Question of the week #31

ImgresI am just going to kick this off with the question.  As we think about the future it really makes you wonder. 

Based on your retail experience, what do you envision as the future for the indoor shopping mall

When I grew up there were a few malls that we frequented; the Montgomery Mall and Tysons Corner.  Each had their respective anchor store and then of course all the chains in between.  These malls were made for American expansion not for Mom and Pop stores.  The malls exploded in the 70's.  I remember when I was working in the garment center and the Mall of America opened in Minnesota in 1992.  The enormity of the whole thing was just insane with over 520 stores.  Was that the height of the mall market?

The next level of consumer engagement in the shopping arena was the explosion of big bookstores.  They brought people in to not only read and buy the books but have a cup of coffee, use their wireless access points and meet others.  Those stores rode the wave up and down pretty quickly as Amazon encroached in their space. They also realized they were not selling books but becoming community centers.  What was left were an array of coffee shos that popped up with the same functions that people really used when they went to the book stores.  Certainly a lot less square footage was needed to make that work. 

With the advent of the Internet the marketshare of many of the stores in these malls has diminished.  Some have built an smart online platform while others have not.  Selling on line might take away from the person walking into the store on a dailiy basis.  In the past if you needed something you had to go to the store and buy it.  Now you can just sit down at your computer or pull our your phone and make a purchase. 

The knee jerk reaction to the indoor shopping mall is the same as the knee jerk reaction to the constant information flow we receive every day.  The next generation and others who are changing their careers are making products that they are passion about be it pickles, chocolate or even becoming a cobbler.  We are returning to our roots.  What happens to the big stores when we begin to rent clothes, buy less and deliver all of our content to a computer or phone.  What happens to the malls?

Real estate is still the key component to those malls.  It is the developers who will start to be saavy as the leases end and so goes another store.  The large brands will continue to want to have a brick and mortar stores but not as many.  More than likely the stores will carry less inventory in the stores and there will be ability to try on a few items for size and have them delivered to your home that day from a warehouse.  The stores will create reasons for people to come in and that does not mean having a sale.  It could be a special conversation with a buyer or a designer.  It could be a unique fashion show.  It could be a class on how to use new gadgets.  I am just making it up as I go along.  I would assume many of the malls will be converted into indoor communities from apartments, commercial office space, new restaurants, carts with local items, perhaps live theater or endless tables of ping pong. 

IMHO malls will be transformed into what people will want to engage with.  Remember it is all about what the market wants.  Some malls will remain empty but hopefully most of them will be converted into a place for communities and people to meet and greet vs shop and get crazed. 

Comments (Archived):

  1. ag

    A really interesting thought experiment, but a part of me feels as though online shopping is not a full substitute for brick and mortar shopping. There is still something social about shopping and practical about being able to try everything on (not to mention that it’s an activity for many). I could never buy a pair of pants or jeans without trying on. I wouldn’t even dream of it. So I need the store and the 3 way mirror. And while I don’t know how the rest of the country feels, I do know that I, as well as many of my friends, can’t stand malls. So I do agree that malls may be a thing of the past.

    1. Gotham Gal

      once in a while i like the social part of shopping too but when it becomes a chore it isn’t fun.

