Making Malls Internet-Proof

Discussion
Jul 23, 2012

At Scottsdale Quarter in Arizona, 30 of its 53 tenants offer dining, entertainment, or a service in addition to traditional retailing. The emphasis is designed to bring experiences to the mall that consumers can’t get online.

While a Scottsdale shopper can buy apparel on the web, "she can’t go out to lunch with her girlfriends and have a glass of wine and a salad online," Michael Glimcher, chief executive of Glimcher Realty Trust, which owns the mall, told The New York Times. "She can’t get her hair done online. She can’t go and make pottery or soap or a cake online."

Mall tenants are stretching the definition of a traditional mall, such as Make Meaning, a membership store where people make cakes, ceramics, candles and jewelry, and Drybar, a salon where stylists use blow-dryers only and no scissors. With members coming in regularly, a store like Make Meaning can also boost traffic for the rest of the mall.

Beyond a greater share of restaurants and cafes than the average mall, Scottsdale Quarter features a yoga studio and a movie theater where viewers can have drinks and snacks delivered to their reserved seats. Many traditional stores feature in-store only options, such as a jeans store with a "Booty Cam" that enables women to get an alternate view while in the dressing rooms. A Restoration Hardware soon to open will sell fresh flowers and cups of tea.

Scottsdale Quarter makes $1,000 per square foot, the highest figure of any Glimcher mall. At Glimcher’ typical mall, only 20 percent of its tenants focus on dining, entertainment or service options.

An article earlier in the year also in the Times explored how some abandoned urban malls are using the empty space for schools, medical clinics, call centers, government offices and even churches. Aquariums, casinos and car showrooms have also been added to malls.

But the big design push around downtown malls was a shift away from "big, overwhelming malls" toward places that could be entered from the street and featured restaurants and "other Main Street mainstays." Many are being redesigned as town squares with the addition of gardens, dog parks and putting greens.

"Basically they’re building the downtowns that the suburbs never had," Ellen Dunham-Jones, a professor at the College of Architecture at the Georgia Institute of Technology, told the Times.

Discussion Questions: How can malls be reinvented to reduce direct competition from online shopping? What are the pros and cons of adding more tenants offering dining/entertainment/services in malls?

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10 Comments on "Making Malls Internet-Proof"

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Dick Seesel
BrainTrust

Malls and lifestyle centers need to drive “experiential” traffic, but not only to compete against online shopping. More importantly, they need to find ways to keep consumers onsite longer and to let malls return to some of their original purpose as the social hub of the suburbs. And, let’s face it: With the consolidation of mall anchors and struggles of specialty apparel chains, there is plenty of space available for this sort of repurposing.

Marge Laney
BrainTrust
4 years 11 months ago

She can’t try on clothes online either; I don’t care how accurate the online ‘fitting room’ app appears to be. No buying decision is made until the customer tries on clothes either in-store or at home, period. The 50% online return rate for apparel bears this out.

The mall apparel customer is there to touch, feel, and try on and the smart retailer creates a store service experience wrapped tightly around the fitting room. Studies confirm that if you get a customer in the fitting room, there’s a 67% chance they’ll buy, versus 10% for those that don’t use the fitting room.

Get them in the fitting room and conversion will take care of itself. Service them while they’re there and all the other key performance indicators will rise as well. It’s that simple.

Ken Lonyai
BrainTrust

This is a great example of looking for solutions and adaptations to the ever changing consumer. As in the past, shopper’s evolve and change and to survive, so do successful retailers. The biggest insight from Scottsdale Quarter is what I see as a critical lesson to all mall operators and retailers that want a mall presence: Glimcher took the lead and set the tone of the mall, creating a destination environment. Without a shepherd guiding the vision, it’s impossible for one or two destination-oriented stores to make an entire mall or downtown a haven for shoppers.

It takes property owners, planners, and business organizations working together along with solid business strategies from tenants that support b&m success.

Doug Fleener
Guest

I don’t see this as reinvention, but rather an evolution. When the Circuit City Express store went under, something else replaced it. That store may or may not be replaced by something else. To paraphrase Mark Twain, the reports of the death of brick and mortar stores and malls are greatly exaggerated.

Kai Clarke
BrainTrust

This is a good concept, in its basics, but the author and these mall owners are locked into a “buggy whip” paradigm that has a fallacy for its basis. Malls are going away because the Internet offers so many things, not because malls can offer some things. Yes, there are some services which a mall can offer, but these services in total cannot support a mall. The model requires a large amount of purchases and cash flow, and most of these services are not extensive or diverse enough to support any of these major malls.

Ralph Jacobson
BrainTrust

Face-to-face, hands-on engagement may be one of the last great differentiators of brick stores versus online stores. The human touch will remain exclusive to brick stores for the foreseeable future. Retailers must not underestimate the importance, therefore, of hiring the right people to make this differentiator compelling for shoppers. Services that touch senses that PCs cannot yet emulate will drive shoppers to malls.

Tony Orlando
BrainTrust

There are many malls struggling to stay open today. Our mall is 70% empty, and it will eventually close. In larger cities of inhabitants with decent incomes, I can see some sharp start-up investors changing the way malls can attract new business, as in the article above. Unfortunately, most malls that are in trouble are in poor, and over-stored markets, which would scare off even the most hearty investors. The internet for hard goods is here to stay, and some malls will fade away no matter what efforts are made.

Ed Rosenbaum
BrainTrust

Providing a true service as opposed to filling an order, or checking a customer’s purchase at the register is going to be the true differentiator between real shopping and online shopping. We have said for many months that online shopping is easier and less time consuming. But why are we staying away from most malls? Could it be we are not getting true service? Could it be the clerks are there strictly to help us check out? If either is true, then we are starting to see why we look for true service elsewhere.

I do not think online is any more than the stepping stone between not wanting to go to the mall and looking for true customer service elsewhere. Maybe at the mall described in the article?

Phil Rubin
BrainTrust
4 years 11 months ago

In order to compete effectively, malls, like their retail and service provider tenants, need to deliver a differentiated experience. Shopping has always been about entertainment and malls have long had food courts. Like so many other aspects of retail, failure to recognize and embrace technology coupled with inertia and a dearth of leadership from legacy participants have eroded value.

Jerry Gelsomino
BrainTrust

Isn’t this a direct contradiction the the question asked today about mobile POS? Do we embrace technology or not and on who’s terms?

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