As a person passionate about retail, I make it my business (and it literally is) to read everything I can get my hands on with regard to the subject. Not surprisingly, I am often disheartened (and somewhat annoyed) by the seemingly endless number of articles with the same subject matter: the Internet will be the death of the mall…etc…etc…etc. I find this explanation of today’s mall to be too singular in nature to describe such an organic marketplace. What frustrates me even more with respect to these predictable articles is their lack of vision and/or solution.
Well, you can imagine my surprise (and joy) when I happened upon an article recently in WSJ.com by Paco Underhill that offered not only the best explanation of retail I have heard to date (“Retail has always been
about birth, life and death; and just as in organics, that death ends up as compost that regenerates.”), but four trends for future malls and retail.
Underhill’s four trends – (1) malls becoming “alls,” (2) the flourishing of the artisanal movement, (3) personalized and tailored apparel, and (4) mobile retail – are subjects about which I too am passionate and on which I have also written. However, I believe them to be so vital to the survival of the retail industry that I have decided to write a series of blogs reviewing each trend forecasted by Underhill, beginning with the first today:
Trend #1: Malls are becoming “alls”
What is the concept of “Malls Becoming ‘Alls’”? Allow me to first offer a scenario before a definition:
Meet “Jessica.” Jessica is receptionist by day and a student by night. During her limited spare time, Jessica enjoys grabbing a quick snack, manicure, haircut or massage as all 20-somethings like to do. Days and evenings off are spent studying, at the gym or going out with friends. The problem with this scenario is that Jessica’s community college annex, which has no on-campus dining or gym, is 15 miles away from her apartment, the medical office in which she works is 10 miles in the opposite direction, none of the personal services she desires are located in one central area, and her friends and their meeting places are spread-out all over the city. In short, Jessica spends all of her spare time, time that could be spent doing something she enjoys, in her car.
Now, keeping Jessica in mind, the general definition of “Malls Becoming ‘Alls’” is to transform them into lifestyle/town centers where all aspects of well-rounded lives – home, education, personal services, relaxation, entertainment, fitness, wellness AND retail – meet.
The predictable articles that I mentioned previously are right about one thing: retail times they are a-changin’. Gone are the days of Baby Boomer driven retail development. Millennials find malls generic and boring, looking at them with the same nostalgic eye that we might look at a station wagon with wood paneling – a cute relic from the 70’s.
The sleepiness of the mall model, combined with more shopping options, will force today’s malls to evolve into lifestyle/town centers to become relevant. Underhill wrote, “The mall of tomorrow will have all the apparel, consumer-electronics and general-merchandise options, but alongside it will be
gyms and innovative fitness centers, medical services and even schools, grocery stores and luxury spas.” I could not agree more and would add to the list community centers, public space, residential, hotels, farmers’ markets and wellness centers.
I envision the malls in this new lifestyle/town center-model to be larger than the malls of today with retail comprising approximately 20% of the total gross leasable area and the other sectors listed above rounding-out the equation. Retail needs to be 175,000-200,000 sf (excluding anchors) for a critical mass. Most of the malls will have a grocery store to drive daily-needs traffic with farmers’ markets and fitness centers filling the need in the absence of a grocer.
In addition, I foresee tomorrow’s mall being measured by traffic, visitors per year and gross sales volume instead of sales per square foot. Sales per square foot is a tired, outdated metric that is not a good indicator of performance. Savvy owners with successful malls have already pivoted away from sales per square foot.
The good news is the revolution has begun and we are seeing the redevelopment of malls into lifestyle or town centers or incorporating town center-like elements. The bad news is that combining all of these mixed-use ingredients into a successful recipe will not happen overnight. There will be some trial and error and some malls will die-off in the process and this carnage is the natural result of any revolution.
One thing that Underhill suggested that will not change is our innate hunter-gather need to congregate at “markets.” We will continue to visit “the market” to shop, eat and play, but we will also visit a mall to work, stay, get well, work out, study, rejuvenate and be entertained. A-malls that figure out how to tap into this mixed-use formula in the future will thrive. B-Malls can incorporate some of these elements today and survive. Those malls and centers that hang on to the traditional model will perish.