It's become a familiar site in virtually every American city. Sprawling shopping complexes with empty buildings adorned with the ghostly echo of removed brand signs. The stores Circuit City and Blockbuster once occupied now sport perpetual "For Lease" signs, in some cases leaving shopping centers without any anchor tenants at all.
Inside the traditional shopping mall, it's not much better. With vacancy rates at a 20-year high, mall managers are trying everything from discounting rates to short term leases to embracing pop-up retail. And though some of these tactics are innovative and are filling in spaces - for now - for the most part, they are band-aid fixes covering up a far greater problem.
The mall, as we know it in the United States, simply isn't relevant to today's shopper. Gone are the days when the convenience of a collection of disparate stores under one roof is essential: we have the Internet, with infinite diversity only a click away. And time-pressed shoppers want the convenience of in-and-out surgical shopping rather than the long walk from the fringe of the parking lot for a day of leisurely browsing.
The one bright spot seems to be that department stores - a retail sector that has been ailing for some time - are capitalizing on the same trends and re-inventing themselves as the mini-malls of the future. JC Penney is leasing space to Mango and Aldo, and one Sears store has leased 45000 square feet to Forever XXI. The raw scale of department stores and their experience with "store-within-a-store" concepts means this trend is one to watch as it may exacerbate the challenges facing traditional mall operators.
In fact, once you strip away the collection of stores, today's mall simply doesn't offer much: a collection of common chain brands, perhaps a few dingy "local" retailers, and a food court brimming with mediocrity. Free WiFi, mall-based "loyalty points," and early-opening days simply won't resurrect the mall to its former glory, so increased vacancy leads to diminished foot traffic leads to lower sales... and repeat until closure.
But the humble mall does have a chance to reinvent itself. At the World Retail Congress, a diverse group of speakers including a retailer, an architect, and a mall operator all discussed the question: what is the future of the mall?
And surprisingly, a strong consensus emerged.
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A social gathering place that offers more than just shopping. The shopping mall at Potsdamer Platz in Berlin is surrounded by high-end restaurants, movie theaters, a casino, and a performing arts venue. The streets connecting these locations boast a changing variety of festivals, moving the week we were there from the Festival of Lights to an Alpine festival, complete with pop-up taverns and a temporary downhill ski slope. Inside the mall proper, an exhibit on the "shoeshine boy" culture informed and inspired, even featuring a stand selling the traditional favorite cuisine of the shoeshine boys. And all of this in addition to a great collection of stores, anchored by not one but two grocery stores, one upscale and one discount.
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Integration with the virtual world. Eric Kuhne of CivicArts spoke on some of the innovative malls they have designed around the world. While the retail redevelopment of Moscow's Sheremyetvo Airport into a mall instantly captured my imagination (Combining a mall with an aviation museum? Yes, please!), it was the Bluewater mall in Kent, United Kingdom that offered perhaps the best lesson. Aside from the "new basics" for malls (stunning architectural design, community integration, entertainment as a destination), Bluewater features an incredibly innovative solution to two problems that vex most malls. With a two-story limit imposed by local council, Bluewater created a virtual "third floor," an online-only part of the mall that holds virtual stores for retail brands waiting for store space to open up in the mall. With 0% vacancy, the waiting list for the 320 store spaces currently has 189 brands, all of whom can engage mall shoppers "virtually" and test the waters with brand concepts and offers prior to physically moving into the mall.
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Popup retail is a part of the draw of the mall. In many US malls, vacant space is filled twice a year: costume stores before Halloween and Christmas stores right after. But popup retail is now attracting luxury brands to create a time-urgent destination for shoppers such as Dunhill's New York popup and Longchamps' temporary store in Tokyo. This marriage allows the mall to get more affluent and upscale shoppers onto the premises and gives luxury brands a presence in markets that can't support a year-round branded store.
These ideas aren't a prescription for all that ails the American mall, but rather a diagnosis of what needs to improve for long-term sustainable viability for these properties. And despite the rough economy of the last few years, this is the time for malls to draw inspiration from new retail development around the world and create something that isn't there for many malls today: a reason to shop there.
