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Date: May 7, 2018
Category: Real Estate
Tags: retail

Shopping Malls Aren’t Dying…They’re Evolving

When you say the word “mall”, people probably visualize a similar image.

A massive, bi-level, enclosed structure, filled with name brand stores, and anchored by quintessential department stores like Macy’s, J.C. Penney, and Sears. That’s because, since the first mall opened in 1956, not much has changed.1 For more than 50 years, America had a recipe for building malls, and between 1956 and 2005, more than 1,500 were constructed.2 But like any good recipe that’s overused, the “traditional” mall has become stale. This doesn’t mean malls are dead. It means developers must tweak their recipe and evolve with shifting demographics, socio-economics, and technology.

A new shopping experience

Contrary to popular belief, the majority of American consumers still want a brick-and-mortar experience. However, they want to be offered something they can’t get on a website or an app.3 They want an experience. As a result, malls are no longer just about shopping. Today, they’re offering amenities and experiences that go far beyond what consumers are used to. From the ground up, malls are adding more greenery and park-like settings, increased natural light, and interesting architecture. With social media at everyone’s fingertips and a huge influence over consumer draw, malls are looking to add visually stimulating, Instagramable moments throughout their design.

Additionally, foodie culture is now mainstream, and the typical food court options aren’t going to cut it. Malls are adding high-end restaurants, full service bars, and food trucks to their offering. Going even further outside of the box, they’re also incorporating fitness centers, recreational sport complexes, and health and beauty spas for even more variety. And with the addition of regular cultural and art experiences, malls are more becoming more of a total lifestyle activity.

Consumers are also seeing a more diverse store selection when they enter malls. With online sales only accounting for 8.4 percent of total retail sales in 2016, and web-influenced offline sales totaling $1.3 trillion, many online-only specialty retailers are opening up physical stores in order to compete.3

The Millennial effect

Gone are the days of the Generation X “mallrat” culture made popular in the 1990s. Today, Millennials are the main influencers when it comes to mall evolution, and for good reason. Millennials have more than $200 billion in spending power, but studies show that they’re not into traditional malls.4 So, with that much spending power on the table, malls have no choice but to adapt to Millennial wants and needs.

You probably guessed that Millennials want to spend their money on experiences, and you’re right. They’re not interested in buying lawn care equipment from traditional anchor stores or grabbing a burger at McDonalds. They want unique retail they can’t find online and dining options that are local to their environment. They want rooftop bars and personal events.

Millennials are also tech-savvy. Malls, and the stores within them, are upping their online presence. They’re gearing their marketing efforts toward concepts that draw shoppers into their stores and away from screens.5 It’s about figuring out what they can provide a Millennial that he or she can’t provide for themselves from the comfort of home.

Malls aren’t going anywhere

While it’s a popular belief, malls aren’t actually dying. Malls are finally evolving, adapting to consumer needs, and taking a giant leap into the 21st century. Malls that haven’t adapted are closing, but that doesn’t mean that all of them are.

The Lesson Here:

As long as malls can continue to evolve with social needs and an ever-changing economy, the need for them will remain.

1 Business Insider. 25 Incredible Photos Revealing the History of America’s First Modern Shopping Mall. 8/2/17.

2 Simon CRE. The Evolution of the Mall as We Know It. 7/18/17.

3 Simon CRE. Clicks to Bricks: The Value in the Retail Experience. 2/16/17.

4 Forbes. How To Tap Into The Millennial $200 Billion Buying Power With Social Media. 10/31/17.

5 Places. The Decline of the Traditional Mall and the Evolution of Experiential Shopping. 5/10/16.

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