Photo: Seismique
Will immersive experiences revitalize U.S. malls?
Big, immersive entertainment experiences were sweeping the U.S. before the novel coronavirus pandemic, but the need to socially distance put a pause on that type of interactive entertainment. Now as parts of the world appear to be bringing the pandemic under control, some are speculating that experiential entertainment could emerge as the new main attraction at the shopping mall.
A struggling mall in Houston has replaced a Bed Bath & Beyond with a 40,000 square foot interactive art museum called Seismique, according to the Houston Chronicle. Another mall in the region is using a location of the home décor chain Z Gallerie that closed in 2019 to house an augmented reality experience from a special effects company called Flight School.
Mall property owners assert that experiential entertainment like this can fill space vacated by retailers that are moving toward smaller concepts, act as a draw to bring foot traffic to other mall stores and improve the profile of a mall.
In the years leading up to the pandemic, some unique, large footprint entertainment enterprises already had their sights set on malls. In 2018, Las Vegas mainstay Cirque du Soleil, for instance, announced plans to open 24,000 square-foot family entertainment centers in Canadian malls. Climbing gyms, trampoline parks and other immersive/experiential offerings had also begun to pick up steam in malls.
By that same time, however, the fate of the shopping mall had become a perennial question in retail as customer interest in the once thriving model saw a sustained drop.
Some have recently suggested that food hall and farmers’ market-type offerings, beyond the traditional QSR food court, could be the path to restoring mall foot traffic.
Others, like Simon’s Property Group (SPG) CEO David Simon, predict that the shopping mall is poised for a comeback due to broader social trends. The return of residents to the suburbs, less commuting into the cities and a drastic rise in working from home all point toward an impending mall rebound, in Mr. Simon’s approximation.
SPG has also been exploring ways to embed newer aspects of today’s retail ecosystem into the shopping mall. For instance last summer the group was in talks with Amazon.com to turn some defunct department stores into distribution hubs.
- New breed of retailer helps malls experience a revival – Houston Chronicle
- Cirque du Soleil entertainment group to launch family entertainment centres – Cirque du Soleil Entertainment Group
- How to save today’s mall – RetailWire
- Is suburban retail (malls, too) primed for a comeback? – RetailWire
- Will Amazon install distribution hubs in malls across America? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: Do you think big entertainment experiences can adequately replace the revenue and draw malls counted on from anchor department stores? Do you see shopping centers with quickly rotating pop-ups and/or those with big entertainment experiences becoming the future of malls?
Poll
BrainTrust
Immersive experiences are necessary but not the ultimate cure for malls in America. Other factors are: too many malls, too many uninteresting malls, a waning number of retailers due to store closures, and sameness/a lack of unique concepts. All have to be addressed.
If the objective is to revitalize retail (traffic) with experiences to save your mall, it is time to try something new.
Totally Gene. This is the time for bold, imaginative combi-ideas.
Malls can not afford for “silos” to exist in how they see and blend different concepts to provide a compelling argument to visit, or shop the mall online.
Bob is right. Too many malls are boring or too big or crippled by vacancies. My mall in Florida is about to be redeveloped into residential units. The pandemic issued another blow by shuttering food courts. The time for action — big, flashy, unavoidable action — is now.
What you are seeing in that Florida mall is likely the real answer. Start with a blank sheet of paper and turn the mall into something completely different.
Rosedale in the Twin Cities is right now tearing down its south side and rebuilding with higher-density residential, senior-housing, hotel, and grocery. It’s already a transit hub and has critical mass of restaurants/cinema. My only concern is they aren’t aiming high enough (literally, they should be putting 20-story towers there instead of 5-story). But it will ensure a captive, car-free audience and earn more daily/weekly visits from the surrounding community.
I agree with you. Go higher!
Farmers’ markets, movie theaters, fitness centers — all good repurposing of empty mall space, and hopefully able to draw traffic. But Bob Amster hits the nail on the head: If the main purpose of the mall is to highlight retailers and to sell merchandise, fixing “tenant fatigue” is Job One.
