Mall Operators Adjust to the Times

Discussion
Aug 03, 2011
George Anderson

Two separate articles, one by Bloomberg News and the other by The Wall Street Journal, make it clear that a) mall operators are facing significant challenges in the current environment and b) there are high- and low-tech steps they are taking to keep consumers shopping in their facilities.

The Bloomberg piece focused on mall operators’ use of digital technology, including setting up a virtual mall (Westfield Group), smartphone apps (Simon Property Group) and GPS tracking software (Hammerson Plc).

Westfield’s virtual mall in Australia and New Zealand provides shoppers with a price comparison tool for the retailers in the physical location. According to Bloomberg, “The service provides a single checkout and links on social network sites for shoppers to give feedback on merchandise and service quality.”

Simon has its own mobile shopper club and offers shoppers the shopkick app to let them know where to find special deals when walking around its malls.

The tracking software used by Hammerson is interesting because it gives the company clearer insights into how consumers move around the facility, which in turn, helps it better position stores in optimum locations.

The Wall Street Journal article looked at the increasing willingness of mall operators to lease space for kiosks and temporary stores to small entrepreneurs.

“I think a lot people right now are finding that they’re either out of work or they’re looking to add income to their household,” Patricia Norins, publisher of Specialty Retail Report, told the Journal. “Bottom line, everyone is asking themselves how do they bring more money in the door?”

According to Ms. Norins, sales of goods sold through these spaces (specialty products) rose in double digits to $2.86 billion in 2010. By comparison, traditional merchants rang up sales of $1 trillion on three percent growth.

Discussion Question: What steps being taken by mall operators do you think will go the longest way in helping them remain competitive in the years ahead?

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16 Comments on "Mall Operators Adjust to the Times"


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Max Goldberg
Guest
9 years 9 months ago

All of the steps outlined in the article make the consumer shopping experience easier or more unique. Isn’t that something that consumers have traditionally responded to? Expect to see more pop-up stores and kiosks, as merchants that don’t want or need larger/permanent space offer seasonal and non-traditional items to consumers who are bored by the sameness of traditional mall offerings.

David Biernbaum
Guest
9 years 9 months ago

Not so long ago, nearly every regional mall in the nation looked exactly the same. Same stores, same chains, same food courts, same everything. These days, they do not all look the same, but not for the good. Many malls today have lots of vacancies, lower-end niche stores, and even temporary seasonal stores.

What malls need today are new types of anchors such as movie theaters, unique independent restaurants, and constant events to attract the desired public. And indoor parking will go a very long way to bring consumers to the mall in all types of weather.

Joel Warady
Guest
Joel Warady
9 years 9 months ago

While the digital initiatives are definitely steps in the right direction, the mall operators, if they are going to stay relevant, will have to continue to be more innovative. The fact is, the malls largest competitor is going to be Amazon, the world’s most connected mall. As mobile and digital technology continue to grow, it will make it that much easier for the consumer to simply place their order from Amazon after comparison shopping, sometimes from the mall itself.

The way that malls, and mall stores will differentiate themselves is to continue to turn shopping into theater and entertainment. For example, with the daily discount sites continuing to be popular with the digitally enabled, mall owners should figure out how to incorporate the same type of treasure hunt mentality for great deals within their malls, on a daily basis, with their store owners. The mall owners need to constantly look for unique ways to bring the customer back to the mall, as often as possible.

Make it fun, exciting, and interesting, and they will come.

Joan Treistman
Guest
9 years 9 months ago

A combination of high tech, low tech and social media seems to be the widest net to catch the shoppers. There is also a need for vision into the future and how shopping behavior will continue to morph. Retailers and mall operators are faced with the uncertainty that is derived from the changes in how consumers adapt to technology and apply it to their daily lives.

Following shoppers’ paths with a GPS device and then placing retailers in the path begs the questions of why a particular path was followed in the first place. The article uncovers the desire to be where the action is…after the fact rather than to properly anticipate. Spending more time with consumers on an on-going basis to understand their behavior and develop hypotheses for the future may bring more revenue. I think the knee jerk reactions we read about have some merit, but don’t show the long-term engagement that is necessary to stay on top.

Tony Orlando
Guest
9 years 9 months ago

They could start by offering rents that small business can afford, because strip plazas are much more competitive on rent. Encouraging a 50% cut in real estate taxes if the business signs on for 5 or more years, and some free promotions from the mall management might help as well. For malls it’s getting tough to keep tenants, and the ball is in their hands to come up with creative ways to attract new business.

Gene Detroyer
Guest
9 years 9 months ago

Once upon a time, mall shopping was entertainment. That no longer is the case and will never be again.

