A first for Walmart: It just bought an entire shopping mall
Walmart, which has nearly 5,000 stores in the United States, has a new approach to reaching more shoppers. It just bought an entire mall.
With this purchase, Walmart now becomes a first-time mall landlord. The retailer hasn’t divulged details about its plans for the mall, or why it made the purchase, but industry watchers are pegging it as a shrewd strategic move.
The retailer paid $34 million for the Monroeville Mall in Monroeville, just east of Pittsburgh, Pennsylvania. It bought the property from CBL Properties, which owns and manages malls and open-air shopping centers, primarily in the Southeast and Midwest part of the country.
“This is the first time that we’ve seen a large retail chain acquiring a mall,” Stephanie Cegielski, vice president of research with ICSC, formerly known as the International Council of Shopping Centers, said in an interview with Bagable.com. “It’s probably a smart move for Walmart. Amazon, for example, bought a mall a couple of years a go to turned it into a distribution center.”
In a statement to Bagable.com, Walmart said it “is very interested in being part of any future redevelopment of this site.” The retailer said it has partnered with real estate investment company, Cypress Equities, on “potential redevelopment of the site” but is “unable to share any specific plans at this time.”
“Redevelopment of a mall takes a while, so they have time to think about that,” Cegielski said.
The two-level Monroeville Mall, with over 1 million square feet of space, has a food court and more than 100 stores, including H&M, Dick’s Sporting Goods, Best Buy, JCPenney and Macy’s.
“There aren’t luxury brands in it and it probably needs some updating. Walmart has the deep pockets to do some of that,” she said. Walmart sits on about $10 billion in cash and cash equivalents on its balance sheet.
“I would be interesting to see if Walmart actually gets into the mall business or if they try to redevelop this with one of their stores being an anchor to the mall,” Cegielski said. “Also, I’m curious about how current retail tenants in the mall feel about having Walmart as their landlord?”
“It’s a win-win”
Walter Holbrook, a retail industry expert, is excited by Walmart’s mall play.
“It’s a new opportunity,” Holbrook said. “The mall sold at a pretty reasonable price, too. So it’s not a huge risk for Walmart,” he said. “But the big question is, does Walmart go in there and put a large Supercenter store or redevelop the entire property?”
While the Pittsburgh area is a strong market for Walmart, the retailer “has a hole where that mall is, where it doesn’t have a Supercenter nearby but it has a Sam’s Club,” said Holbrook. “It tells me that Walmart already has a lot of data about the customer in the area and it’s giving the company confidence to buy that mall.”
Holbrook suspects Monroeville Mall’s current tenants will cheer having Walmart take over ownership of the property.
“If I’m Macy’s or Dick’s or H&M or JCPenney, I’m pretty excited by this, especially if I’m still able to do business out of that mall because of the shopper traffic that a Walmart location would bring into it,” Holbrook said. “To me it’s a win-win for the city, it’s a win for the area and a win for Walmart.”
At the same time, the mall acquisition could signal that Walmart is searching for new ideas for expansion.
With about 4,700 Walmart stores across the country located within 10 miles of 90% of the U.S. population (according to Walmart’s own data), it’s a challenge for the retailer to find more room to grow.
“There isn’t that much space left,” said Holbrook. “The mall’s location appears to be a perfect for a Walmart store to come in because of the demographics. It’s similar to the middle of the US, suburban and diverse, a fit for Walmart.
Burt Flickinger, retail expert and managing director of retail consultancy Strategic Resource Group, noted one other advantage to Walmart scooping up the Monroeville Mall.
“It’s Walmart’s checkmate to Amazon because it prevents Amazon from getting that property for its own use,” Flickinger said in an interview with Bagable.com.
Could this be the first of many mall purchases by the retail behemoth?
“I think Walmart will be an opportunistic real estate buyer. When the deal is compelling, they’re going to jump on it,” said Holbrook. “The one thing Walmart has is a lot of money.”
They should put reasonable price apartments upstairs.ive seen other malls do that.I would love to live at the mall. There should be restaurants and bars and of course shops. You wouldn't really have to leave except to get grocery's. It would be a great place for seniors.