According to Coresight research, 5,994 stores have announced they will close their doors while 2,641 have announced openings as of April 2019. U.S. retailer store closures so far this year surpass the number of closures from last year: 5,684. With all of the mall closings in the U.S., it is easy to think that retail is dead. And while big box stores might be fading in Cleveland, smaller, hyper-focused brands are finding the right mix of technology and positive customer experiences to shape the way Ohio malls do business.
Malls and mall space purposes are shifting from a one-stop, family-focused destination to a full-on immersive undertaking. New York-based Hudson Yards combines the traditional mall experience with luxury living, offering gourmet meals, trendy shopping options, and even a place to take a nap or shower. Vacant mall spaces are also being transformed into job sites. In North Randall, Amazon took over the former Randall Park Mall space to create a fulfillment center. Mall space purposes are evolving to suit the needs of the economy.
The Shift to Online Shopping
E-commerce is certainly partially to blame for mall closings. A UBS report estimates 75,000 more stores will fall victim to online shopping trends by 2026, and by 2030, one-third of retail sales will be online. This retail apocalypse has hit brick-and-mortar giants – cornerstones of America’s malls – like Sears, J.C. Penney, Gap, Dillard’s, and Columbus-based L Brands, which operates Victoria’s Secret.
The shift to online means malls have to reinvent themselves. Rather than outdated sales tactics, retailers need to consider the full shopping experience. In 2019, Millennials will surpass Baby Boomers as the largest living generation, which means shopping malls will have to cater to Millennials’ penchant for authenticity. They seek experiences rather than material goods and look for sustainable brands that are fixtures in their respective communities.
Malls as Entertainment Destinations
To capture foot traffic, malls may begin to transform to Mall of America type destinations, with entertainment embedded into their layout plans: roller coasters, golf courses, and other attractions to encourage longer stays. This retail model touts malls as destinations for out-of-towners as well as locals. Especially for B and C malls – malls that exist in areas where there are multiple shopping mall options – developing a plan to combat sales losses via local attractions could mean staying afloat.
Malls as Residential Spaces
Malls have the potential to be living spaces as well, like Hudson Yards. These spaces are highly curated, directed towards a main target market who will fully utilize its offerings at a premium. Demand for these spaces is high in urban areas looking to expand living options while not losing prime retail space.
Malls as Small Business Incubators
Malls can attract younger crowds by putting in rotating storefronts. Short-term pop-up shops not only garner interest from consumers but also allow malls to test out new store prospects with little risk.
As the gig economy mindset continues to grow in popularity, co-working spaces are also popping up in malls’ vacant stores. These shopping mall co-working spaces allow freelance workers to be near amenities like coffee shops and clothing stores without the traditional office space fees, and could contribute to shopping malls remaining open. Cleveland has StartMart, located in Tower City; and more co-working spaces are taking advantage of mall vacancies across the country.
Malls to Create Jobs
Vacant malls may not contain the stores they once did, but the spaces can still serve an important purpose: job creation. Fulfillment centers – brick-and-mortar locations for e-commerce sites that store and ship goods – might be the next move for retailers. Case Equity Partners is acquiring vacant malls to create fulfillment centers with a twist: the storefronts within the fulfillment center would predominantly act as spots to store and ship online goods, but they would also be brick-and-mortar stores where customers could try before they buy.
The Future of America’s Malls
With so many malls closing, retailers and investors will need to think outside of the box to attract foot traffic. Retail trends are shifting, not fading. With slight adjustments to shopping mall plans, retail investors can capitalize on shopping trends to allow malls around the U.S. to thrive again in new ways.
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