For years, we’ve seen suburban shopping malls build up and expand out. A favorite pastime for many teenagers growing up in the ’70s, ’80s and ’90s was known as “mall ratting,” in which parents drop kids off to hang out. For hours on end, these teens would roam the mall in search of new clothes or spend time with friends in the food court.
With big department stores, which are the backbone of most malls, like J.C. Penney and Macy's closing down hundreds of locations, some have started to call into question the future existence of these sprawling centers of commerce. In Q1 alone this year, just over 2,800 of these mall anchor stores have shut their doors with analysts predicting 8,600 total to close by the year’s end. As online shopping is showing no signs of slowing down, it has affected shopping malls greatly resulting in less foot traffic alongside less dollars spent in brick-and-mortar locations.
Are shopping malls doomed to fall by the wayside along with retail trends of the past?
Not quite yet. This year, Boston Retail Partners principal analyst Ken Morris shared his thoughts with Glossy on the closing department stores and what’s happening as a result. “The malls that are anchored by bad department stores, that are failing, really are dead,” Morris said. “There will be fewer malls – that is a fact. But what’s interesting is what’s happening to the good malls. They’re evolving and frankly, they’re packed.’
Malls are evolving, and retailers are finding new ways to attract customers into these multi-store venues.Malls are evolving and retailers are finding new ways to attract customers into these multi-store venues. Whether it's adding on grocery stores like Wegman's replacing J.C. Penney's in Massachusetts' Natick Collection or arcades and trampoline parks in Florida's Orlando Square Mall, these shopping centers are most certainly thinking outside of the box.
“Malls need to think differently about who their anchors are. Thinking outside the box about what type of retailer is going to serve as a destination – that could be a grocery store or restaurant or theater – that’s how you attract people,” Morris added.
There will be future malls moving forward. According to Credit Suisse's research, an approximate 20 percent to 25 percent of all U.S.-based physical shopping malls will shut down by the year 2022, which comes out to 400 big malls total. As malls move to find what to replace these big and empty department stores with, the remaining retailers are starting to integrate more technology into the brick-and-mortar experience.
As we’ve reported, stores like Sephora and Melissa Shoes have started adding not only apps but tablets to the store experience, which allows for an additional layer of consumer engagement with the retail brand. While retailers are adding tablets to stores and developing branded apps, there are over 150+ technologies specifically geared toward enhancing the vendor and consumer experience for the retail world.
While the many available retail technologies can be somewhat overwhelming for merchants, consumer demand is pushing for a more seamless experience. One of the major retailers today that’s helping to lead the charge is eCommerce company Amazon. It has broken out of the eCommerce arena by opening up its own brick-and-mortar stores via its grocery store and its bookstore. Customers can walk into Amazon’s grocery store and out without stopping at a register to complete the transaction. Those choosing to shop for their food with Amazon will be able to have their mobile wallets via the Amazon app charge their card upon exiting the premises.
There is something to this new way of making payments as analyst firm McKinsey's partner Sangeeth Ram wrote about how technology is helping to evolve the payment process for brick-and-mortar stores. “Digital technologies and changing shopping habits are a clear threat to traditional retail business models,” Ram said. “But there are positive ways to respond to these trends. To embrace these opportunities, real-estate developers must get closer to consumers and figure out how to meet their evolving wants and needs. That means rethinking the role of the shopping mall, and adapting its strengths to those of the virtual world.”
Down the line, it’s likely that we’ll see even more technology integration by merchants and enticing new ways to enhance the consumer experience by real-estate developers. As the entire retail industry is currently in flux, it’s difficult to say how long this will take but it's something we will be keeping an eye on.