As long as mall anchors are offering a bland experience (or dying on the vine altogether), more A and B malls will turn into locations that no amount of “experiential” tenants can save.
I loved the “dying on the vine” comment (a sin among oenophiles like me).
The mall concept has been dying for two decades now. Should the operator be trying to draw traffic like in the good ol’ days or should the property be looked at completely differently?
If your mall was completely destroyed by an earthquake, fire or tornado (no injuries of course) would you rebuild the mall or do something different?
The experiences noted are nice, but how many times would someone visit them? Will they generate the days of “Saturday afternoon, let’s go to the mall”?
Retailers are embracing experiential retail and shopping malls absolutely need to do the same – entertainment, farmers markets, and experiences will draw customers, families, and communities into the spaces where anchor stores no longer serve this purpose. The future of the shopping mall is changing with many commercial real estate giants embracing innovation to increase footfall.
The challenge is when shopping malls stick to the traditional lines of tenant vs. landlord and don’t innovate with their retailers. Shopping centers need to work WITH their tenants to not only bring foot traffic into to mall, but help retailers to bring customers into their stores. If the retailer wins, the shopping center wins.
Immersive theater and theme parks are not the answer. Studies have long shown while events generate visitors, that traffic does not reach into stores. What consumers really want in a shopping center is better retail and food choices, not themed events. Furthermore, these venues don’t help the surrounding community because they don’t generate the same tax and job benefits as a healthy retail center. It’s high time for malls to evolve – the way they think, look and operate hasn’t changed in 70 years. Malls would be better served by integrating an e-commerce marketplace, establishing a centralized pick-up and delivery system for both tenants and outside retailers, and adding a layer of temporary and pop-up spaces for direct to consumer or existing retailer uses on a revolving basis. Mall owners need to decide if they are going to use their space for short term event revenue bursts, or do the work to earn sustainable long term financial health by regaining their status as community hubs.
Nice dive into this question.
I think the answer to this question is closely tied to Maslow’s hierarchy theory. Once consumers’ basic needs are taken care of (more in the case of developed nations), they will have the time, money, and willingness to indulge in immersive experiences. That is why I think over time we have grown from an agrarian economy to industrial, service, and now to an experience economy that aligns with the self-actualization needs of the consumers. In that experience economy, there will be a combination of products and services that come together to engage the customer in an immersive experience to gain their loyalty. The more the retailers understand this, the better equipped they are to win in this experience world. That said, the same will not be true for countries that are lower in Maslow’s hierarchy. For those countries, the immersive experience strategy will not work.
“Blow up the stage” experiential venues are great — for a while. They will draw traffic and the right kind of attendant shopping (food; related impulse purchases) will do well. Unrelated retail (traditional apparel; hardware) not so much. But the biggest issue with the wow factor draw is that it wears out. Even Disney has to constantly add or refresh rides, shops, food offerings and other parts of the experience and that is expensive. Mall of America made it for decades with the amusement park in the center so this can work. But as a frequent non-shopper dad who took his kids there for entertainment, I can tell you it was the surrounding shops and experiences that kept them coming back, not the rides.
For many years, landlords have been relatively passive in their innovation path. Generally they have been “happy” clients form an orderly queue to compete for storefronts, and their income streams stable enough for their institutional investors and other key stakeholders. All was good until the pandemic struck and lockdowns prevailed, robbing many of their tenants of a revenue stream, jeopardizing the finely balanced cash flow projections of the landlords.
The pandemic has shocked many from the “mixed use” strategy (which often required significant capital investment and remodeling/restructuring of the mall environment). Of course, many mall anchors have come under enormous financial pressure, which in some instances has threatened the entire revenue base of the mall for those who signed up to covenants tied to the anchor being a viable concern.
Malls were designed for retailing and for building communities (high traffic!). The pandemic has ignited landlords to get into the fray and develop new innovative concepts.
To complete the picture for the early 2020s, landlords need to have pretty honest conversations with their tenants as it is the landlords who must start to curate experiences based on various combinations of retail concepts. To enable this, they must have much more flexible lease agreements which allow the landlord to eject a retailer that is not contributing to the overall excitement/experience. This is a major shift in thinking.
