What Will Happen to the Future of Malls? FASM 430 | Madeline Muvihill Current Events Fashion Journal
Table of Contents
Chapter 1 : Victoria’s Secret Bets that Malls Will Stay in Business Chapter 2 : Ways Ecommerce Retailers Cannot Compete Chapter 3 : Washington Mall Paving the Road for the Declining Industry Chapter 4 : American Malls Should Take Note of Hong Kong’s Shopping Insights Chapter 5: Boutiquing department stores - tips from boutiquing Chapter 6: Successes of Viving Failing Mall Businesses Chapter 7: How to Properly Recycle Vacant Mall Spaces Chapter 8: Re-urbanizing The Suburban
CEO Bets that Malls Will Stay In Business Chapter 1 | Wall Street Journal
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ictoria’s Secret CEO, Leslie Wexner sees an ending near for this set back in large brick and mortar spaces. According to Khadeeja Safdar from the Wall Street Journal in “Victoria’s Secret Boss Bets on a Radical Idea: Smartphones Will Fade” Wexner states, “The internet won’t kill stores, we’re in the process of bouncing back from that. I don’t think this is a new norm.” (Safdar 2018). He continues to add how landlines did not eliminate face to face interaction and frozen food did not end the restaurant business. At the end of the day, we are social creatures and we will go to places where we can gather and interact. Despite the sales dropping in the past year for L Brands, Wexner continues to focus on the brick and mortar business by opening new stores and revamping. “The company has been putting more than 70% of its investments into opening and remodeling stores. Mr. Wexner stays involved in the minutiae, such as the placement of a flat-screen TV to broadcast fashion shows in the bathroom and the choice of wallpaper in the dressing room stalls.’It’s about creating an atmosphere,’ he says” (Safdar 2018). And that not all Wexner plans on selling. There has been a shift in product with this new trend of comfort and athleisure that caters best to online sales. Victoria Secret has been and plans to continue to focus more on constructive, fit specific product in order to better serve the customers and compete with online retailers. Wexner argues, “Fashion brands become obsolete because the products they sell aren’t compelling, or the atmosphere of the store isn’t enticing. He believes clothing chains are hurting because they haven’t fundamentally changed what they sell, not because of Amazon or declining mall traffic” (Safdar 2018). While many investor see the 6% drop in VS brick and mortar sales and do not believe Wexners prediction, Micheal Goody, who owns 3.8 millions share in L brands, has faith. He points out that Wexner is the longest standing CEO of a S&P 500 company quoted, “He’s the straw that stirs the drinks. This is in his blood” (Safdar 2018). Even though it seems like a gamble of an investment, Leslie Wexner has many compelling arguments.
Ways Ecommerce Retailers Cannot Compete Fashion Jounral 2 | Business Insider and Forbes
In Kurt Jetta’s “The E-Commerce Paradox: Brick-And-Mortar Killer...Or Is It?” published on Forbes,
he reveals buying patterns in consumer-packaged goods - also known as CPG. One of these patterns brought to the surface was the improvement of sales in vitamins and cosmetics seen in both brick and mortar and ecommerce. While there is much concern for the ecommerce business taking a dent in the physical store business Jetta notes,“In no instance did e-commerce share grow enough to materially affect brick-and-mortar sales” (Jetta 2017). He continues to discuss an industry that remain to show greta demand for physical stores - Grocery shopping. With Amazon recently buying WholeFoods, there was a lot of talk about the implication of online grocery shopping and Jetta has mostly put it to rest. “Our fourth annual Food and Beverage Report revealed that online grocery share is anemic, struggling to reach the 2% share mark. Less than 5% of adults make at least six online purchases per year. By contrast, 78% of adults purchase regularly at traditional grocery stores, and 56% shop at Walmart”. Clearly there is hope that some sectors in retails’ brick and mortar are here to stay.
In an older article on Business Insider, Emily Adler reports the factors that internet based retailers just can not compete with. To the left is a chart released in her article that sheds light on some of these factors through an analyzed survey. Emily Adler also explains showroomed and reverse showroomed in consumer behavior. Showroomed is a term used to explain an item being seen in store but then later bought online, and reversed showrooming is when the consumer researches the item online and then purchases in store. According to her survery she found surprisingly that “In the U.S., 69% of people have reverse showroomed while only 46% have showroomed, according to a Harris poll” (Adler 2014). Through this type of behavior, consumers are demanding a strong Onmichannel experience and are somewhat reliant on both platforms of product exposure.
Washington Mall Paving the Road for the Declining Industry Journal Entry 3 | Wall Street Journal
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hile the mall and department store business has been in major decline, there are still several exceptions that are making way to lead a path of success for this industry. One of the most significant expectations is that of the Bellevue Square in Washington. According to Stephen Moore’s “How Retailers Can Thrive in the Age of Amazon” on the Wall Street Journal, this mall’s foot traffic 21% in the past year while malls across the country and closing left and right. According the mall owner, Kemper Freeman, this high end mall charges retailers $100 per square foot, which is said to be three times industry standard. All of this success is due to the initiative made in prioritizing the customers experience above all. One of these initiatives include the yearly Bellevue Christmas Show, that is considered the largest outdoor Christmas celebration in the country, lining up an average of 500,000 customers yearly. This event consists of a parade and light show that is displayed every night close to the Christmas Holiday. The event is payed out of pocket by Mr. Freeman as it brings in heavy customer traffic who attend the show, shop, and dine at the many restaurants offered by the mall. It has become a traditional event that families all around Seattle look forward to. Cleverly so, Mr. Freeman sees the demand consumers remain to have for a sense of community despite the great expansion of the ecommerce retailers. Mr. Freeman does not stop there. Seeing the demand for brick and mortar involvement with ecommerce driven brand, Tesla, Bellevue Square showcased a 1,800 square ft. showroom of cars. This broke the record for the malls sales at $16 million worth of cars in just 12 hours. Tesla was the best choice imaginable for retailer as it in innovative, high end, and a rare product line for the average person to have contact with. It is this type of unusual experiences that are driving consumer traffic that same way that pop up stores are. If malls focus on event plannings and experience based stores, people will go out of their way to see it. According to Moore, “Mr. Freeman says, and he is planning a multimillion-dollar expansion—a bet that even in the age of Amazon, Americans won’t give up in-person shopping” (Moore 2017). Malls only die when they stay stagnant and fail to look at the opportunities that the E-commerce industry can not compete with physical interaction.
