How Malls Make Money: Leasing to Retail Media

Currently, the main source of income for shopping malls is the rental income from retail tenants. The amount a retailer pays for a space depends on factors such as the size of the unit, its location within the mall, and the perceived value of that retailer to the overall tenant mix.

Shopping malls generate revenue primarily through various streams. Here are some of the main ways:

1. Rent from retail tenants: The primary way shopping malls generate revenue is by charging rent to their tenants, the companies that operate stores in the mall. This rental fee can be fixed, variable based on sales, or a combination of both.
2. Percentage of sales: Some shopping mall operators may also charge a percentage of the tenant's sales as part of the lease agreement. This means that the more money the store makes, the more the mall earns.
3. Advertising and promotional revenue: Shopping malls have a lot of foot traffic and visibility, making them attractive spaces for advertising. Malls can charge companies that advertise in common areas or on mall-owned digital signage. They can also generate revenue by hosting promotional events, product launches, or pop-up stores.
4. Parking fees: Some shopping malls charge for parking, and this can be a significant revenue source, especially in urban areas where parking is scarce.
5. Commissions from vending machines: Shopping malls may have vending machines (such as for food and beverages) owned by external suppliers. The mall can earn a commission based on the sales of these machines.
6. Real estate sales and appreciation: If the owner of a shopping mall decides to sell a mall that has appreciated in value, they can profit from the difference between the purchase and sale prices.
7. Service fees: Some shopping malls may charge additional fees for services such as premium parking, personal shopping assistance, or the rental of equipment like wheelchairs or strollers.

Shifting Sands

The retail sector, including shopping malls, has been undergoing significant changes due to various factors, and these are likely to continue in the future. Some of the main trends affecting the future of shopping malls include:

1. E-commerce: The rapid growth of online shopping has had a profound impact on physical retail spaces, including shopping malls. Consumers now have the convenience of purchasing items from the comfort of their own homes, and e-commerce platforms generally offer a wider variety of product options than physical stores. Shopping malls will need to find ways to compete with this, possibly by providing experiences that cannot be replicated online.
2. Experience-based retail: With the rise of e-commerce, traditional retail has shifted towards offering unique experiences that cannot be replicated online. This can include things like experiential stores, food and entertainment options, fitness centers, or other amenities. As this trend continues, shopping malls may start to generate more revenue from these types of tenants and services.
3. The impact of COVID-19: The pandemic has led to an increase in online shopping and a decline in foot traffic at shopping malls due to social distancing and lockdown measures. This has accelerated the need for shopping malls to innovate and adapt to changes in consumer behavior, such as improving their online presence or developing omnichannel strategies.
4. Diversification of shopping malls: There is a growing trend of transforming shopping malls into mixed-use spaces, incorporating offices, residential apartments, hotels, schools, and more. This could diversify the revenue streams for shopping mall operators.
5. Sustainability: There is a growing demand from consumers for ethical and sustainable practices in the retail sector. Shopping malls that can demonstrate environmental responsibility, such as reducing energy usage or waste, may be more appealing to both tenants and shoppers.

In the future, the ways in which shopping malls generate revenue may need to adapt and evolve with these trends.

A New Path Forward

The advent of AI-based solutions, like Footprints AI, is poised to revolutionize the business model of shopping malls. Footprints AI provides advanced customer analytics and predictive behavior modeling, transforming customer behavior data into highly valuable predictive media audiences. This data can be used to inform rental pricing, considering factors such as foot traffic, conversion rates, and even predictive buying behavior.

1. Data-driven rental pricing: Imagine setting the value of your retail spaces based on the quality of customer interaction they offer, not just square footage. By analyzing traffic, how long customers stay, and conversion rates, malls could create a win-win pricing model for themselves and their retailers.
2. Performance-based rental model: Let's take it a step further. Footprints AI can track sales data, enabling malls to implement a performance-based rental model. Retailers would pay a base rent, but also a percentage of their sales. So, as the retailer grows, so does the mall's revenue. It's teamwork at its best.
3. Value-added services and retail media networks: This is where things get really interesting. Equipped with the rich data from Footprints AI, malls can venture into retail media services. This means malls can help retailers advertise their products to the right audience at the right time, driving foot traffic and increasing sales. The mall could create its own Retail Media Network, generating additional revenue streams from advertising.

