What Is an Anchor Store in Retail?

Anchor Store
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An anchor store is major retail store used to drive business to smaller retailers. These larger department stores or grocery stores are generally part of a retail chain and are the prominent business in a shopping mall or strip center. Not to be confused with a category killer, this store has a more broad appeal. 

Retail goes through cycles where malls are the most popular destination and then its online and then its lifestyle centers, but the one thing that has always been true, any retail development needs an anchor store to be successful.

As the term implies, this store "anchors" the development. Its presence determines other retailers that 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 tis way, the anchor is actually selling the mall space for the developer as well;. When I was opening stores around the country, I always wanted to know who the anchors of the project were before I would sign a new lease. It was important to have the right anchor. In other words, a retailer that would drive customers to the mall or center that fit my store's customer demographic. 

Anchor stores are the draw and they feed traffic into the smaller stores that surround them  Typically an anchor store is 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.

But 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 traffic to the center as well.

In fact, we reduced our marketing budgets for our mall locations for this very reason. We found that in store marketing was more important and the the anchors spend the money driving people into the mall. We kept our freestanding stores marketing budgets in tact though since we were solely responsible for driving traffic there. 

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? When I had my shoe stores, our merchandise mix was more fashionable, so we wanted to be near retailers and anchors that sold fashionable or lifestyle goods as well. So I preferred to be near Anthroplogie versus Abercrombie and Fitch. The customer who was drawn to Anthroplogie would also like my store. Plus those customers were very loyal which helped sustain my store as well. 

Just as the anchor store can make the retail development, it can break it as well. Every day we read about anchor stores closing. This has the greatest impact on malls. A large empty space at the end of a mall signals to customers that there is a problem and they should shop elsewhere.

(Not to mention that fact that parking is disrupted since a main entrance to the mall is now gone.) Some retail developers have been successful in reimagine the space by adding other types of entertainment. But the empty anchor spot in a mall will impact the sales of all of the stores in that mall.