• Holly Chasan-Young

A Tale of Two Malls

Today, dear readers, we have a tale of two “high-end” malls: One successful - with steady traffic and no vacancies - the other struggling to reinvent itself in the face of constant store turnover and lapsed customers.

Both malls opened around the same time - circa 2004 - with some duplicate merchants - the Gap, Banana Republic, and Starbucks. Both were trendy, new “open-air” malls with grassy areas offering a park-like experience.

We’ve been observing these two shopping malls for a while because we see them facing the same problems -- yet while one seems to be changing to address new consumer behavior, the other is falling far behind.

Let’s define their shared problem statement: Retail malls have been slow-simmered for almost a decade. Over 8,000 retail stores closed their doors in 2017.

Amazon is cranking up the heat and the retail cauldron is boiling. Consumers are changing their behavior, shifting to online purchases or more specialized stores, getting closer to their food sources. Retailers have been slow to catch on.

Consumers seem to be shunning the one-stop shopping experience of pricey department stores - abandoning the convenience of getting eyeliner, a blender, and a cocktail dress all under one roof. They're taking that behavior online instead - with bennies like 2-hour delivery, free shipping, and online-only perks.

So what’s a mall to do? In a word: adapt. Warby Parker understands this very well. Their brick & mortar showrooms supplement their online experience, streamlining the glasses try-on process. You don’t need to go to a store; it’s merely faster, and a compelling experience. You see, we consumers are not only fickle - we lack patience.

Let's take a closer look at the mall doing well here in Richmond:

We think its stores appeal to the Richmond demographic, offering a wide variety of options for diverse socioeconomic backgrounds - including several restaurants, a number of high-end chain stores and popular local retailers who can absorb the rent.

Proximity to two major highways and an Apple store help with traffic. On a recent Tuesday afternoon visit, we observed families milling about on grassy areas, shopping bags in hand. The Starbucks’ line was out the door.

This mall recently abandoned its initial food court concept and now scatter a few eateries throughout the property - supplemented by seasonal food carts.

They've also made some major structural changes over the past few years to increase traffic flow and address customer feedback regarding poor access to elevators.

Now let's examine why its counterpart is suffering. We stopped by on a recent Sunday afternoon to observe visitors and check in.

It's going through a large transformation - major construction is underway with several blue tent-like structures covering many storefronts (no signage to hint at what's to come). It's a mixed bag of vacant storefronts, well-known chain stores and unknown "mom & pops."

While there’s a new dog park and an upgraded pop-jet fountain for the kiddos, the mall feels desolate.

The two prominent anchor stores are hanging in for now - but we noticed very little traffic in and out - with the exception of parents who’ve packed beach gear and coolers for the fountain. (One mom sheepishly admitted she'd been unexpectedly forced to go shopping only when her daughter's clothes got soaked.)

We noticed several nappers taking advantage of the new lounge furniture. Nappers. One with a half-empty Starbucks cup nearby. (Did we mention the Starbucks vacated years ago?) We also observed lots of determined dog walkers. All of this made it feel more like place to burn time than a mall. Lounging is fine, but not without shopping in equal measure. The tail appears to be wagging the dog, here.

During our research, we learned it's a big deal for the shoppers in this town to “cross the river” from north to south, where the struggling mall is lcoated. There’s a long history with crossing the river in Richmond. Much of it predates us, so we’ll boil it down to demographics and distance. Over the river feels so far away. There are tolls involved. Local governments are trying to chip away at these barriers, with more accessible parkways and roadways. There's a strong behavioral hurdle that whatever is on the other side of the river must be unique - something I can’t get elsewhere.

And that is a problem for this mall.

If we were called in to help this mall reinvent, we would immediately work to gain actionable insights about their target customers.

We'd likely use How Might We - a technique for framing problems and ideating new solutions:

- How might we connect the online and physical retail experiences?

- How might we offer unforgettable experiences?

- What can we offer that consumers cannot find online or anywhere else in town?

- How might we attract and appeal to customers across generations?

Shopping behaviors have evolved and will continue to do so. Shopping malls in distress need to think differently. They have a lot to learn and do in the next few years to avoid implosion.

It's not about adding more human-size chess sets or a bigger fountain. Instead, retail development firms and store owners must understand and address customers' unmet needs more profoundly (and creatively).

It's time to jettison the traditional retail rule book, experiment with new approaches, and iterate to learn. That will take some investment, but we don't believe that anything less than a radical reinvention will do.

We’re here if you want to talk, mall developers!

#costefficiency #returns

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