All eyes are on the detail as we continue to read the headlines of accelerated e-commerce sales and major store closures. The pandemic compressed the years of e-commerce adoption / growth into months, to the dismay of unprepared physical retailers.
Since many of these stores are anchors for specialty malls and retailers, it’s no surprise that 25% of all closed malls are expected to close in the next five to seven years. However, these trends have also created an opportunity for surviving malls to self-correct and thrive.
The pandemic has forced an accelerated evolution for mall owners with increased investment in technology, better tenant merchandising, improved logistics, and a significantly high customer experience.
From the very beginning, closed malls dominated the retail landscape by providing the customer with many large and small retail stores under one roof, promoting convenience, selection and competitive pricing.
By exploiting e-commerce and specialty commerce, the relevance of closed malls was questioned. Mall owners began to orient their focus toward delivering a high-quality brand and customer experience, while balancing physical and electronic performance attributes.
For example, Macy’s, one of the mall’s top tenants who recently announced the closure of 125 stores, offers several upgrades in its best locations, such as ATMs, personalized marketing, and the incorporation of unique branding experiences. With this change, Macy’s concluded that promoting personalized items with higher customer service resonates with the current consumer rather than their historic practice of regularly discounting their merchandise.
There are a large number of malls that will survive and thrive. These properties will have the following common features:
- Location, location, location: The best performing malls are in prime locations, with superior demographics and heavy traffic;
- Densification: Offices, hospitality, and residential properties in malls contribute to higher customer traffic, stronger sales, and higher incomes.
- Experience is key: the repositioning of the shopping mall category focuses on the inclusion of experiential and entertainment concepts, thus providing current customers with the necessary service and experience. These uses are becoming the new anchors of shopping malls.
- A strong balance of sales in the store with omnichannel presence. These offerings include online shopping / in-store collection features, augmented and virtual reality to allow the customer to digitally test products, pop-up stores and order aggregation.
Mall owners who have opted for the previous changes will continue to see more traffic, higher sales and well-rented malls. Shopping malls are not dead. They are simply evolving with the rest of the consumer world and will continue to be a key part of the success of the retail industry. Yes, “I am a believer. I couldn’t leave her (the mall) if I tried. “