Dave Biernbaum’s suggestions are the best, but even that won’t do it. Dinner and a movie is a great idea, but it doesn’t eat up enough space.

The vacancy rates are too high. The fill-ins to those spaces lean towards schlocky. In the end, this will drive people away.

It isn’t even a matter of tearing the mall down. The mall concept is outdated and will continue to wither.

Dennis Serbu
Guest
Dennis Serbu
9 years 9 months ago

The outlook is very positive. There is a new retailer called “Vacant” that has 15 new stores opening this month.

Charlie Moro
Guest
Charlie Moro
9 years 9 months ago

The mall experience seems to need a generational facet to the solution. Younger ages may see it as an outgrowth of their social media relationships. Organizing around school groups, hobby groups and so forth where the experience adds to the computer time with face time or activities that need tangible interaction. As the generations age, how many have seen that middle aged husband sit in boredom while the shopping experience is going on around him? Why not an informal area with couches and large screen TVs tuned to the hot sporting event of the day? Mall visiting then becomes a little more bearable.

Bill Emerson
Guest
Bill Emerson
9 years 9 months ago

These are all great ideas and will work for those employing them. However, they do not address the central problem–there is too much space chasing too few customers along with a growing e-commerce business. The real answer is for the landlords to come up with alternative uses for the property that don’t involve retail.

Craig Sundstrom
Guest
9 years 9 months ago

Not to be a pessimist–well, OK, I AM being a pessimist, but I don’t enjoy it–if we assume (1) increasing movement of retail to online, and/or (2) possibly declining retail sales overall, then we have to face the fact that the already existing glut of space will grow worse…much worse. This can be countered either by broadening the assortment of potential tenants (as in the article), or consolidation in the number of operators and wholesale demolition of existing space; expect to see both (along with increasingly desperate efforts from cities to have “their” properties be the survivors of the shakeout). As for the new diversity of tenants, it could be either a positive–the return of individuality to malls and meaningful competition (as opposed to GAP #3125 vs. GAP #2956) or a negative (a wholesale downgrading…just when it is the last thing needed). Presumably the better operators will achieve the former.

Christopher P. Ramey
Guest
9 years 9 months ago

Benefits of technology don’t change the human desire for community, belonging, and the desire to be around others.

Rethink the mall concept; why aren’t the roofs used as public parks or outdoor theater? Repurpose sections of the mall for schools, libraries, or offices. Add community rooms around the food court for business groups such as Rotary, Toastmasters, etc. There are hundreds of ways to create an environment where people “must” go. Then it’s up to the retailers to leverage the traffic.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
9 years 9 months ago

One sort of mall I haven’t seen mentioned here is Outlet Malls. Why? Is it because they excel in a special way that ordinary, slapdash malls do not? Could it be that they are utilizing “discovery” or “surprise” shopping techniques like those employed by Costco and other big boxers? (Big boxers, an interesting term.) Around every turn, a special deal that won’t be here tomorrow?

With the advent and availability of regional, seasonal, specialty kiosks and popup stores for slapdash malls, why can’t they take advantage of and promote the idea of discovery/surprise shopping? Call me crazy (too late, it’s already been done), but this could really help slapdash malls “remain competitive in the years ahead.”

Dennis Price
Guest
Dennis Price
9 years 9 months ago

None of the above. Malls should become in spirit and in experience like the markets they are meant to be–each reflecting the unique-ness of that ‘tribe’. It stands to reason that not all will survive–so others will transform into different spaces where retail will be secondary. IMHO.

Ralph Jacobson
Guest
9 years 9 months ago

I don’t have any silver bullets to soak up all the vacant space in malls, however more retailers certainly could install concepts like Tesco’s Homeplus Virtual Store in the windows of vacant and leased stores, alike to bring back that “entertainment” aspect of malls.

Odonna Mathews
Guest
Odonna Mathews
9 years 9 months ago

How about mall operators offering discounts that are tied into multiple merchants at their mall for a particular time period? Consumers might like a choice of 30% off lunch or dinner and 30% off their choice of five stores in a mall. There could be different themes to tie in merchants, restaurants, theaters, services, etc.

Michael Greenberg
Guest
Michael Greenberg
9 years 9 months ago

2 comments:

1) Mr. Ramey and RetailSmart have it nailed – it’s time to stop thinking of malls’ primary purpose as “shopping” and realize they are merely places to rent space and service the local community.

2) Everyone needs to stop looking at GPS tracking as a viable marketing option until a) smartphone batteries get much, much better (persistent GPS kills them quickly) and b) predictive modeling finally enters mainstream marketing.

Until both are addressed, marketing needs to look elsewhere for local relevance.

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