Extra Mall Space Is Not Solving Anything for Consumers
Another epic article about the future of retail malls in the New York Times.
At this point, what is left to be said?
eCommerce continues to take share. Shopify CEO reports that eCommerce trajectory was accelerated 10 months in the first 10 weeks of COVID.
Leases and debt are a huge impact to retail balance sheets.
Most of the top-performing retailers like Target have not been building large stores in the last couple of years at all - focusing primarily on smaller-format stores.
COVID has added a double-whammy to the Apparel category in particular - given that a large majority of mall retailers are apparel-focused. Much of that inventory is being liquidated (which depresses prices) or pushed forward (which depresses manufacturing orders).
Yet, those statistics which quote America as "over-stored" forget about the fact that most shoppers never wanted to drive 50 miles to the nearest mall, which is how we became over-stored to begin with.
One way malls could pivot, but keep their core retail mission (and tenants), would be to serve as a central point for click-and-collect purchases from multiple stores. Customers could pay a premium for same-day pickup (or delivery), and stores would function more like fulfillment centers. Perimeter stores could convert to having exterior-facing storefronts, and interior shops could set up pick-up counters in parking lots. This would address the pain point of shipping delays and, in COVID times, both give people an errand to run while keeping low/no contact. This also means stores could maximize their square footage for inventory, rather than curating an in-store shopping experience.
The best ideas I have heard show malls being hubs of both entertainment - which in some sense they have always been - as well as self-care. They could function like indoor recreation/activity centers with facilities like climbing walls, dance/fitness/yoga studios, indoor skate parks, as well as spas. Think: elevating the “indoor amusement park experience” that the Mall of America has been cultivating on for years, but make it modern.
The big issue: extra mall space is not a consumer problem. It's an investor problem. What persistent consumer problem are you trying to solve that also happens to solve this investor problem?
