Thus, especially in the midst of seismic shifts in the retail industry, there is only so much retail space a nation can create before surpassing demand. It is natural, therefore, that the number of malls and stores would fall back to earth.
In fact, a 2016 study by Green Street Advisers suggests that the department store sector needs to close stores (about 800 of them) in order to attain the productivity levels that they had a decade ago.
Further, some research suggests that a shopping mall’s toughest competition may not be coming from Amazon, but, surprisingly, from other malls. According to a recent study by Wells Fargo Securities, competition from newer malls has been the leading cause of death for aged shopping centers. For malls to thrive in a new retail environment, mall operators and retailers must embrace the shifting expectations of consumers.
Even Amazon has entered brick-and-mortar retail business. The No. 1 online retailer has established book stores in several cities, but has incorporated a model that would suit the type of consumers that use its website.
For instance, the books are shelved according to the site’s product recommendation feature, as customers perusing a favorite literary work are directed to similar books they may like as well.
The stores also feature Amazon’s technology products, such as the Kindle e-reader. They only accept payment via credit card or by app.
Mall operators should put more focus on incorporating discount stores and trendy clothing retailers into their shopping centers. For example, TJX Companies, which owns off-price retailer T.J. Maxx, reported 5 percent sales growth at their stores in 2016.
The company opened 219 stores last year and plans to add about 200 more in 2017.
In addition, the growing consumer demand for speed, affordability, and value has driven significant growth in the trendy fast fashion industry over the last few years.
Other vital areas that mall operators and landlords should prioritize are entertainment and dining services. With restaurant spending on the rise, especially among Millennials, malls could entice more consumers by expanding their dining offerings.
Not surprisingly, more malls are welcoming restaurant chains like Dave & Buster’s into the fold. Dave & Buster’s continues to show impressive sales growth, driven by its unique business model that mixes restaurant dining and arcade gaming operations. This model provides the company with the opportunity to keep customers longer, as they spend more during the duration of their visit.
Offering more entertainment services, such as movie theatres and fitness centers, would also attract customers who are increasingly prioritizing experience over material goods.
So although many analysts suggest that the radical shifts in retail have doomed the iconic shopping mall in America, ample opportunities exist for malls to reinvent themselves and succeed in a new environment.
For, just as in the natural world, only the fittest survive in retail.
Raghavan Mayur is the president of TechnoMetrica Market Intelligence, and directs the Investor’s Business Daily/TIPP Poll. Tom Westervelt is a TechnoMetrica Market Intelligence research analyst.
The article appeared in the October 2017 issue of the Newsmax magazinne.