Tuesday, April 16, 2024
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The Mall of the Future

In this month’s Retail Insight, Kyle Spencer, Co-Founder of NextRivet takes some time out to look into how mall operators are revitalising their spaces to accommodate changing consumer demands.

The Mall of the Future 1

The Covid-19 pandemic caused dramatic changes to all aspects of our lives; from how we travel to how we shop. As a result, the retail industry experienced an identity crisis. People turned to online shopping first out of necessity, but we soon found ourselves growing accustomed to the ease of same or next-day delivery.

The rapid growth in e-commerce driven by the pandemic greatly improved logistics networks, as near-instantaneous delivery shifted from a far-off daydream to an actual reality. With retail giants such as Amazon and Walmart growing their delivery logistics, consumer expectations grew with them. This is seen in the ‘Last Mile Delivery Expectations for 2023’ Forbes article, which found that 90 per cent of global consumers expect two- or three-day shipping to be standard and 32 per cent of respondents would abandon their carts to buy from another store if delivery or collection of their item was predicted to be too long.

Following the end of the pandemic, the world changed again. Instead of a return to the normal we were used to pre-2020, we saw consumers now demanding a mix of in-person and online shopping. This has caused a new challenge for retailers, as they struggle to fulfill online orders whilst also maintaining an in-person location for customers to see products.

For retail property owners, the rise of e-commerce is not necessarily a bad thing. Consumers are not looking to only shop online, so mall operators must consider how to best manage the blend of in-person and digital retail.

It is more than just a shopping centre now
Mall visitation numbers increased by 19 per cent from 2021 to 2022, according to research by Near. The report considered that, despite economic instability, certain features in some malls made them more attractive to consumers, even if there was another mall closer.

This is because malls are turning into lifestyle centres. Consumers will flock to malls for various reasons, one of which is seeing physical products prior to purchasing. But, the draw for that is not big enough on its own. Malls are transforming to become destinations, not outdated merchandise centres.

Mall operators are trying to lure digitally native brands to physical retail by exploring what actually drives consumers to shop in person. Vienna-based Waterdrop, a company selling water bottles and flavour cubes, currently sells in 10 European markets, including the UK and has now expanded to the US.

Waterdrop is a great example of modern retailer demands. As they expand into the US they are testing the “proverbial waters” by launching a website for e-commerce, alongside mall-based kiosks across various markets. At their in-person locations, consumers can see the product and try a selection of beverages. This helps build a community, while also giving potential customers a look and taste of the product.

In-person shopping is not dead; it just serves a new purpose. Brands want smaller locations that allow them to create a more experience-based sales process. This means that malls must operate as entertainment hubs and destinations in order to attract consumers.

There are quite a few examples across the UK of malls emphasising entertainment alongside traditional retail. Since London’s Battersea Power Station opened to the public in October 2022, the ‘mall’ has since been frequented by over five million visitors. In an effort to connect with the contemporary visitor, Battersea Power Station has gone above and beyond to turn the disused historical building into a mall that combines retail space with entertainment. Housing multiple popular high-street stores with a cinema, the space also features a futuristic viewing point (Lift 109), and a ping-pong bar opening soon.

By innovating in-line with modern expectations, the space has been created for visits on weekends, morning coffee breaks and social gatherings alike. This is the future; balancing e-commerce with physical experiences that draw people back to the malls.

It’s also about blending in-person shopping with e-commerce
Not only do customers want to use malls for entertainment, but also to assist in their online shopping experience. Mall operators can engage potential customers by offering local pickup options. Online shoppers who choose local pickup at checkout were 13 per cent more likely to complete their online purchase and spent at least 23 per cent more than customers who opted to have their order shipped, according to a study by Shopify. This means that mall operators need to have the infrastructure to accommodate new ways of shopping, as retailers will be looking for this when considering potential leases.

Additionally, technology integration can help mall operators merge in-person and digital retail. One example of this is unifying in-store and online shopping through omni-channel. Retailers around the globe are investing in options to support all areas of their fulfilment chain. By incorporating the right technology and investment, retailers are able to offer consumer-friendly solutions with acronyms sounding like a bad sitcom like BOPIS (buy online, pick-up-in-store), BOSS (buy online, ship-from-store and BORIS (buy online, return-in-store).

Where do mall operators come into this? As retailers look to strike a balance between physical innovation and e-commerce, mall operators have an opportunity to shift their spaces to provide retailers with the functions they need to keep their customers happy. Mall operators can revitalise unused space into micro-fulfilment centres, create the infrastructure for curbside pickup and provide entertainment options to drive foot traffic. All of these make them a competitive choice when retailers are searching for in-person locations. It also has the potential to drive digitally native brands to physical locations.

The demand for e-commerce has not made the mall obsolete, but instead, has led to calls for a seamless experience of online to in-person shopping. Perfecting that blend through technology and innovation is the hard part. Our work at NextRivet, turning theoretical innovation concepts into results-driven initiatives for our clients, has enabled us to see the benefits of mall operators supporting retailers as they look to capitalise on changing consumer demands. It has also been made clear to us that the mall is not dead, it is just changing.