‘Retaildential’ Spaces Offer New Life to Old Malls
Imagine for a minute that instead of going to the mall, you lived there.
Now, imagine that that mall wasn’t just a parcel of real estate with dozens of national retail chain tenants selling often largely undifferentiated merchandise, but instead was magically transformed into a highly differentiated mixed-use space whose sole mission was to cater to you, and people just like you — a home in the best senses of the word, surrounded by commercial offerings that mirror your needs, wants and values.
So say goodbye to the shopping mall of the past, and say hello to the "retaildential complex," just one of a number of consumer engagement spaces of the future — a commercial offering designed to improve both your quality of life and the fortunes of the retail real estate industry, which is currently poised somewhere between a 21st century renaissance and all but inevitable collapse.
The growth of malls and shopping centers was fueled by the baby boom. The oldest boomer was just 10 when Edina, Minnesota’s Southdale Center opened on Oct. 8, 1956. Boomers’ parents loved the idea of centralized buying spaces, causing the rate of U.S. shopping center growth to dramatically outpace the population for the better part of the 1960s and 1970s.
But things changed.
By 2030, the youngest boomers will be over 65 and the oldest will be 85. And they will be competing for attention with five other generations — the Silent Generation, Gen X, millennials, Gen Z, and now alphas — the youngest of whom will be five years old in 2030, forcing mall operators to either deploy design strategies aligned against specific cohorts or develop retail offerings that cut across several cohorts.
We see retaildential spaces as curated “life stage centers,” offering demographic-specific and appropriate sets of retail, restaurants, entertainment and services to everyone from young urban hipsters and single-and-staying-that-way 40-somethings to seniors and other such enclaves.
Aeon Co., a Japanese developer, is already repurposing malls to address the needs of an aging population. Let's call them pioneer retaildential spaces. Senior retaildential facilities will feature housing, medical services, pharmacies, exercise facilities, lawyers specializing in geriatric law, accountants specializing in estate planning, and community rooms, in addition to a broad range of entertainment and shopping options.
Retaildential consumer engagement spaces for young, urban, hipster professionals on the other hand might contain high-end technology stores, upscale furniture shops, microbreweries, bars, gourmet food stores, meet-and-greet social space, gyms and other fitness facilities, spas, and live entertainment facilities.
Another variation on this theme might be retaildential centers strategically located close to where large numbers of people work, offering integrated living, shopping and entertainment experiences as well as easy access to necessities from food to dry cleaning services. As urban cores begin to repopulate, there will be growing demand for these kinds of downtown centers.
What do these retaildential consumer engagement spaces have in common? They will share deep understanding of their customer, enabled by sophisticated data collection and processing systems. Technology will be the center’s invisible backbone. For example, monitoring health data in the case of seniors or perhaps the musical preferences of Gen Z residents of urban centers.
Technology will also drive all transactional activity, from capturing trends and processing sales to ensuring intra-center deliveries arrive on time and sensing trends before they manifest themselves. Regardless of the clientele, these will all be “smart” environments that learn and reflect that learning in real time.
Retailtainment is one idea for repurposing underperforming commercial properties. We focused on one consumer engagement space in this article, but a variety of formats are examined in depth in our full report, The Future of Shopping Centers.
Michael Brown is a partner in the consumer and retail practice of A.T. Kearney, a global management consulting firm.
Related story: The Overgrown Retail Landscape is Due for Pruning