Traditional suburban malls in the U.S. are struggling with falling revenues and many even face demolition. The suburbs are not as prosperous as they used to be and consumers prefer the cheaper big-box stores. To save themselves, malls either have to reinvent themselves to draw in new customers or relocate to the places where their customers have gone.
- 15 to 50% of American malls may succumb to declining revenues in the coming years. Sears, a longstanding anchor in many malls, looks to be heading for bankruptcy and Macy’s, another anchor, is closing shops at a high pace.
- Malls increasingly offer food and entertainment (22.1% of space today, compared to 19.2% in 2012) and become more like amusement parks and some even sell day passes for customers to visit multiple experiences.
- Beyond common cinemas, which have been part of the mall-experience for decades, new forms of entertainment include deluxe movie theatres, high-tech golf ranges (e.g. TopGolf), trampoline parks, kids’ entertainment centers, skydiving simulators and comedy clubs.
- Traditional enclosed malls are replaced by open-air shopping ‘villages’ in which consumers spend more time, and hence money, simply because they enjoy being there.
- In the rest of the world, many malls are much more part of the urban fabric and are naturally located close to the masses of consumers (e.g. at a transit junction).
The archetypal suburban mall tried to offer the kind of public space that was otherwise lacking in suburbia. Unfortunately for them, in many parts of the U.S., the suburban middle class is in decay and these families prefer to go shopping in low-cost big-box stores such as Walmart.
malls start to recognize that they need to provide a quiet and healthy atmosphere where consumers do not necessarily rush from shop to shop, but spend money while relaxing
The best-performing malls find themselves in areas with a more affluent population and have switched to a more diverse and enjoyable pallet of experiences. For instance, the classic anchors, e.g. Macy’s or Sears, are replaced by food markets (e.g. Eataly) or popular brand stores (e.g. Apple stores) and an increasing share of their surface is taken up by high-end entertainment.
Crucial to any mall’s survival is that it provides a space where people actually enjoy spending time, just like they did in the 1960s and ‘70s. Back then families were happy to spend their time shopping and the malls provided just that. Today, malls start to recognize that they need to provide a quiet and healthy atmosphere where consumers do not necessarily rush from shop to shop, but spend money while relaxing as if they were visiting a mediterranean village.
In America’s gentrifying cities, malls are gaining popularity as well. Just like the malls in Asian megacities, which are often the only (air-conditioned) public spaces in an overcrowded downtown area, American urban malls increasingly form some kind of retreat from urban chaos.
Whether malls find themselves in suburbia or busy city centers, shopping is no longer the sole reason for consumers to visit them. One could even imagine malls charging entrance fees when they become more and more like resorts and amusement parks. Irrespective of any entrance fees, such ‘non-shopping malls’ offer opportunities for online retailers as they provide an unobtrusive brick-and-mortar front-end where consumers can browse and order products for home delivery.