Retail Is Now Taking The Brunt Of Economic Fallout From Mass Shootings

When Allen Premium Outlets reopened its doors late last month, 25 days after a gunman killed eight people, wounded seven and traumatized hundreds more, many members of the community took to social media to say it was too soon.

A spate of deadly shootings has gripped U.S. malls and shopping centers over the past several years, leaving operators grappling with how to minimize the emotional and financial fallout.

With millions of sales dollars in the balance, large retail venues cannot afford to remain closed indefinitely — and most do not, according to data analyzed by Bisnow. But in addition to lost sales, property damage and potential legal liability, research shows mass shootings lead to long-term economic impacts that are both broad and industry-specific. 

“There's an effect on the economy, that's for sure. It persists, and it’s quite large,” said Abel Brodeur, an associate professor at the University of Ottawa and co-author of a 2019 report that studied the economics of mass shootings. “We're talking about an effect that would be similar to the economic consequences of a hurricane or a pretty powerful storm.”

Mass shootings have hit a record pace in 2023, averaging roughly one per week. Over the July 4th weekend, tragedy struck three more times, with mass shooting events in Baltimore, Philadelphia and a Fort Worth, Texas, parking lot that left 10 people dead.

Malls and other retail establishments are seeing more than their fair share of these violent events. Thirty-nine mass shootings occurred at retail locations between 1966 and 2022, placing the sector as the No. 1 spot for active assailants, according to The Violence Project. The incidents are also increasing in frequency, with more than half occurring over the last 14 years.

Academics who study mass shootings told Bisnow they were not aware of any research into the economic health of malls or major shopping venues specifically following a mass shooting event. A May study published in the International Journal of Hospitality Management, however, found an 11.3% immediate decline in revenue per available room for hotels in cities where mass shootings had occurred. The study of performance outcomes for local hotels after 85 mass shootings across Texas from 2013 to 2019 concluded those "effects gradually fade away and become insignificant in the following months."

But Brodeur’s estimates suggest that mass shootings — which the Congressional Research Center defines as having four or more victims — reduce employment and earnings in the communities in which they occur by about 2%. Mass shootings also cut the number of establishments in targeted counties by 1.3%, and they can result in housing price decreases of 3%.

“People are less likely to go to work in counties hit by mass shootings than other similar counties years after; they are more likely to miss a day of work,” Brodeur said. “These effects can be permanent, and it's really sad.” 

For malls and shopping centers in particular, revenue loss tends to vary based on when a facility reopens. Alf Gonzalez, franchise owner of the Fatburger at the Allen outlet mall, told the Dallas Morning News it could take six months to a year to recoup the money he lost over the three-week closure.

“It’s different for us, as a small business,” Gonzalez told the DMN. “We aren’t like the bigger retailers here that have so much to fall back on. We need support.”

Even though the chance of a community being targeted more than once in a short time frame is very low, studies show fear of future shootings can have consequences that last years.

Fifty percent of respondents to a 2019 study by the American Psychological Association said malls are places they feel the most stressed about mass shootings — more than schools, universities or movie theaters. One-third of adults said they avoid certain places and events as a result. 

Lengthier closures give the community more time to process a mass shooting, which can impact whether or not they return, said Mark Lipton, professor emeritus at Parsons School of Design and The New School and an adviser to corporate boards and CEOs. 

“There’s a very delicate balance of ‘how long do we wait and not look like a crass landlord who just wants to get this place back open again,’” Lipton said. “There seems to be a smoother opening when this period of, ‘let’s unpack this and understand where we are,’ comes first.”

A Bisnow analysis of 10 retail locations targeted by a mass shooter found that the average length of closure is about 66 days, or a little more than two months. 

In several cases, though, malls remained closed for less than a week. Westroads Mall in Omaha, Nebraska, for example, reopened just three days after a gunman fired 30 rounds that killed eight people and himself.

When a mass shooting occurs, property owners essentially have four options of what to do with the building, Lipton said: demolish, renovate and repurpose, create a memorial, or do nothing.

There are federal grants that pay for a school to be razed after a mass shooting, but that same program does not exist for the private sector, prompting many to leave the structure as-is.

The lack of public assistance could put more pressure on the insurance industry, Lipton said. Some companies offer standalone coverage for active shooter events or have the option of tacking it on to an all-in-one policy, but the market is still relatively small.

There are between 5,000 and 10,000 policies that exist for active shooters, comprising roughly $100M worth of premiums, according to CFO Dive. By contrast, cybersecurity insurance is a $6B market.

“So much rests with the next moves of the underwriters who insure these properties because there’s a dramatic lagging factor insofar as what do you do with the building,” Lipton said. “It’s clearly a changed world in terms of indemnity and what active shooter coverage really needs to embrace.”

Insurance coverage for active shooter events can play into the calculus of when to reopen, Lipton said. If a retail owner has no coverage for the business interruption, they may feel compelled to open sooner, though Brodeur said there’s no guarantee they will be immediately successful. 

“Clearly a mall is going to struggle getting customers to come back and is going to struggle to hire more employees,” Brodeur said. “In the short run, for businesses at that specific location, it’s going to be really hard from an economic point of view.”

In the case of the Allen mall, foot traffic was up 23.7% in the week following the May 31 reopening, according to data from Placer.ai. By contrast, Greenwood Park Mall in Indiana, which was the subject of a shooting incident in July 2022, saw a foot traffic decline of 30% after its three-day closure.

The active shooter marketplace is growing as more incidents occur, said Rick Lindsey, CEO and president of Salt Lake City-based Prime Insurance Co., which has been offering the coverage for about 10 years.

Policies are tailored based on what a customer wants, Lindsey said, but can include anything from property damage and business interruption to grief counseling for victims. Adding the coverage can increase premiums by up to 10%, Lindsey said, with policy limits ranging from $1K to $10M. 

Though the likelihood of falling victim to a mass shooter is relatively low, Lindsey said the coverage is necessary given the massive financial impact shootings can have on business.

“It’s certainly not cheap … but small businesses can’t run from it,” he said. “They’re going to be impacted, people won’t come back for a while. There’s all kinds of repercussions as far as what it’s going to cost your business, the same way [fires and floods] cost people their homes.”

Active shooter coverage carries a lot of risk for insurers, which is why many don’t offer it, Lindsey said. When underwriting a new policy, Prime makes sure clients take certain steps to protect themselves from liability in the event of a mass shooting.

“It’s not a lot more of a risk to me as long as you’ll do the things I want you to do, which is to have a plan, which reduces the risks of it ever happening,” he said. “When it does happen, we did everything we could, which is the best we can do.”

Fortification of facilities could prevent mass shootings, but in most cases the cost is too exorbitant for property owners to take on, especially at the store level, said Read Hayes, director of the Loss Prevention Research Council, an organization that works with more than 70 major retail chains on loss and crime-control solutions. 

“We work with retailers that might have thousands or tens of thousands of locations,” he said. “They couldn’t do it, and that’s why you see retailers shutting down across the country in large part because of crime and risk, and employees don’t want to work there.”

Many retail centers provide essential services to shoppers, which means traffic will likely rebound, Lipton said. But the speed of success may largely hinge on whether landlords go the extra mile to show they care about what happened.

“They may want to rebuild and get places open quickly, but dealing with the emotional side of this is not something they’re accustomed to doing,” Lipton said. “Having those difficult conversations is really important to whether the mall or retail center has a life again.”