The death of retail is all over the news. CNN recently reported that as many as 25% of American shopping malls may close their doors between now and 2023. But the truth about the retail transformation is lost in the gloom-and-doom news of bankruptcies and store closures. Just because stores like Forever 21 are failing, doesn’t mean the rest of retail is over.
Instead, physical retail is flourishing when paired with memorable experiences. As we mentioned in part one of our series on service-oriented retail, in-store experiences keep shoppers engaged. Here in part two, we’re taking a walk through the new frontier of the mall: a vibrant space that takes advantage of vacant storefronts and avoids the past mistakes of failed retailers.
- Traditional malls and shopping centers are reinventing physical retail through experiential shopping and omnichannel interactions like ecommerce sites, mobile applications and social media platforms.
- Younger generations of shoppers are driving real-life experiential retail space transitions that include restaurants, fitness centers, co-working spaces and more.
- As many as 25% of American shopping malls may close their doors between now and 2023 — making experiential shopping in physical retail more important than ever.
Omnichannel is the new path for retail success
While consumers rely more on their favorite websites to order specific items, they still yearn for an all-encompassing, tangible experience. Omnichannel experiences are the best way for retailers to connect with their customers.
When marketing and retail leaders think in omnichannel terms, their reinvigorated strategies can reinvent any kind of physical retail space, from as large and layered as the malls to as small and specialized as boutique stores. Omnichannel retail thrives on user experience. By integrating communications channels to engage existing and potential consumers, merchants can reach more shoppers in their native buying environments.
Retail leaders can find success with omnichannel sales and marketing strategies by combining key hubs of their brand activity to serve a unified customer experience like:
- Physical shopping locations – Think Target’s BOPIS strategy that offers curbside pickup within a few hours of placing an order.
- Ecommerce websites and other online marketplaces – Direct-to-consumer retailers hit it big online — now they’re betting on storefront success by delivering the same great experiences across both channels.
- Mobile apps – A good retail app can be a vital channel, but it’s important to get it right.
- Social media – Shoppable ads are becoming their own channel, and influencers are an untapped resource for many marketing leaders.
Each merchant has its own channel mix for success. The main rule for omnichannel development is to break down silos. Add the channels that make sense, and keep an eye trained on the experiences that keep customers coming back. There’s a lot to lose when you can’t connect with your customers.
Millennials and Generation Z drive retail reinvention and adaptation
The old idea of the mall — a few anchor stores, lots of chain and franchise retailers, a handful of smaller specialty stores — is over. It’s time to think of experiences that draw people to the mall. Millennial and Generation Z shoppers aren’t content to spend their money solely on things. They’re giving their money to retailers who can show them a good time. Three out of four from this demographic prefer to buy an experience over a desirable object.
It’s important for retail leaders to understand the true purchasing power of the younger generation. Millennials alone account for over 83 million people in the U.S., and over 40% of millennials are parents. So it’s not helpful to think of a single millennial shopper buying only for themselves. These shoppers have families to buy for, and they’re growing in numbers. Retailers must reach this demographic (and the next ones coming up) immediately, and the best way to do that is to serve up eye-catching and value-delivering experiences to keep the shopper and their dollars at the mall.
Reimagined retail keeps shoppers engaged
We mentioned in-store experiences in our previous installment of service-oriented retail commentary. A Forbes article expands on what experiential retail can include: Destinations like bowling alleys, arcades and restaurants such as Dave & Busters are becoming the new anchor stores in reinvented malls. These new experiences may have been built to attract millennials and Gen Z, but they’re becoming a hit across all demographics.
Smart retailers are finding ways to take over empty spaces in malls and shopping centers to fill the entertainment gap for shoppers and to address their own logistics and supply chain concerns. Where the media sees the end of retail as we know it, omnichannel-minded retailers only see the beginning.
Here are just a few ways that developers are repurposing shopping mall spaces:
- Fitness centers – 49ers Fit in San Jose, Calif. is a gym housed in a mall that offers state-of-the-art training equipment used by the San Francisco 49ers football team. The fitness facility offers the same services as any other gym, but this space adds the 49ers brand and elite training equipment to give customers an elevated experience every time they come in. And since it’s in a mall, they can also stop by Target to pick up something for dinner, grab a coffee after a workout or return a sweater they don’t want to keep — all in the same trip.
- Coworking spaces – Coworking company Industrious opened two new locations in New Jersey and California this year. As younger generations of workers demand more flexibility in their day jobs, full-service coworking spaces are becoming more important than ever. Fast Company reports that coworking spaces in shopping centers provide workers with close proximity to amenities like coffee, food, or a quick trip to the gym — essentials for many commercial renters that are hoping to attract more customers.
- Distribution and fulfillment centers – Euclid Square Mall in Euclid, Ohio began construction to become home to a new Amazon ecommerce fulfillment center in January 2019. Commercial real estate services provider CBRE found 24 examples of properties across the U.S. that were once home to retailers but now have turned — or are in the process of being turned — into a warehouse or a supply chain center since 2016. The demand for warehouse space is only growing, so these retail reclamation projects will play a larger role in logistics, space planning and urban development going forward.
Welcome to the new retail reality
Start thinking of the changing face of retail as opportunity, not defeat. Retail leaders can embrace the transformations to help keep their businesses relevant to customers. Omnichannel, service-oriented retail and experiential shopping are past the upcoming trend stage. These aspects of shopping are now mandatory for retail success. Fortunately, it’s not too late for merchants and retail leaders to step into the ring. Learn from the above retail transformation examples to find ways to integrate the new service-oriented retail principles into your everyday strategy.