Tomorrow’s Shopping Mall is Taking Shape Today
by Alexandra Whittington and Bart Édes
U.S. shopping malls have been on the decline for many years, victims of a consumer culture that has turned toward strip malls and on-line shopping. Then the pandemic arrived and shoved many malls over the edge. Iconic stores declared bankruptcy one after another — Lord and Taylor, Pier One, Neiman Marcus, Brooks Brothers, JC Penney and others. A report issued by Coresight Research in August 2020 predicted that around 1,000 malls would close within the next three to five years. UBS predicts that 80,000 retail stores will shut by 2026 — many of these stores are in shopping malls.
Yet this dire picture does not reflect the whole story, which is infused with examples of innovation, adaptability and out-of-the-box thinking. The shopping mall is not extinct, particularly in wealthier communities. Instead, it is being reborn as something with a different look and feel, with links to the home and virtual spaces. Changes began to take hold over the past decade and multiplied during the economic crisis created by COVID-19. As America accelerates its post-Omicron reopening, we can begin to discern plausible futures for the shopping mall. Here’s what we see happening.
A multiplicity of choice
One of the most significant shopping trends of the past two years has been retailers’ embrace of omnichannel sales. According to the U.S. Department of Commerce, e-commerce sales reached $870 billion last year, a whopping 50.5% increase over 2019. And yet, physical stores still do much more business than online sellers.
Public confidence is growing that it’s again safe to go out as COVID-19 case numbers steadily decline. Humans are social beings and many have missed interaction with others during the pandemic. While consumers are not going to give up the convenience of shopping from home, they also find joy in mingling at the mall, scanning the shelves, touching the merchandise, and trying on clothes.
In response to pandemic-era restrictions and social distancing, companies began to offer more ways to shop and collect purchases. Omnichannel options have become ubiquitous. Retailers have created multiple options for buying products — like ship-from-store (allowing the customer to browse first), and buy online and pick up at the curb, in-store, or in a locker. They are now trying to integrate these options into store designs.
More retailers (like Ikea) are opening experiential showrooms. These give customers the chance to view products in a space prior to making purchases in the store or ordering online.
The grocery chain Publix has debuted a new store format that includes a permanent online order hub, pharmacy drive-through, and designated parking spots for grocery pickup. Other stores are reserving parking spots for curbside pickup. Countertrends are also at work. Some e-commerce giants are shifting toward a brick-and-mortar model as traditional supersized retailers are opening small stores.
Amazon provides a striking example of this trend, with new in-person shopping sites designed to complement online sales via a department store format. Amazon Go convenience stores are now expanding to the suburbs, providing an automated way for more customers to pick up the items they want and depart. The tech giant is also bringing its Just Walk Out technology to full-scale supermarkets.
Target is adopting a small store format with a more intimate customer experience, while a Walmart convenience store pilot will feature freshly prepared foods geared toward organic, healthy meals on the run.
Let me entertain you
There is a growing audience ready to visit physical stores again, but months of bingeing on a growing array of streamed programming has changed perceptions. People expect to be amused and stimulated. It is no longer enough for malls to offer a large variety of stores and food outlets to attract repeat customers. This is because they are competing with an enlarged universe of experiences available to the average consumer.
The response has been to offer more activities. Many malls now feature maker spaces, batting cages, rock climbing, axe-throwing, escape rooms and other entertainment facilities luring consumers out of their homes. A mall in East Rutherford, NJ boasts indoor ski slopes. People are beginning to visit the physical mall to enjoy immersive experiences. For example, The Shops at Crystals, an upscale shopping mall on the Las Vegas Strip, is hosting an immersive Van Gogh exhibit.
Virtual reality (VR) experiences will become standard fare. Such experiences are exploding across the country, like “Terminator Salvation” at the Irvine Spectrum Center, or “Alien-Descent” at The Outlets at Orange, both situated in Orange County, California.
An Ericsson study on the mall of 2030 suggests future shopping experiences will include options to buy clothing for your avatar, indoor nature exploration, VR exercise, and on-demand healthcare centers. There could also be places to repair items or purchase second-hand goods, adding an aura of sustainability to the future shopping excursion. Restaurants might integrate hardware that allows customers to dine with friends over video conference while entertainment options could evolve to include holographic performances.
Into the metaverse
In addition to hosting VR entertainment, malls are also plunging into the Metaverse. One initiative, known as Metamall, seeks to create a VR experience for the crypto currency community to create, explore and trade a virtual mall owned by its users. Obsess, a virtual store platform for experiential e-commerce, enables brands and retailers to offer “3D 360” shopping experiences on their websites, mobile apps and social channels using proprietary technology.
Social media is also offering new avenues to capture consumer dollars digitally. According to new research from Sprout Social, 90% of consumers plan to shop through social media in 2022. The study also found that the inclusiveness of branded social media presence is an important determinant of their interest to buy.
Ensuring a diverse range of creators across the metaverse may constitute a valuable strategy for gaining new customers in the coming decade. Tiktok, for example, is serving up recipes popularized on the app through ghost kitchens that offer delivery or carry-out options from established restaurants. Celebrities and brands are expected to continue their exponential growth as influencers in 2022, putting traditional advertising in the backseat.
Continued reinvention
Even before the pandemic swept the country, U.S. shopping malls had already begun to reinvent themselves. COVID-19 has left its mark, and the reinvention continues. For example, retailers are trying to adjust to the future of hybrid working. Malls that were heavily dependent on lunch-time and after-work visits from workers at nearby offices are scrambling to reconstitute their customer base, which is spending more time at home.
Among the other trends that malls must adjust to is the growing elderly population. In response, one can expect greater attention to accessibility, as well as age-friendly design and services. The Garden City Shopping Centre in Melville, Australia provides an example of adaptation to demographic change. Growing consumer interest in sustainability and the climate crisis will push retailers and mall operators to adopt greener practices and influence the range of products and how they are packaged and presented.
While some malls adapt and flourish, others will find a new purpose. Last year, an old Macy’s department store was converted into the new Burlington High School in Vermont’s largest city. A former shopping center in Wayzata, Minnesota now provides senior housing. Westside Pavilion, a dying mall in Los Angeles, has been transformed into an office complex for Google. The enormous space in “retired” malls provides a multitude of potential uses.
Today, e-commerce accounts for about one-fifth of retail sales in the U.S. This is expected to increase over the current decade. Gartner predicts that, by 2026, a quarter of people will spend at least one hour per day in the Metaverse on activities such as shopping. The growing embrace of e-commerce, new hybrid working patterns, and expansion of retail activity in the metaverse, will profoundly influence the future of malls. The malls that survive will increasingly operate in both the physical and virtual worlds, while fine-tuning customer-centric, omnichannel options to improve convenience and enjoyment of the shopping experience.
Alexandra Whittington is an educator, writer and researcher who has been recognized by Forbes as one of the world’s 50 leading female futurists. Bart Édes is a trends watcher and author of Learning from Tomorrow: Using Strategic Foresight to Prepare for the Next Big Disruption (John Hunt Publishing).
