Mall tenants stand at a turning point in the retail industry: evolve and thrive, or stand to be replaced with a quicker shopping experience online. While The Wall Street Journal reports that 9.1 percent of malls stand vacant — a seven-year high — Class A malls that are transforming are thriving. Culturally, younger generations are demanding cultivated experiences that take the place of Amazon-quick shopping promises, and shopping centers that react to this demand are set to thrive. E-commerce can’t and won’t replace the experience consumers get when they gather together, and savvy retailers will focus on getting them there more often and keeping them there longer.
Experience-diverse shopping centers must pay close attention to their tenant mix to guarantee consumers that perfect blend of leisure, entertainment and convenience.
The Service Element
Consumers are shifting from a transactional experience to a relationship experience. Successful retailers today are making connections with their customers through both in-person and digital experiences — before, during and after their purchases. They've found the most effective ways to interject in-person service that differentiate their stores from quick digital stops. Store owners need to focus on hiring service-oriented staff who want to deliver an amazing experience to customers because they're doing more than smiling and greeting customers. In fact, they may be what makes shoppers walk in the door vs. making a purchase online.
It also means that technology should be interjected into your in-store experience, but in nonredundant and efficiency-minded ways. It’s not enough to add an iPad to your store. Ask yourself: Does it [the technology] make the experience richer and faster? Does it allow you to gather data that also improves your shoppers’ experiences?
The Right Mix
Developers must evaluate the mix of tenants they bring into either new or renovated shopping centers. Innovative and agile concepts such as incubators and pop-ups, like Brooklyn-based HiO, provide less expensive retail space for international, boutique shops in traditional shopping centers without the burdensome investments or underwriting that brick-and-mortar have typically required. Storefront options like these concepts also create richer, more curated experiences for local shoppers that can’t be found online.
While some retailers have incorporated food and beverage as an amenity (a mix of white tablecloth, fast-casual and other restaurant experiences), now it’s about gathering places with nontraditional food options. Retailers like RH have brought in wine vaults, for example. Some Nordstrom locations offer shoppers the opportunity to grab and go (Ebar), sit down for a meal (cafés), or have craft cocktails and tapas (Habitant). These food and beverage options are all designed to bring shoppers in to stay and to keep them coming back. Tenants such as fitness centers are also newer options to consider, with a focus on boutique group cycling or training centers. Health and wellness-focused services will complement typical fitness offerings over time.
Grocery stores are designed to do the same, with local grocers or organic market-style shops meeting the needs of the evolved consumer. Finally, the more a shopping center can incorporate a community vibe — which sometimes means adding civic organizations, farmer’s markets, faith-based gathering centers or museums — the better.
Looking ahead, the most successful retailers will be curating that perfect experiential mix, and landlords will need to continue renovating existing centers to meet that demand. Stores like Target and Walmart, for example, are investing to improve the aesthetic with eco-friendly lighting, open shopping spaces and the integration of outdoor elements.
The best shopping experiences in the future will feel more like strolling an outdoor community marketplace rather than crossing something off your to-do list. To be successful, retailers will need to continually evolve their storefronts and interior designs to capture this vibe. After all, it’s going to be all about experience and how to make consumers enjoy it more than the satisfaction that an online cart checkout can provide.
John Kranyak is senior vice president, real estate at Skilken|Gold Real Estate Development, a national commercial developer that counts Walmart, Starbucks, Kroger and Wawa as clients.
Related story: 4 Opportunities to Win Shoppers in Stores in 2019