Shopping malls have always been a way of generating good revenue.
Any commercial property or shopping mall generally gives its space to different tenants. These tenants sell their products and services, through which they earn money and pay their rent. Shopping malls are considered one of the best commercial places. They not only sell products and services but always provide entertainment areas like theatres, game zones, and many more.
1. What are the different strategies and business models used by shopping malls to generate revenues?
Shopping malls provide different services, from selling products to movie and game zones and many more, that help generate revenue. Let’s discuss the various strategies used by these shopping malls to generate revenue.
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The first traditional way shopping malls generate revenues is by leasing retail space or keeping tenants. The tenants sell their products and services to earn money, through which they pay their rental fees. These lease agreements come with different revenue generations, like fixed rent, percentage rent, short-term leases, and anchor tenant arrangements. Short-term leases offer pop-up shops or seasonal businesses. These leases help keep the mall flexible. They come with premium services and help generate large revenue during seasonal shopping.
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Percentage rent refers to the base rent along with the percentage sale of the business. The tenants have to pay a percentage of their gross sales from the business they own. And if the business is going well and better, the mall will also benefit from the tenant’s revenue.
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Fixed rent is one of the traditional models. The tenants have to pay a fixed amount to the mall. This conventional model helps the mall generate steady income even if the business is not performing well.
2. The other easy way for malls to generate revenue is through advertisements and promotions. Advertisements and promotions help generate substantial revenue for the mall, whether it’s inside or outside the area.
- External advertising through different methods like billboards and digital displays in areas with heavy traffic will help attract exterior customers. And these will give us a chance to generate revenue.
- In-mall advertisements include digital screening, posters, or banners within the mall. The brands or retailers pay for the advertisements in the interior area of the mall.
- Big malls host events in their area to generate revenue by promoting different brands. Events like fashion shows, product launches, and concerts always take place in big malls, which bring opportunities for brand sponsorship.
3. The mall’s parking area is a key revenue source, especially in urban areas. Malls offer tiered parking options—hourly, daily, or monthly—with premium services like valet or reserved spaces available at higher rates.
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- Cinema halls provide revenue to the malls by sharing their profit percentage based on the sale of the ticket along with the rent of the area.
- The amusement areas, such as bowling alleys, interactive play areas, escape rooms, and many more, come with different admission fees. That will further be a direct source of revenue for the mall if they are operating. And if there is a different operator for these amusement areas, they share their profits with the malls.
- Gyms in the malls attract more fitness visitors. Therefore, apart from commercial sales of the mall, fitness centres also help in increasing the revenue of the mall.
5. Food courts and restaurants are major revenue drivers for malls. Tenants pay base rent plus a percentage of daily sales, making high foot traffic crucial. This creates advertising opportunities and boosts revenue. Additionally, high-end restaurants attract more visitors, enhancing the mall’s appeal.
Shopping malls have different strategies to generate large revenues. The malls should look into their abilities and innovation and also adapt according to the positive demands of visitors and tenants. And make sure that the mall has a dynamic environment, which will further attract more visitors.
