Anchor Department Stores: The Key to Mall Success

Why are "anchor" department stores in shopping malls charged lower rents than other stores?

Do anchor department stores have more bargaining power than other stores in negotiating rent?

Answer:

Anchor department stores are charged lower rents due to their ability to attract more customers to the mall, benefiting smaller retailers. They also have greater power to negotiate lower rents.

Anchor department stores in shopping malls are usually charged lower rents than other stores because they act as a major draw, attracting a significant amount of foot traffic to the mall. This increased foot traffic benefits smaller retailers and helps keep the mall bustling and economically healthy. The anchor store's presence can contribute to the overall success of the mall, which incentivizes mall management to offer them reduced rent as a strategic move. Additionally, the size and pulling power of these anchor stores often give them bargaining power to negotiate lower rents.

Small "Mom and Pop" shops may operate without economic profit for reasons like community value and personal fulfillment.