What is the future of retail and malls in the United States? With Amazon and online shopping growing, where does that leave physical retailers and all of the real estate they have traditionally occupied? What shops, attractions, and new experiences will fill the millions of square feet of empty retail space at malls and shopping centers? I shared my thoughts in this wide-ranging interview with Authority Magazine.
Here’s an excerpt from the interview where I answer the question:
“Can you share 5 examples of how retail companies will be adjusting over the next five years to the new ways that consumers like to shop?“By Fotis Georgiadis from Authority Magazine
The Future of Retail Is Experiences
A 2017 report by Credit Suisse predicted 25% of malls will go out of business by 2022 leaving millions of square feet of retail space empty. That will likely be accelerated by COVID-19. What will happen to all of that space? I predict that experiences will be a major part of the future of retail. Trampoline parks, indoor theme parks, go-kart family fun centers, and virtual reality games have already started to replace many department stores in malls. The new American Dream Mall in New Jersey is a look at the future of the country. It was originally designed to have 55% entertainment space and 45% retail space but has already pivoted to 70% entertainment space and only 30% retail space. Our 14 chain indoor family fun center currently has four locations inside malls. We plan to open more locations inside of malls in the coming years. Each location takes up the space of a large department store with over 50,000 square feet of rides, arcade games, dining, and more.
Curbside Pickup Is The Present and Future
Many retailers were forced to quickly expand curbside pickup options due to COVID-19. Most have seen impressive results, including Best Buy, Target, and Walmart. I expect this trend to continue and become a major consideration during new store designs and location refurbishments. Nordstrom rolled out its new concept Nordstrom Local into urban locations in Los Angeles and New York City. The locations serve as convenient service hubs for online order pickup and returns, express alterations, and stylist consultations. These smaller locations are less expensive to build, conveniently located to more consumers, and require less staff to operate.
Pop-Up Shops Will Continue To Grow
The permanent closure of thousands of retail locations will create millions of square feet of empty retail space that malls and shopping centers will need to find ways to fill. These store closings will create opportunities for pop-up shops from large brands, small neighborhood businesses, and local artisans. More affordable and shorter commitment leases will provide opportunities to a new set of entrepreneurs that will bring more innovation to the retail world. Some of my favorite pop-up shop examples include The Poundshop design collective’s budget-friendly boutique, Chicago’s Green Market Garden flower shop, and the Hello Kitty Cafe container pop-up.
Hybrid Retail Experience Stores Will Become The New Normal
Retailers will continue to find new ways to offer experiences such as exercise classes, cooking demonstrations, and training seminars to entice shoppers to visit. Lululemon uses its stores’ weekly complimentary yoga classes to create deeper relationships with customers. Apple has redesigned its stores to provide more room for the popular Today at Apple classes that offer sessions on photography, programming, and more all centered around using their products. Even more traditional retailers like Staples have reconfigured their stores to include Spotlight Space to host speaker sessions, hands-on workshops, and educational seminars for small businesses.
Seasonal Attractions Will Be Important Retail Center Traffic Drivers
Seasonal attractions, such as haunted houses, Instagram art museums, and interactive theater experiences, will no longer be relegated to strip malls, warehouses, and abandoned shopping center parking lots. The abundance of retail space caused by store closures will create new opportunities for these types of seasonal attractions to be located in more prominent locations. In addition to helping pop-up shops, more affordable and flexible leases will help seasonal attractions. Similar to the role movie theaters have played, these attractions will become important traffic drivers for retail centers. Except these attractions offer an experience that is not easily replicated at home.
What do you think will be the future of retail in the coming years? Has COVID-19 changed or accelerated that future? Share your thoughts in the comments below.
Please visit Authority Magazine to read the complete interview.