Researchers love to call this time in American history the “retail apocalypse.” Major companies like Bon-Ton, RadioShack, Toys “R” Us and PayLess have gone through bankruptcy. In the mid-90’s there were at least 1,500 shopping malls across America: now, that number has fallen to below 1,000 as big retailers shutter their brick-and-mortar doors.
However, shopping centers are not dying. They are evolving to adapt to the new demands of today’s economy. Shoppers can find everything online. What they can’t find online? Experiences. Fine dining. Community. By evolving marketing techniques to respond to the changing demands of American consumers, retail shopping centers don’t have to despair when an anchor tenant vacates a space. Entertainment, dining, and community users are actively seeking retail locations.
The Rise of Online Shopping
Why are major retailers falling by the wayside in the first place?
Many blame the onset of online shopping. Let’s face it: it’s often quicker and easier to order a product online than to drive 30 minutes on congested streets to the nearest shopping mall. There’s the hassle of waiting in line, the promise of recalcitrant and gloomy cashiers, and the general time-waste of wading through racks only to find out they don’t have your size or color. Online shopping simplifies the experience. With today’s busy consumers, they’re looking for an easier shopping experience that delivers products right to their doorway.
Entertainment & Experience at Shopping Centers
If people are looking to online shopping to satisfy their splurge-urges, then what do you do when your anchor tenants vacate your commercial spaces? Odds are, there won’t be three big box stores ready and willing to step in and fill the gap. This is where a little bit of creativity comes in, and a knowledge of general psychology. Both Millennials and Boomers are spending more and more of their money on experiences as opposed to material possessions.
This urge for experience-over-stuff emphasizes the importance of entertainment and experiential retail. Consider how the following could add value to your shopping centers:
- Consider even-based companies that need hosting space for car shows, music, or even fashion exhibits.
- Roller skating rinks. This time-honored entertainment attracts people of all ages.
- Comedy venues. When it comes to getting a laugh, an online comedy show just doesn’t compare to the real thing.
- Appeal to a demographic of health-conscious consumers with yoga studios, dance studios, and even Zumba or super-trendy cycling studios.
- Kid friendly activities like bowling, laser tag, and bounce houses.
- Movie Theaters with in-seat dining continue to seek new locations.
Fine Dining and Unique Foods Add Value
People today, especially millennials, seek new, unique, and highly specialized restaurants. People want the best-in-class food within each category (Mexican, Asian, Mediterranean, Italian, etc) that is healthy, high quality, and easily customized to tailor their lifestyles (gluten free, vegan, etc). The days of the food court in all its greasy glory might be coming to an end. In fact, you may have noticed previous standard Sbarro’s fall from grace in the mall food court. This could have to do with the fact that more and more consumers have changing standards when it comes to eating out. More and more “food halls” are replacing the “food court” concept.
In 1970, studies showed that 25.9% of consumers reported dining out. Now, that number has jumped to 43.5%. Millennials, with their desire for new and unique experiences, don’t want to eat at the same food court fast food restaurant they’ve always eaten at. They’re interested in unique, healthy, and more easily customized options for eating out. With so many people choosing to tailor their eating around an eating style like gluten free, vegan, or ketogenic, the model of the one-size-fits-all fast food restaurant just doesn’t cut it.
Fine dining establishments are an incredible value proposition for shopping centers in a country that’s moving away from big-box to smaller formats and more unique, experiential, and exciting ways of dine.
Although community-oriented leases might not bring in the big bucks, they can help reignite a commercial space and make it a social gathering hub. You might have seen local libraries popping up in previously-vacated spaces. Farmers’ markets making use of the sprawling empty spaces in the parking lots. Museums of local history and culture starting a niche interest following in a vacated space.
Though it’s true that none of these are huge revenue generators, they also offer something that consumers certainly can’t get online: person-to-person experiences, in the real world, shaped by community interaction.
So, while its true that anchor stores might not be lining up in droves to fill in vacant spaces, there are opportunities to find a replacement tenant. The change in shopping center merchandising simply signals something deeper in American culture: our desire for better experiences, better food, and a better sense of community. With an open mind and the ability to evolve along with changing attitudes, retail shopping centers can stay on the cutting edge of relevancy.