By Ulrika Haug, Lithium Technologies
For years, we’ve heard that shopping malls are struggling. So it comes as a pleasant surprise to learn that in 2014, malls saw their highest occupancy rates in a decade.
Fortune.com reported that this upswing is credited to the weakest malls closing and an increase in retail sales. But while this news seems great, many malls aren’t entirely in the clear. More malls are predicted to close and mall retailers are faced with uncertainty, rising rents and fiercer competition. No matter what a retailer’s mall fate may be, a strong online community strategy can help it navigate and build customer loyalty independent of its physical location.
The good news for malls.
Leading mall property owners General Growth Property and Simon Property Growth saw strong 2014 financial results. The National Retail Federation predicts shoppers will increase spending by 4.1% in 2015, the biggest increase since 2011. Likewise, mall anchors such as J.C. Penney and Macy’s also predict sales increases.
And…the bad news.
Advertisement
Nearly 300 of the 1,500 malls across the U.S. are expected to disappear. Large retailers continue to close stores, which leaves many malls without an anchor tenant. With less mall space available, the price for rent and sales per square foot is only going to increase in remaining malls. This will potentially edge out retailers who are doing okay, but cannot accommodate the higher cost of business.
This mix of good and bad news leaves many mall retailers wondering how they can ensure their future.
Online communities can be the key to survival.
With the advent of social media and omnichannel shopping, retailers are fast realizing that they need to meet their customers’ extreme expectations. These include a seamless omnichannel shopping experience, instant digital customer service and interaction on their preferred social media channels.
Retail brands have to be more than just a place to shop or brick-and-mortar destination. They must provide customer experiences that go where their customers are: In-store, online and on mobile. Retailers with a strong digital strategy have a distinct advantage when it comes to building customer loyalty — and this can help save brands who may end up being forced out of mall locations.
Best Buy was an early brick-and-mortar adopter of online communities when it launched its Best Buy Community in 2008 to start meeting customers at their preferred location: Online. The retailer also instituted the @twelpforce on Twitter to provide faster responses to customer inquiries. Today, Best Buy operates multiple online communities on its web site to keep customers engaged via informative posts, customer care and real-time advice.
The power of a community is that it creates a “third place” where customers feel at home with the brand, regardless of their preferred online channel or brick-and-mortar location. It’s a place where they’re not just being sold to, a locale for them to interact with other customers and obtain quality content on products, as well as answers to their questions. Sure, the brick-and-mortar retail industry is in a state of transition, but the business doesn’t have to die if and when a mall does. Those retailers that are nimble and able to engage customers in the location of their choosing (online or in-person) will be more likely to retain their loyalty regardless of brick-and-mortar location.
Why? Because community builds trust — the key factor that keeps customers following you no matter where you are. It’s a two-way street. The brand builds the community to attract its most loyal customers who, in turn, build trust among other customers. The community helps brands follow customers wherever they prefer to shop, but conversely, they will then follow the brand wherever it is.
Retailers also face competitive pressures from online heavyweights such as Amazon and Zappos whose innovation has shaped customers’ expectations for every other shopping experience they have. Brands are left with no choice but to keep pace. A digital strategy centered on a strong community creates a hub where customers congregate, interact with the brand, get their questions answered, receive product recommendations from peers, and help brands innovate product improvements and solutions. Communities also lead to improved conversions, as customers making product and service recommendations to each other can positively impact purchase behavior. But there is also a significant bottom-line benefit: Communities often assume the bulk of customer service care, saving retailers precious dollars that they can invest in other areas of the business.
Communities are the focal point to building and maintaining a strong brand that can thrive regardless of any shifts in location. By building customer loyalty, brands can ensure that they maintain flexibility whether located in a mall or not. And that’s great news for both brands and customers. Happy retailing!
Ulrika is the Director of Product Marketing at Lithium where she is responsible for Lithium’s community, analytics and Klout products as well as retail go-to-market. Prior to Lithium, Ulrika was the VP of Marketing & Product Management at a German-based tech company where she led product management, product marketing, public relations and marketing communications. Ulrika launched a retail technology startup, ReTel Technologies, while in graduate school. The company was acquired by ShopperTrak in 2012.
