Page 40 - March 2021

RLI EVERYTHING DIGITAL

The Great Mall Reset

In the second part of our ‘Everything Digital’
series, Gary Burrows, Managing Director –
Malls and Meeting at FitForCommerce discusses
the great mall reset and how the sector is making
the most of a bad situation.

ith so many malls struggling, in breach of their loan to frictionless, and service oriented as the physical experience. We must
value covenants, previously healthy assets are being leverage advanced algorithms, similar to those used by Facebook, that
sold off at a fraction of their previous value. While the deliver only the content that the consumer is interested in. When used
W industry was already changing before the pandemic, the in a mall or retail environment, wrapped within a digital ecosystem, we
thinning of the herd is increasing its pace and the oversupply of retail and can deliver an enhanced personalised customer experience that allows for
malls is readjusting itself quicker than anyone imagined. In the US alone, greater upsell opportunities and thereby an increase in turnover potential.
25 per cent of all malls will permanently close their doors within the next Malls and meeting places can also learn from Amazon’s end-to-end
five years, if not sooner. business solutions that include website and e-commerce setup, logistics
The great reset of malls, towns and city centres is upon us, and nobody and even manufacturing and finance options. Imagine if mall owners
was truly ready for it. Focusing on minor adjustments and waiting for offered a similar solution to local entrepreneurs and new business
a return to normal is simply not enough to survive. In times like these, startups. Consumers have already expressed a strong interest in locally
we must embrace systemic change in order to evolve enough to stay unique and authentic brands. If malls were to offer a business solution
relevant. From the lease structure through to the operating model, all to local businesses, we would see a lot more regional variety and
aspects of a mall or meeting place must be supported by a strong digital exciting new businesses in malls where they have previously been priced
foundation. Although it may be difficult to justify the investment in a digital out of the market. This is consumerism creating and defining its own
ecosystem when times are tough, the investment will prove beneficial for environment, based on the behaviours, needs and desires of the local or
the long-term sustainability of the asset. regional catchment.
The great reset of malls focuses on a merged digital and physical space As more digitally native brands enter the physical space, filling the void
with greater collaboration between landlords and retailers. Data sharing left by those retailers that did not embrace online commerce early
and landlord access to transactional data, within a secure closed operating enough, leases will change with turnover only, or percentage rents, which
system, is critical in this new mall reality. However, tenants are still reluctant even wrap in service charge costs. If mall owners want to include these
to share transactional data with landlords as they are concerned about digitally native brands that are lean, agile, creative, innovative, adaptable
the security and confidentiality of the data or believe that it will be used and scalable, they will have to radically rethink their rigid lease structures.
for an upward rent negotiation. As a merged digital and physical space, the future mall or meeting
The historic distrust between tenants and landlords that has been place will rely on a much stronger logistics infrastructure and layout. The
glossed over with superficial partnership strategies must be put aside. physical space will include dark stores, group kitchens for restaurants
Shared data is essential to supporting new turnover or percentage rents, and new store formats. Rather than simply a shopping destination, brand
especially within a geographically ring-fenced area, where online sales are stores will focus on delivering unique brand experiences and increasingly
also included in the rental calculation. If the online sale is fulfilled from the become fulfillment hubs for home delivery. As a result, malls and meeting
store, then it is particularly hard to argue that the landlord should not places will welcome a more diverse tenant mix, including medical clinics,
receive a proportionate amount, as defined by the turnover rent. educational institutions, co-working spaces, leisure and entertainment,
If landlords leverage a closed, secure and confidential operating system, e-games, and social, cultural and community events.
with advanced algorithms, tenants will be less concerned about allowing The technology solutions required to radically evolve the industry already
transactional data to be shared with the landlord. Designed to benefit the exist but have yet to be adopted by the mainstream. These leading-edge
tenant as well, such a system can provide intelligent and actionable data systems and technologies, that go way beyond digital ecosystems, are
to the tenant including trend analysis and performance metrics. It can also hosted by the landlord and interfaces with the tenants/operators and
capture essential customer data needed to deliver personalised customer customers, allowing for a new level of communication and sales potential
experiences, while successfully navigating GDPR and cybersecurity laws. based on consumer demands and expectations. The future is here now
In this new mall reality, the digital customer experience must be as – are you ready to reset?

40 RETAIL & LEISURE INTERNATIONAL MARCH 2021