American shopping malls are iconic institutions, born in the 50s and the quintessential centerpieces of teenage culture in the 80s. Who can think back to the mall madness of the 80s without conjuring up images of Spicoli, Stacy, Linda and the rest of the characters in Fast Times At Ridgemont High who didn’t just sling pizza, but came of age in the food courts and maze-like walkways of their local mall?
For decades, the mall was a staple of popular culture that represented suburban consumerism in its most basic form. The plotline for today’s retail experience is vastly different. Prognosticators have been proclaiming the death of the shopping mall ever since people began seriously shopping online, and web sites like Deadmalls.com have sprouted up to document the demise of retail centers from South Dakota to Mississippi. It’s a good story to tell, but does it reflect reality? Are yesterday’s malls destined to wither as e-Commerce and mobile commerce move up the retail bell curve? Or, is their room for both in tomorrow’s retail landscape?
While E-Commerce Grows, Brick-And-Mortar Will Still Dominate
There’s no disputing that e-Commerce is growing at a rapid pace and continuing to disrupt brick-and-mortar retail. Only the Internet makes it possible to shop at 2 a.m. in pajamas, choose from unlimited product options and score items cheaper than what can be found in a store.
Convenient as it is, the easy conclusion that e-Commerce will lead to the obsolescence of physical stores and malls may be far from accurate. The truth is that more money is still being spent offline than online, and that division of spending isn’t forecasted to reverse any time soon. Research firm eMarketer predicts that e-Commerce will still represent a small portion of overall U.S. retail sales by 2017 — web sales will account for just $440 billion, compared to $4.9 trillion in non e-Commerce sales.
Yes, many malls — especially mid-level malls flanked by struggling anchors like Sears and JCPenney — are meeting the fate of bulldozers and wrecking balls. But, despite the closings, it’s not all doom and gloom. Many higher-end malls are still bustling with business, and others are reinventing their way to renewed profitability. A report from the International Council of Shopping Centers (ICSC) shows total shopping center sales for 2012 topped $2.4 trillion, up from 2011, and that shopping centers account for more than half of all retail sales in the United States.
Physical stores and malls have a few things going for them that can’t be replicated online. For one, they afford customers the chance to see, touch and feel before buying, something that can’t be done through their computer or smartphone screens. Real-world shopping experiences also deliver instant gratification and easy returns, two attributes that the digital world has yet to truly master.
Could Millennials Be The Mall’s Unlikely Saviors?
Shoppers are continuing to keep more than a thousand U.S. malls in business, but those patrons may be far from the likely suspects. Many would presume the mall’s biggest backers are Baby Boomers — a generation that grew up in and around malls and adopt technology at a slower rate than younger generations. The opposite couldn’t be more true.
An OpinionLab study of 1,103 consumers unpredictably found that Millennials (ages 18 to 29) are, in fact, the only generation that prefers shopping in malls to shopping online. As many as 37% choose online. That compares to 32% of non-Millennials who would prefer to shop online, and 23% who would rather visit a mall.
While the research suggests the mall isn’t dead for Millennials and other consumers, the mall of the future isn’t here yet either. Futurists believe that physical retail will evolve more in the next five years than it has in the past century, and that will include a reinvention and redesign of the mall and shopping center.
Shopping centers of tomorrow won’t just be built around the transaction, but focused on creating an experience — they’ll be destinations for discovery, experimentation and entertainment. Most will take the form of open-air, mixed-use developments that blend innovative retail concepts and lifestyle amenities such as high-end restaurants, health clubs, green spaces and outdoor venues. Real estate developers are already evolving in this direction, recognizing that by creating a welcoming setting where people can congregate, shop, dine and be entertained, they’ll stay longer and spend more.
While some of these new-concept malls will be popping up in urban areas, many more will materialize in suburbia, which also happens to be the destination of many Millennials — the same generation that prefers the mall to other shopping channels. As they climb toward their 30s, Millennials are increasingly trading in a lifestyle of city biking, subways and cramped dwellings for the spacious houses, gardens and job prospects that the suburbs have to offer.
Even so, the newfangled suburban mall is unrecognizable from the isolated fortresses of the 80s. The cookie-cutter architecture and approach of mall’s past are being replaced with more open, engaging and personalized shopping centers that are meant to resemble hometown Main Streets. They’re places where people can shop and eat, but also walk their dogs and play with their kids on the greenscape.
Touch, But Don’t Buy
The industry is also seeing dramatic shifts in the purpose of brick-and-mortar stores, which, while still relevant to the Millennial generation on up, must be geared to the new digital customer — one who visits a store to touch and feel the products, and then buys them from their mobile device and has them delivered the same day.
Stores are already shifting from a place to buy and sell to a physical location where deeper customer connections can be built and offline loyalty can be fostered. Within a decade, many stores and malls may evolve solely into showrooms or test centers, with products shipped from nearly mini distribution centers. Apple is the shining example of a brand that’s achieved an incredible amount of success by dedicating its floor space to interactive experiences with its products and staff, rather than to product-filled shelves. Companies such as Microsoft, Sony and Tesla Motors are following suit by placing showrooms in malls, advocating the try-even-if you-don’t-buy approach.
As the physical and digital worlds collide, and shoppers become younger, more connected and more favorable to suburban living, the reincarnation of the mall is inevitable. It may not be a walled-off fortress or a place where today’s Millennials pine for love, money and social status like the cast of Fast Times at Ridgemont High, but the concept will survive so long as retailers can reinvent their way to relevancy. Who knows, by the time today’s teens are Boomers, what’s old could be new again.
Mark Treschl is President, CTO and co-founder of OpinionLab where he works directly with some of the world’s leading brands to optimize the customer experience online, in store, in contact centers, and on mobile devices. Before starting OpinionLab in 1999, Treschl served as creative director and co-founder of Corporate Performance Resources (CPR) and was previously a member of the Multimedia Factory at Andersen Consulting, where he constructed interactive training and web-based learning applications.