An anchor store is a major retail store used to drive business to smaller retailers—usually in a shopping mall or strip mall setting. These larger department stores or grocery stores are generally part of a retail chain and serve as the prominent business in a shopping mall or strip center. Anchor stores are not to be confused with a category killer as they have a broader appeal. A category killer is a retail business that dominates its competition in a product or other stores of its kind.
The Need for an Anchor Store
Retail has been experiencing a cycle where malls were the most popular destination, and then it became online shopping and now lifestyle centers are the new thing.
One point has always been true, though, and that is that any retail development needs an anchor store to be successful. As the term implies, this store "anchors" the development. Its presence determines which other retailers may join the project.
In fact, retail developers often times put the names of the anchors on their architectural plans for other businesses to see. In this way, the anchor is actually selling the mall space for the developer as well.
If a store plans on opening stores around the country, they would likely want to know who the anchors of the project were before signing a new lease. It's important to have the right anchor. In other words, a retailer that would drive customers to the mall or center that fits your store's customer demographic, not just theirs.
Bringing Customer Traffic
Anchor stores are the draw and they feed traffic into the smaller stores that surround them. A typical anchor store would be a large department store like Dillards or Macy's. These stores offer a wide variety of products and therefore appeal to a broader audience, thus driving more traffic.
An anchor can also be a grocery store like Whole Foods or Central Market. These grocers tend to set themselves into retail malls or lifestyle centers for their traffic as well. They appeal to a different segment of customer: one that shops in lifestyle centers and not strip centers.
Anchor stores also spend a large amount of money on marketing which helps drive more traffic to the center. In fact, you could reduce your marketing budgets for mall locations for this very reason.
If you were operating your store in the mall, you might find that in-store marketing was more important for you, while the anchors spend the money driving people into the mall. This would help preserve your store's marketing budget since you were solely responsible for driving traffic to your store.
Choosing a Worthwhile Center
The key to selecting the right anchor for your store (meaning picking the right mall or lifestyle center to locate your retail store) is to know and understand the demographics of the anchor. Is their core customer the same as yours? Or do they appeal to someone different?
Say you have a chain of shoe stores, and your merchandise mix is more fashionable, so you want to be near retailers and anchors that sell fashionable or lifestyle goods as well.
You might prefer to be near Anthropologie versus Abercrombie and Fitch. The customer who is drawn to Anthropologie might also like your store. If Anthropologie's customers are very loyal, this might also help sustain your store as well.
When Anchors Move Out
Just as the anchor store can make the retail development, it can break it as well. You can find news every day about anchor stores closing. This has the greatest impact on malls. A large empty space at the end of a mall signal to customers that there is a problem and they should shop elsewhere.
Not to mention that fact that parking is disrupted since the store's closed and a main entrance to the mall is now gone. Some retail developers have been successful in reimagining the space by adding other types of entertainment, but the empty anchor spot in a mall will still impact the sales of all of the stores in that mall.