With more major retailers announcing same-day delivery programs every month, it seems clear that the modern consumer doesn’t need the traditional mall any more. While rows and rows of shops and kiosks might have appealed to their parents, younger consumers just aren’t enamored with retail spaces – especially big massive malls - as we once knew them.
But it might not be long before malls are built with the wants and needs of the modern millennial consumer at heart. At the very least, that’s what Steiner + Associates and Bucksbaum Retail Properties are trying to do with several new retail spaces in Ohio, CoStar reported.
Forgoing the idea of a traditional mall filled only with consumer-facing stores, Yaromir Steiner, founder and CEO of Steiner + Associates, explained how millennial consumers want something more than the malls that satisfied previous generations. In fact, as same-day delivery programs continue to replicate and in some ways enhance the in-store retail experience, Steiner explained that retail developers need to combine some non-retail elements, such as dining and entertainment options, to create a location that younger consumers see more value in visiting.
"In the best examples of these projects, the design of outdoor public spaces follows traditional urban planning principles, and the project is not only the commercial, but also the social and civic hubs of the community," Steiner told CoStar.
The change may necessitate an update to consumers’ vocabularies as well. Instead of calling these new retail spaces “malls,” Steiner prefers the term “lifestyle centers” to more accurately reflect the wider breadth of constituent offers, such as cinemas, residential dwellings and sports facilities. Roughly speaking, lifestyle centers usually clock in around 150,000 to 500,000 square feet, with a handful of national name-brand retailers serving as anchor points for smaller merchants and a slew of non-retail options.
"The data shows that the millennials in particular are very social - they want to get together with friends to do several things at once, like exercise at a spin studio, get a bite to eat and then go grocery shopping - and they want to do it at one multipurpose lifestyle center area," Maureen McAvey, senior resident fellow for retail at the Urban Land Institute, told CoStar.
As malls continue to refine themselves in regard to modern consumer interests, data suggest that they might be making some headway. A survey conducted by Cotton Incorporated found that millennials are 6 percent more likely (48 percent) to shop at a department store in 2015 than they were in 2010. Millennials have also demonstrated a preference for non-traditional pricing strategies from traditionally mall-bound retailers, as sales at off-price locations are up 7 percent to 41 percent from 2010.
B&M stores are far from the only retail entities rethinking their real estate strategies, though. As explained by The Street, merchants offering same-day delivery also aren’t content with their current system of routing packages through national hubs. Instead, companies focused on eCommerce have been buying up warehousing centers to facilitate the expansion of express delivery services into non-urban centers. In fact, as more online retailers push for same-day delivery and require the physical warehouse space to facilitate rapid shipping, B&M retailers could find themselves pressed to find prime real estate in suburban centers they’re used to dominating in the past.
As online retailers continue to disrupt traditional practices, B&M retailers might be forced to confront an uncomfortable truth about same-day delivery: They can’t compete. But instead of throwing in the towel and closing up shop, lifestyle centers, off-pricing strategies and an open-mindedness toward offering experiences that express shipping can’t offer just might keep them in the game.