Mall Metamorphosis: Success in the Midst of Retail Disruption
Today, we are in the midst of a retail transformation. As in the past, demographics, economics, advances in technology and changing consumer tastes are driving this change. As more and more people shop online, e-commerce technology has been refined to a point where online sellers are able to sell goods at prices that would be impossible for a physical store due to significantly lower real estate and operating expenses. Advanced logistics enable same-day, if not same-hour delivery is a reality in many major metros. Cultural changes have exacerbated the issue, consumers are no longer loyal to brands as marketplaces such as Amazon allow consumers to compare multiple brands of competing products with ease. Brand switching costs are low to non-existent, and online subscription models have become popular for many products. Traditional retailers are competing not only with other brick-and-mortar stores, but omnichannel—with digital competitors accessible to every customer via mobile phone.
Retailer bankruptcies and the vacancies that they have created has put shopping malls under significant pressure to adapt. Rather than relying on necessity or convenience to drive foot traffic, there is an expectation that malls provide experiences that go well beyond shopping. To survive, mall owners are finding ways to innovate, they are adding entertainment, upgrading food and beverage offerings and diversifying their tenant mixes.
This report looks at current trends affecting the retail environment and considers how they are manifesting within retail real estate with a focus on shopping malls. We will discuss how mall owners and operators are responding to these trends as well as the initiatives and technology that shopping malls can employ to position themselves for the future.