The concept of anchor stores is wedded to the pre-pandemic demise of some malls. I believe we will see “big winners” in the mall space built on an innovative combination of national “brands,” local merchants/artisans, pop-ups, food courts and entertainment spaces to give shoppers a degree of familiarity, and a ton of high churning excitement to bring them into the complex.
Landlords will also develop fulfillment systems and capabilities to ensure whichever route to purchase consumers choose, the local mall is the solution!
The mall, as a patient, is sick with multiple maladies. Broken bones, bad allergies, impaired vision (literally). Even if the entertainment experiences helped to restore foot traffic, that doesn’t mean individual retailers will benefit. Lots of mall tenants have their own individual content issues that also need resolution. Each retailer needs to figure out its own “treasure hunt” offering, other than the size of the number on the % savings sign. There has to be a reason for the customer to leave the wonderful new food court to shop and buy in the individual stores.
It is an absolute necessity that malls (and management) figure ways to bring customers back. But there are just so many “experiential” and “immersive” things one can create before they, too, lose their attraction. Plus, one has to consider how close this problem is to what museums have been going through; and how their core collections of static art lost its lure. Which begat “blockbuster” exhibits. However there are just so many attractive artists one can feature without their work seeming “already seen.” Hence came the realization that they needed to put on something even more “in the moment.” But “motion activated” activations are already becoming somewhat redundant. The only sure way to bring people back to malls (and museums) is to not have to do that with a lot of them in the first place. That means creating your retail (or museum) environment with residences at the beginning. (Or even a built-in hotel helps.) Unfortunately, this isn’t an easy proposition for most in-existence malls. With their vast parking lots as potential views, and highway interchanges making it all about the noise/traffic day and night. Still, the alternative means constantly trying to figure what’s next (when what you have peters out).
U.S. malls are in trouble, and this isn’t going to save it.
There are just too many of them and not enough interesting things to support it. You might as well say “let’s fill them all with Laser Tag” or something. Isn’t that immersive? It wouldn’t save the mall either. 😉
The most viable path for malls at the present time is to become fulfillment/logistics centers/cross-dock, etc. Amazon is helping give this trend a push!
I recently had a conversation with a mall executive on this same subject. He asked the same questions he has been asking for two years. I told him that perhaps he should get out of the mall mentality and think completely about experiences. I then suggested he get to Pike Place (not for the fish), but to see how he could create the culture they have with with their mix. Certainly we agreed that nothing that size, but a wonderful rotating presentation in similar to Pikes Place vendors. I also suggested that perhaps JURIED artisans could also participate. He asked how long it could last. My response was perhaps some time, but never forget that it is about consumer thrill, AND attracting lease negotiations.
Malls can’t rely on one thing to replace what is gone. Consumer tastes have changed and malls need to give shoppers a variety to reasons for customers to go, whether it is dining, healthcare, personal services, package pickup, entertainment based on local demographics. Not try to find the one “killer replacement.”
Quite simply, “no”: there are too few people involved in these activities and they have little or no spillover effect on retailers (with perhaps the exception of restaurants). Shopping was — and mall owners are praying it still “is” — a recreational activity; these “experiences” are another … replacing the first, rather than augmenting it.
That’s interesting — and it may be a fad. But at the end of the day, malls will likely become distribution centers for fulfillment.
Anything experiential will enhance the experience in the mall. That includes “immersive experiences” and traditional entertainment experiences, such as restaurants and entertainment (movie theaters, ice rinks, etc.)
We did a white paper recently on this subject in “Flipping the Script – Transforming the Store to a Stage.” The future of our stores needs to evolve and quickly as we exit from the biggest disruptor in our lifetimes. What better time to treat retail as theater. We need to think outside of the box like William Filene did in Boston at the turn of the century in 1900 when he created a zoo on the roof of the downtown Boston store. We need to get creative and not just treat stores as distribution centers, which they are, but also drive traffic by creating an immersive and interactive experience.