Claims that the shopping mall is dead — or at least on its way there — are rampant across the retail industry, and it’s easy to see why. The way people choose to shop is changing, and it can be hard for large-scale, traditional structures like malls to adapt in time to stay profitable. Yet with smart investment and redevelopment, real estate experts are rejecting the idea that the mall will disappear.
For one, shopping centers are still popular destinations for large swaths of the population. According to ICSC, 83 percent of shoppers still frequent a mall once a week.
“People are still going, aren’t they?” said Holly Rome, EVP for national retail leasing at JLL. “We’re still seeing shoppers coming to the centers, landlords and owners are still investing in them, and they’re bringing in new things all the time. I wouldn’t say it’s dying; I’d say it’s changing.”
One change has been the crossover between digitally native brands and physical shopping hubs, as many online brands have opened brick-and-mortar outposts in recent months. The locations are used to consolidate brand identity and inspire connection with the consumer, which makes the high foot traffic of a shopping center particularly appealing.
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“[People] say the mall is dying because the online shop is killing them,” said Doug Healey, EVP of leasing at Macerich. “But all of a sudden, all these online brands are realizing that once they open up a store, their online sales go up in the market, and now they have a lot of incentive to open up in malls. If the tenants that are supposedly going to kill the mall actually want to open stores there, then they’re really not killing the mall, are they?”
By introducing these e-commerce companies, the mall additionally benefits from an influx of younger consumers who are familiar with the brands from their online presence. This is crucial for success, as industry experts agree that while the concept of shopping centers will live on, not every mall will survive.
“There is too much retail competition for everyone to get their fair share of the market,” said Sandy Sigal, CEO and President at NewMark Merrill. “We have three times as much retail as any other country in the world per capita, so we have to think about how we make every center that we have more relevant.”
While developers are wary of committing to full-scale redevelopments across the board, there is consistent adaptation occurring in the market. Incorporating entertainment and experiences into the centers attracts a greater range of consumers, while onsite activations can keep people coming back week after week.
“The mall industry is going through an evolution that, while likely to eliminate some malls, will result in the majority transforming to better meet the needs of both consumers and retailers,” said Heather Almond, director of national retail marketing at CBRE. “Many properties are adding vibrancy and draw by incorporating more food and beverage offerings, entertainment concepts, services and amenities, while reducing their reliance on soft goods.”
A recent report by NRF concluded that retail sales will continue to rise in 2019 at a rate of between 3.8 and 4.4 percent. With $3.8 trillion in sales on the table, there is plenty for mall owners to feel optimistic about — if they can adapt.
“The future of the mall is bright for the right malls in the right markets,” said Healey. “To stay relevant, the mall has to be something that speaks to everybody — not just our more mature customers but also our younger customer and the younger customer after that. It’s so important to stay out in front of things and understand not just who your customer is but also who your customer is going to be.”
