Today’s shoppers are looking for more than just what’s just available on a website. They want an experience. Malls have always been a destination, but the concept of a ‘mallrat’ no longer exists. The days of meeting friends at the mall and shopping all day are gone. Malls are still considered a destination, but it’s because they now offer amenities, experiences and entertainment to enhance the shopping experience. They are now not only anchored by department stores but with popular restaurants, bars, salons, cinemas, and fitness centers.
First Insight’s most recent study of consumer shopping habits, purchase behavior and influences driving decisions found that 71 percent of shoppers are spending more per visit in-store than online. Brick-and-mortar retail clearly isn’t dead.
As millennials and Gen Z’ers mature and their purchasing power increases, the concept of traditional malls is being replaced by new adaptations of shopping centers. These younger consumers place a high priority on experiences, preferring to spend their money on experiences rather than on material things. Although these two generations have grown up digitally, they still value and enjoy the experience of shopping in the in-store physical environment.
Wisely, the re-invention of malls is relying heavily on experiential and entertainment environments. With many malls being anchored by bowling alleys or Dave & Busters, new traffic is being driven by those properties. In December 2018, USA Today shared data analytics from firm Thasos that mall traffic was up 2 percent during the 48-hour period that began on Black Friday morning.
Commercial mall developers are also rethinking their long-term lease tactics. Sourcing Journal reported that retailers are already planning 1,800 store closures in 2019 in the apparel sector alone. Mall developers are leveraging these closures as a chance to offer exclusivity and newness with pop-up opportunities and short-term retail strategies in the new retail landscape. This minimizes risk by enabling brands to test the market and location before committing. Many online direct-to-consumer brands are taking advantage of these short term and pop-up opportunities to create experiential retail activations. They are providing what digitally-native brands can’t offer online: physical stores as an extension of their brands. All this is giving shoppers a more diverse selection of stores than ever before.
Seeing all this evolution, I reflected on how and why shopping malls came into being in the first place. The growth of malls followed the migration of population out of cities towards suburbs, along with the growth of automobiles. According to Lizabeth Cohen’s report From Town Center to Shopping Center: The Reconfiguration of Community Marketplaces in Postwar America, “malls were created as community spaces for scattered suburb-dwellers in the second half of the twentieth century.” With the explosion of suburban population by 43% between 1947 and 1952, commercial developers began constructing shopping centers. The shopping mall was initially created as a destination community center where people could come together to shop and interact socially.
According to the Atlantic, the first outdoor suburban shopping plaza opened in 1954 near Detroit. In 1956, the Southdale Center opened in Edina, Minnesota as the first enclosed shopping mall in America. The World Atlas states that there were 4,500 malls in 1960 accounting for 14% of all retail sales in the U.S. By 1975, there were 30,000 malls accounting for more than 50% of the retail dollars spent. The amount was equivalent to $676 billion, 8% of the workforce, and 13% of U.S. GDP.
An example of how a mall near my home in Pittsburgh has transformed throughout the course of 55 years to stay relevant is The Block Northway. Northway Mall first opened in 1953 as a strip mall, grew to become a destination flagship mall, struggled with occupancy and store closures and now has since fully re-invented itself into a new, winning concept. Northway Mall was the first fully-enclosed shopping mall in Pennsylvania and featured the nation’s third glass elevator. Anchored by a two-story Joseph Horne Company department store, it was the premier shopping center and destination for shopping in Pittsburgh’s northern suburbs for many years. As the tide started to turn for traditional shopping malls, anchor stores died off and occupancy at the mall started to decline. By 2014, the majority of the stores in Northway Mall were empty.
Instead of shuttering and going out of business, the Block Northway has been completely renovated and is anchored by Nordstrom Rack, Saks Off 5th, the Container Store and Dave and Busters. They have drastically reinvented the very first enclosed mall in Pennsylvania. The new tagline is ‘shop, eat, gather,’ offering a destination to shop, meet and hang out with friends.
The newest tenant of The Block is Land’s End, making their return to Pittsburgh after exiting their Sears partnership. There are many retail locations to choose from in the Pittsburgh market, from premier malls like Ross Park Mall, with high-end stores like Louis Vuitton and Tiffany & Co., to outlet malls outside the city like Grove City and Tanger. Land’s End chose to place their newest store location in the middle ground, a newly-reinvented hybrid mall. This store is the first company owned and operated Land’s End in Pennsylvania offering the brand’s iconic apparel. Claudia Mazo, Senior Vice President of Retail, shared that Land’s End is excited to return to their customers in Pittsburgh. “The store is conveniently located where our customers live and work so they can easily combine a Lands' End store visit with the many other activities that are happening at The Block."
As the revival of malls continues, it’s thought-provoking to consider what malls will look like in the future. From the conception of malls in the 1960’s as baby boomers moved to the suburbs, to experiences and entertainment transformations for millennials, successful malls have evolved to stay connected with the zeitgeist. Others have ended their journey on the DeadMalls list. What’s next as Generation Z shoppers take over as the big spenders and increase their shopping power? The answer: shopping malls must continue to transform to survive the generational changes. As with so many other areas of retail and beyond, it’s evolve or die.
