Today, I will cover why so many malls have closed and how many more will, I also cover the repurposing of malls, why Amazon is actually launching physical stores, and what retailers can do to keep their doors open.
How are Malls Doing?
According to real estate research firm Green Street Advisors, roughly half of all remaining mall-based department stores will close by the end of 2021.
Predictably, those closings will have a catastrophic effect on the country's malls. Over the past 10 years, hundreds of malls have closed. Last year, the researchers at Coresight projected that 25 percent of the around 1,000 malls left will close in the next 3 to 5 years.
Mall developers have tried to revive their fortunes by bringing in "experiential retail," including gyms, movie theaters, restaurants, and more; however, all those categories stopped being viable during the pandemic.
Similarly, the huge USD $5 billion American Dream mall in New Jersey opened in 2019; it was thought to be "the future of retail" promoting its indoor ski slope, a water park, and a roller coaster. Sadly, when its anchor department stores, Barneys New York, Lord & Taylor, and Century 21 were all victims of the novel coronavirus, the American Dream turned into a nightmare.
The demise of shopping malls has become a challenge for cities and towns throughout the world, as millions of square feet of empty retail space has become available. Malls and retail stores have been turned into medical offices, community colleges, COVID vaccination centers, senior residences, public schools, and more.
Over the past eight months, Amazon has established distribution centers in former malls in Baton Rouge, Knoxville, and Worcester, Massachusetts. And according to Coresight Research, between 2016 and 2019, Amazon repurposed roughly 25 shopping malls into distribution warehouses.
Amazon Working Countertrend
Recently, Amazon announced plans to open a chain of bricks and mortar stores for big-ticket items. Now, you may ask, "Why under these circumstances would Amazon want to risk opening physical stores?" Think about the last time you went shopping for a computer or a large-screen television. You probably wanted to see it 'in person' to assess the product and picture quality.
Not the End of Bricks and Mortar Retail
This COVID-19 Pandemic is not the end for retail; local stores will rise again---it's just that their owners will need to embrace new tactics to attract their traditional and new clientele. The following solutions are for Main Street retailers who want to stay in business:
Keep your overhead low. One way to keep your overhead low is to hire students part-time---especially if your local college or university has a retail merchandising program. Teach them your business, and they will enthusiastically become your cheerleaders in the community.
Use streetfighter marketing tactics. Written by my friend marketing consultant Jeff Slutsky, Streetfighter Marketing Solutions was a book published for retailers. Though it was written back in 2007, the book details how retailers can be successful using nontraditional, highly targeted forms of marketing and advertising---many of which can still work today. One quick insight I can share from the book is to look for other non-competing retailers who serve the same market and exchange coupons. You will each attract new customers.
Create online sales. Just because you have a local bricks and mortar store does not mean that there are not people in other parts of the country who will want to buy the products you are selling.
Recognize the value of social media. Social media has emerged as an extremely powerful mechanism for marketing, whether your retail business is local, regional, or national in scope.
Get Experiential! The title of my new book is Experience Rules for a reason. It really does! Once we get to a comfort level with going back into stores---masked or not---develop in-store experiences to give people a reason to frequent your store. Depending on the type of business you have, get creative. If you are a restaurant, consider having cooking classes. If you sell artists' supplies, consider a master class by a respected local artist.
And these experiences do not have to be classes, they could be a book reading or a brief presentation by a local expert and a lengthy Q and A.
© Copyright 1998-2021 by The Herman Group of Companies, Inc., all rights reserved. From 'The Herman Trend Alert,' by Joyce Gioia, Strategic Business Futurist. (800) 227-3566 or www.hermangroup.com
The Herman Trend Alert is a trademark of The Herman Group of Companies, Inc. Reprinted with permission.