  2. Justin Gray

    This is a very interesting topic, on which I haven’t seen anyone concentrating. I’ve spent the last 12 year in and around Conscious Capitalism (Starbucks, now The Container Store,) and I believe that the future of retail is already being formed by both companies. (I now have a tech startup, but that’s another story.)Starbucks, on one hand, is killing it in regards to engaging with their customers both in their physical stores and online. They’ve done an amazing job of creating a mentally holistic experience for their customers, and I believe that more retailers will start viewing themselves as “hospitality” companies that sell goods, rather than “retail”. An early Starbucks executive once said, “We are not in the coffee business, we are in the people business selling coffee.” That attitude is what will propel retailers into the new age.With The Container Store, it’s much more logistical. The 6th Ave (@ 18th St) store in Manhattan has innovated a technical system into their store that I could see being VERY successful in a large mall – Go Shop Scan & Deliver. Customers, we’ve learned, do not necessarily want to just shop online, but they also don’t want to schlep stuff around the city. There’s a common phrase in the retail world of “showrooming” for “showflooring” in which a customer goes into a store to play with a gadget or physically see an item, then goes online to find the best deal. Go Shop Scan & Deliver is circumventing that tendency by making it “digital” to shop in the actual store.Basically, upon arrival to the store, a customer can check in at the front desk and sign up for a scanner. They then can walk around the store scanning all of the items that they would like to purchase, and when finished they can skip the long check-out line, head back to the front desk, and have all of those items automatically packaged and delivered to their home. The customer even gets to choose a day and window of time that is most convenient for them. (Fun fact – most people want same-day delivery, but a good portion choose to have their items delivered the following weekend.)In my opinion, this would be a killer system to install into a full Mall, as long as the scanner worked at every location within the mall. It would tie together the entire mall community of stores into one experience, while making the customers life easier, as well as (and probably most importantly) cutting back the phenomenon of the “show-roomer”.

    1. Gotham Gal

      “showrooming” for “showflooring” is something I am a huge fan of. you can have your social experience if you want it but you don’t have to shlep the stuff home.

      1. Justin Gray

        I agree completely. Especially given the fact that you can almost always find a better deal online. The scanner system is just the retailers attempt to trim that back as much as possible. Plus the average ticket on those scanners is waaay higher than through the registers (whether or not you believe that’s because of the scanner, or the customer was already going to by a lot which prompted use of the scanner is debatable. Probably a combo of both.) So when it comes to brick&mortars, I think that’s the best solution.

  3. leslie

    They could create some impressive, impactful indoor community garden spaces. Retro-fit with solar panels and all other worthwhile green innovation. It becomes, beyond a source of food, an education and training space. A good way to begin to show a community the necessity of investing in GREEN

    1. Gotham Gal

      that is a fantastic idea.

      1. leslie

        Thank you.

  4. Christine

    Something like a reef ecosystem. One school of fish swims out, another swims in. Thanks for the interesting post.

  5. pointsnfigures

    Mobile technology will be a huge part of the “new mall”. Maybe like Minority Report where your phone, or Google glass sends you a coupon to drive you into a store-or as you walk in, your phone tells you where to find the things you like making shopping more efficient

  6. JLM

    .The mall is dead, long live the mall.The big thing about malls in the near term is their huge and draconian operating expenses. It cost much more to air condition that space than it does to operate the nicest mixed use retail shopping center.Retail is returning — from a real estate development perspective — to its mixed use roots. It was originally on the ground floor of residential development and now it has returned to that position.The most successful new shopping experiences are where burgeoning growth confronts both residential and retail demand. This is happening and has been happening for a long time in the south.Remember the “upstairs” for retail space is wasted. And while wasted, the biggest demand from the retail is customers. Why not put the retail on the ground floor and the residential on the next 6 floors.Old mall sites are great real estate.You know who should be buying old malls?Community colleges and local country government. Convert them as necessary as they have huge spaces and fabulous parking and can be bought, in many instances, for next to nothing.Also incubators, accelerators and co-working spaces.That also is happening.JLM.

    1. Gotham Gal

      Love the community college idea

  7. Dana Jaunzemis

    Malls would make a great senior living facility if you think of the anchor stores being the levels of care from independent living, assisted living to nursing care. The stores in between could be a mix of support services like doctors or dentists that serve the residents and also places to serve the entire community like libraries. There could be indoor gardens to grow food for the residents and create a beautiful area for the inevitable “mall walkers”. Restaurants and coffee shops for residents, but also for family, visitors and staff would create a vibrant community much different from the vision we currently have for senior living.