While some sensationalist headlines argue that the mall is “dead,” there is significant evidence to suggest otherwise and that the right investments in key mall properties can help shopping centers reposition themselves for success in an omnichannel world.
THE WRONG MIX
Anchor stores, typically multi-level department stores occupying the end spots at traditional malls, hold a weighty responsibility. They were originally created to attract shoppers into the interior portion of the mall to browse and buy at the stores typically occupying the wings at traditional malls. Today, the average American mall is still anchored by department stores, which occupy nearly 50 percent of gross leasable area in shopping centers across the country. Apparel, accessories and shoe stores occupy 58% of the remaining Gross Leaseable Area (GLA). Despite these being two of the slowest-growing categories in the current retail landscape, they take up the most amount of mall retail space and leave little room for some of the fastest-growing categories: restaurants, home furnishings and health and beauty.
The traditional mall model was developed nearly 70 years ago, when consumers couldn’t shop online for clothes, shoes and accessories. Today, as those categories have some of the highest rates of e-commerce sales, the traditional model needs to be readjusted.
CREATING THE MALL OF TODAY
As malls look toward the future, anchor stores can be anything from major supermarkets, to high-end restaurants, bowling alleys, night clubs, movie theaters and even residential. And mall owners are taking note.
Simon Property Group is turning its Northgate Mall in Seattle into a transit-oriented development hub—focused around the planned arrival of light-rail service in 2021—complete with multifamily units, offices and retail. Early site plans showcase the redesigned mall as a town center of sorts, complete with a central green space, rather than a traditional enclosed mall. With the addition of new office and retail space, shops and restaurants will be rejuvenated by the reliable daytime foot-traffic of office workers. By also introducing multifamily units, the mall will boast a live-work-play convenience factor that appeals to residents and employees alike.
Moving the tenant mix away from its over-reliance on the low-growth, high e-commerce categories is imperative. Proactive mall owners are pursuing higher growth categories that bring experiences like restaurants, unique forms of entertainment and services that are more impervious to e-commerce.
AN EXPERIENCE OF ITS OWN
Enterprising mall owners are taking different approaches to creating consumer-friendly experiences, including investing in creative design, event spaces and common spaces. Some are choosing to bring in pop-up tenants
, creating buzz and an element of surprise to draw in traffic. Though the strategy may vary between properties, mall owners and developers are staying nimble and investing in new tactic to meet the demands of the omnichannel customer.
There’s no denying that shopping online is often more convenient than heading to a mall, finding parking, navigating different stores and ultimately making a purchase. But if shopping centers can become destinations, they’ll continue to inhabit a shopping sector all their own.