This could trigger a complete shift in the mall-retail relationship. Malls become more than just landlords; they become strategic partners, investing in the success of their tenants and profiting from the value they bring.

Footprints AI: Changing the game with data and AI

Footprints AI can bring a transformative change in how shopping malls generate revenue. Here's how:

1. Data monetization: Footprints AI enables malls to transform their behavioral data into valuable insights, making data an asset that can be monetized. This includes predictive models of customer behavior that brands can use to more effectively target their advertising, thus opening a new revenue stream for malls as brands pay for access to these predictive audiences.
2. Retail media platform: Malls can create or enhance their own Retail Media Network offering using Footprints AI, which is designed to optimize advertising campaigns based on predicted in-store buying behaviors. In this way, malls can increase their advertising revenues by providing highly efficient and targeted advertising solutions to retail brands.
3. Enhanced tenant relationships: The insights provided by Footprints AI can help malls better understand their tenants' performance and provide valuable information to increase their efficiency. This can lead to stronger tenant relationships and potentially higher rents or lease renewals.
4. Improved customer experience: By using predictive models, malls can enhance the overall customer experience, which can result in increased traffic and sales. For example, knowing the predicted customer flow can help organize events or sales during high-traffic periods. A better customer experience can lead to higher spending within the mall, benefiting both tenants and the mall itself.
5. New partnership opportunities: The insights generated by Footprints AI can be used to attract media partnerships and sponsorships. This could open up entirely new revenue streams that malls were unable to tap into before.
6. Greater efficiency and lower costs: With Footprints AI's comprehensive retail analytics, malls can optimize their operations and reduce costs. This includes everything from energy usage (knowing when mall areas will be less busy) to security (understanding customer movement patterns).

At its core, Footprints AI has the potential to transform shopping centers from mere physical spaces into data-driven, omnichannel retail ecosystems that monetize their insights, providing a more profitable, efficient, and customer-centric experience.

Retail Media: The Next Frontier of Mall Monetization

As shopping malls navigate the evolving retail landscape, Retail Media Networks are emerging as a promising new revenue stream. Powered by the first-party shopper data and predictive analytics enabled by solutions like Footprints AI, malls can leverage their unique position at the heart of the customer journey to create highly valuable, targeted advertising audiences.

By monetizing their expansive pool of shopper data, malls can offer brands the opportunity to reach consumers at the point of purchase, when they are actively engaged and ready to convert. This audience-based advertising model can command premium CPMs that far exceed traditional advertising channels. As malls transform into omnichannel retail hubs, Retail Media Networks will be a critical driver of their long-term profitability and success.

From Cost-Based Leasing to Data-Driven Revenue

The fundamental tension in mall economics today is the gap between how malls charge (fixed rent, unrelated to performance) and how online marketplaces charge (performance-based, directly tied to sales). Tenants who pay rent, marketing fees, and maintenance fees see no direct correlation between what they pay and the foot traffic or sales they receive. This frustration is pushing the industry toward a new model.

The answer is data monetization. Every visitor walking through a mall generates behavioral data: paths taken, stores visited, dwell time, purchase patterns. This data, once collected and analyzed, becomes a new asset class for mall operators, one that can be transformed into targeted advertising, tenant performance insights, and cross-brand promotional opportunities.

The numbers support the shift. People still spend more than 87% of their time in indoor environments. Indoor retail spaces attract 1.7 billion shoppers globally every year. AI-based advertising technology applied to this foot traffic can deliver a 5 to 8 times increase in ad targeting accuracy for retail brands operating inside malls.

This is what Retail Media Networks enable for physical retail properties: the ability to monetize existing foot traffic through precision advertising, turning a traditional cost center (common area screens, in-mall audio) into a high-margin revenue stream that directly correlates advertising spend to measurable sales outcomes.

Related Reading

• How malls can make money in the era of Digital Disruption
• Why shopping malls in the US are struggling to survive
• The Halo Effect and retail gravitation
• Closed-Loop Measurement: How Retail Media Proves Sales Impact
• How Audience-Based Buying Defines the Future of Retail Media?

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