April 3, 2018 By michael
When Cirque du Soleil announced plans this week for a “family entertainment” concept inside a Toronto mall, it said a lot about the future of shopping centers. The 24,000 sq.ft. space, called “Creactive”, will be a circus-inspired playground with a range of activities from juggling to high-wire – allowing fans to “peek behind the curtain and imagine themselves stepping into our artists’ shoes”, according to Marie Josée Lamy, producer of Creactive. “Hanging at the mall” will take on an entirely new connotation as shoppers take to the flying trapeze. And that’s the point.
No longer is it good enough for malls to be passive places to buy stuff – they have to be engaging places to do stuff. Otherwise, this particular retail format will be relegated to relic status – “a historical anachronism, a 60-year or so aberration that no longer meets the public’s, the consumer’s or the retailer’s needs”, as developer Rick Caruso mused.
With that point in mind, I draw your attention to Exhibit A: Randall Park Mall in Ohio. When it opened in 1976, Randall Park Mall was briefly the world’s biggest shopping center. It quickly lost relevance however, and by 2000, Randall Park Mall’s vacancy rate was 92%. Fast forward to 2017 when it was revealed that Amazon was constructing a 855,000 shipping center on the same site. Online triumphs over offline, or “software eats retail” as Netscape founder and venture capitalist Marc Andreessen memorably put it. But it doesn’t have to be that way.
Like any kind of retail, the mall as a construct is not dead, but it does need to be radically reinvented. (Having said that, there are acres of digital real estate dedicated to the premise that the mall has had its day – for example, Time Magazine’s article on “Why the Death of Malls Is About More Than Shopping”, and Deadmalls.com, a quirky website that chronicles the demise of centers. I myself have written on “Zombie malls”.)
This month, shopping center developer Westfield unveiled its “Destination 2028” vision, where malls become “hyper-connected microcities”. AI-infused walkways, eye-scanners that personalize a consumer’s visit, and smart changing rooms will add an “extra-perience” layer for shoppers. But the real advances will come in the form of reimagined retail. Stores will be stages, delivering “classroom retail” – showcasing the makers and processes behind products and brands. Event areas will host showpiece interactive activities and events. Allotments and farms will enable shoppers to pick their own produce.
Westfield is already on the road to its future vision, with the launch this Summer of Westfield Square at Westfield London, a giant outdoor dining, entertainment and leisure precinct, including Europe’s biggest Japanese food hall, Ichiba.
China’s Alibaba Group has been working on its own version of the mall of tomorrow with its “More Mall” concept. The five-floor center, which opened at the end of April in Hangzhou, bristles with technology innovations like unmanned checkouts.
In some cases, malls are not being killed by online retail; instead, they are helping to build online retailers. America’s largest shopping center developer, Simon Malls, has created a “scaleable retail platform” called The Edit – a pop-up space for e-commerce start-ups, who are increasingly eager to get a physical presence for their products.
While A-grade malls are being reinvented, we will definitely see a major culling of B and C grade properties. Part of the reason is changing customer needs and expectations, but there are also just too many malls. The number of American shopping centers quadrupled from 1970-2017, in the days when it was useful to have cookie-cutter chain stores close to home. Today, we don’t need ready physical access to goods via malls; the smartphone in our pocket is the gateway to a world of brands. The reckoning is coming – as retail investment adviser Daniel Hurwitz once wryly observed: “I don’t think we’re overbuilt, I think we’re under-demolished”.
To return to my premise, the centers that remain will no longer be “shopping” centers. Instead, they will be “dining, leisure and entertainment” centers, where shopping is an adjunct (and a desirable outcome) but not necessarily the reason to go there in the first place.
I’m looking forward to the next iterations of malls and I predict they will be with us for many years to come. What is a mall anyway, but a modern marketplace? Great markets (like London’s 1,000-year-old Borough Market for instance) have been around since the dawn of retail.