In the last few years as footfall has curtailed in traditional malls, forcing some doors to close and whole chains to throw in the towel, one thing has become clear: the status quo won’t be sufficient to carry the sector into the future.
Already, anchor stores and property owners are experimenting with new formats, including mixed use spaces, pop-up incubators and product-free stores, in a bid to find the right mix to entice shoppers back.
In its “Future of Shopping Centers” report, AT Kearney outlines how and why shopping will change—and what it will take for malls and tenants to evolve. Report authors Michael Brown and Matt Lubelczyk uncover how the surge in e-commerce, shifting demographics and the rapidly evolving tech space are conspiring to separate the winners and losers at retail.
“Tomorrow’s success will belong to those operators and tenants willing to break from yesterday’s patterns and practices and fully embrace a consumer-driven future,” according to Brown and Lubelczyk.
The pair envision four specific types of shopping centers emerging by 2030.
Centered around thrills, the destination center is one where consumers go to see and do. Think theme parks, art galleries and food festivals. With so many different things to do, AT Kearney envisions these spaces as true weekend getaways, ones to which consumers will happily travel and spend multiple days.
While anchor stores will play a part, they’ll be those where discovery and education are at the fore like Lowe’s and REI. Moreover, this mall of the future will play host to a store format we’re already seeing emerge: showrooms. Like the Bonobos Guideshops and Nordstrom’s new Local, these locations will be designed for shoppers to create wish lists they’ll shop from once home. For those who do opt to complete their transactions on the spot, they won’t be burdened by bags. These smart stores will whisk purchases to wherever shoppers would like.
Technology will also make the shopping experience personalized through promotions and incentives based on shoppers’ preferences.
[Read about how the largest mall group in the U.S. is adapting: Simon Property CEO: Retail is “Stabilizing”]
Value centers are local and centered around a core ideal or identity. They serve as hubs for people who share in a love for animals or pride in an ethnic background, for example. Think of the Eataly food franchise on steroids.
Here, consumers will find stores, events and food options that cater to their specific tastes. For instance, a center for those who are pro-animal rights would have vegan or vegetarian food shops, brands that eschew leather and fur as well as event spaces for activism on the subject.
“Imagine the mall equivalent of a Brooklyn cooperative store or market showcasing local fashion designers, restaurateurs, craft brewers and distillers, and artists,” the report stated. “This hyper-focus on a subsegment of consumers will allow new brands to test-market and introduce products to a relevant, targeted consumer base, one that appreciates the newness and relevancy of the offerings.”
With a mix of pop-ups and showrooms, these centers are a dynamic and ever changing reflection of the people they’re designed to attract.
Part lab, part mall innovation centers will put retail under the microscope. These shopping destinations will be rigged to measure every aspect of those who seek them out. This ethnographic, psychographic and demographic information will then be pooled, analyzed and used to continue to evolve the space.
While the mall itself will be run by number crunchers, the tenants will be equally invested in experimenting, testing their newest concepts and products in these controlled environments.
“By monitoring shoppers in a variety of unique retail situations and their interactions in public spaces, retailers, operators, and consumer goods manufacturers will gain access to an unprecedented tool for the rapid testing and development of new products, store formats, and service offerings,” according to AT Kearney.
Mixed use evolves to cater to specific lifestages in the “retaildential” spaces of the future. Whether it’s mid-life singles or aging Boomers, the entire complex will cater to their needs including entertainment, services and retail.
For instance, hipsters will flock to the micro breweries, gourmet food stores and gyms offering flavor-of-the-month workouts.
Other variations on this theme will bring work and play together like the campuses of big brands like Nike and Microsoft where employees can grab food, do their dry cleaning and get a massage all steps from their desks.
[Read more about how malls are already changing: Malls Are Evolving With a New ‘Live, Work, Play’ Mantra]
Ultimately, Brown and Lubelczyk said the winners will be those that take one of these consumer-driven paths to reinventing retail.
“Shopping is, and will always remain, an extension of customers’ lifestyles and values,” the report stated. “Many players, including many technology companies, are going to want to tap into the opportunity to give future shoppers what they want and that means traditional center operators and retailers are going to face new and innovative nontraditional competitors—many with deep, deep pockets.”
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