, or are small businesses closing down in malls all over the USA, being replaced by major corporate chains? And despite what the media and stock markets say, even major chains like Sears and JCPenney are struggling. Decades old chains like K Mart and Radio Shack are forced to shut down many stores. These stores used to be in shopping malls. So it seems like Apple Store may save the shopping mall altogether. So I say give them what they want, so long as it’s within reason. For mall retailers who complain of paying extra, think of the foot traffic you’re getting. If people are spending hundreds, even thousands, at Apple, they’ll probably come spend a little at your small business. Am I looking at the Apple mall invasion the wrong way?

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