Does the combined aroma of Cinnabons paired with Chicken Teriyaki have a scent if no one is there to smell it?
American shopping malls may elect to echo Mark Twain’s famous quip, “The reports of my death have been greatly exaggerated.” However, they may wish to reserve the word, “greatly.”
Green Street Advisors, a real estate analysis firm, forecasts that 10 percent of the largest 1,000 malls in the U.S. will fail within the next 10 years. That forecast may be conservative. According to CoStar Group, another real estate advisor, only 80 percent of America’s large malls are “healthy,” with vacancy rates of 10 percent or less, and the rate of decline is increasing, rapidly. CoStar also reports 200 malls with vacancy rates of 35 percent, or higher.
The market is bifurcated high and low: High-end malls continue to perform well, as do many outlet malls. It is the middle mall, the one of an undefined value proposition, that is struggling.
The trigger points for mall anemia are plentiful: the country is “over-retailed” with too many stores and too many malls, major anchors with old business models are either ill, dying or dead, ecommerce has grabbed over 10% of purchases, traffic congestion, demographic drift, global warming, and, significantly, customer expectations and retail engagement have changed.
Control of the general merchandise market has shifted from the manufacturer - if we build it, they will come; to the retailer - if we stock and display it, they will come;to the consumer - if I want it, they will make it available when, where, and how I want it.
Today’s consumers are educated with a greater amount of highly accurate and readily available information about products, brands and pricing than ever before.
The consequence for failure to evolve is extinction.
All is not lost.
The American shopping mall is at an inflection point; retailers, suppliers and malls will need to reinvent themselves in order to survive. There is a lesson to be learned from the relative success of today’s high-end and high-value malls.
To avoid the living dead, success requires great competency in one, or more, of the following eight (8) attributes:
Differentiation in brand, product, presentation, or service.
Ease of shopping; efficient use of customer's time.
Tangible value offering; price/value ratio.
Persuasive draw as a destination; planned shopping.
Impulsive purchasing; Compelling and instant gratification.
Omni-channel integration; "showrooming" and "click and collect."
Engaging consumer experience; surprise and entertain.
And most important, great products; offer things which people crave.
The signature feature is the Rolls Royce Wraith’s Starlight Headliner, consisting of 1,340 LEDs hand-sewn to create an effect of owning one’s personal night sky filled with stars...
Warning, content below represents a man's libidinous fascination with an automobile. It is not Lolita; after all Bradley Berman, the author, is not Nabokov and the Wraith is not underaged. Nonetheless, I find myself simultaneously repulsed... and seduced. - David J. Katz
Once upon a time… business success was based on providing a narrow segment of consumers with a narrow segment of products, uniquely suited to their needs, sourced and advertised locally, and sold at a local store.
Over time, the spread of mass media - TV, national newspapers and magazines - along with the expansion of national retail stores, and the growth of a global and highly efficient supply chain, led to a world of mass marketing, mass production, and massive retailers. The retail world moved from personalized products for localized, niche markets to mass-produced products for mass markets. Mass marketers thrive on "must-have" items - huge volumes of single styles, sold across many market segments to an audience of consumers eager to have the item they saw advertised in mass media, and which, in turn are produced in great scale and efficiency.
This strategy worked. Until it didn’t.