American Malls Should Take Note of Hong Kong’s Shopping Insights Journal 4 | The Observer
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hile the mall and department store industry is declining faster than it ever has in the past in the United States, over seas is seen to get a different set a cards handed to them. According to Stefan Al’s “The Mall Isn’t Dead— It’s Just Changing” published on The Observer, Hong Kong’s “skyscraper malls” are getting better luck. Hong Kong’s 300 malls are strategically placed on top of subways and in skyscraper buildings. Because of this, these malls are convenient, extravagant, and enormous enough to make them the most visited malls worldwide. Many of these skyscraper malls are also residencial such as Hong Kong’s Union Square which houses 70,000 people. Stefan Al refers to this development as a “city within a city”. These malls are a one stop shop that provides an extensive amount of brands, living, and the best known restaurants. It has become a destination that is not only easy to get to, but impossible to miss. Stefan adds, “Because Hong Kong’s apartments are small – its summer climate hot and humid – the mall becomes a default gathering place. And why not? There’s plenty of space and the air-conditioning is free. And while you’re there, you might as well browse around the shops and spend some cash.” (Al 2017). These highly compacted expansive malls have a lot to offer, but will they make a presence in the United States? Already we see a change in consumerism through the development of the Brickell City Centre in Miami and the largest new development of skyscrapers in New York City. At the center of the World Trade Center, an expansive mall plans to bring in traffic flow through tourism and local commuters. Stephan says, “Since the hub connects office buildings with train and subway stations, the stores are also “irrigated” by the 50,000 commuters who pass by each weekday” (Al 2017). American cities will hopefully soon take further inspiration from Hong Kong malls to limit the amounts of malls spaces and create more impactful all-encompassing shopping centers in the largest cities.
Successes of Reviving Failing Mall Businesses Fashion Jounral 6| Wall Street Journal
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any malls turn to other sources of entertainiment or business to privide to the customer when thay think retail hasfailed them. The idea behind adding extended businesses is to give the customer another reason to make the mall their stopped destination. According the WallStreet Journal, “Some malls have also added grocery stores, medical centers, entertainment options such as minigolf and theaters, hoping to draw a more consistent base of foot traffic. Mall of America in Bloomington, Minn., and the Layton Hills Mall in Layton, Utah, for instance, both have aquariums that house sharks and stingrays (Fung 2018). The idea is to strengthen the perceived value of the mall without eliminating the crucial business of retail. As we learned from the Washington Bellevue Square Mall, sometimes events anx entertainment are all is takes to pitch the experience for families to become loyal. While entetainment seems to be the easy fix, some malls are exploring their options to serve completely different purposes. Global Mall at the Crossings became a run down mall in Nashville that utilized the local college to revive the slows business. According to Sarah Zhang,“Instead of just attracting people with huge stores full of things to buy, the mall’s shops would be joined by new community centers: a satellite campus of Nashville State Community College, a library, a recreation center, and perhaps most unusual of all, a practice rink for Nashville’s NHL team. The Ford Ice Center officially opened just this past Friday”(Zhang 2014). The Global Mall at the Crossings came up with a viable solution that require foots traffic to be steady without eliminating the entirety of the retail business. It is innovative, and resourceful. A mall in Cleveland Ohio, is not far off either by developing part of the mall to serve as a green house. “The Galleria at Erieview has beautiful vaunted glass ceilings that let in tons of natural light... Starting in September 2010, herbs and salad greens and fruit were grown hydroponically in the mall’s glass atrium; old jewelry stalls were repurposed as gardens on wheels. The project, Gardens Under Glass, was lauded in the New York Times and National Geographic” (Zhang 2014). Resorting to a green house is a great solution to be more sustainable, and allowing natural beauty to brighten up often unattractive older building interiors. At the end of the day customers just want to feel appreciated, and by creating space that can benefit them further is what is going to draw them into brick and mortat stores for the experience rather than just purchasing online. Mall owners need to look at the values of the community to best cater to their audiences.
Boutique-ing the Department Stores Fashion Jounral 5| Personal Opinion
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ajor retailers such as Urban Outfitters, Forever 21, and Zara have restructured their visual merchandising in the past several years to carry less inventory, and focus more on creating a lifestyle and mood in the displays and fictures. This includes fully outfitting looks, create themes, add fun lighting, and catchy sayings on signs. By doing this, the customer feels that they understand the prupose of the merchandising making it seem of higher value. This model can also make the shopping expeirence a bit easier for the customers as they quickly understand how to style and wear different pieces rather than having to figure it out on their own at home or in the fitting room. Department stores have been struggling the most of the retailers, and it is because they are perceived as low qaulity, and often provide an overwhelming shopping experience. By cutting out a lot of the unnessecary amounts of inventory, and refocusing on modernized fixutres and displays, the customers will be far less intimidated to participate. While most of the needed revamping is through visual merchandising, often the product needs to also be updated and stay current. Department stores should take note of hot growing fast fashion retailers in the way that their merchadise always has some sort of trend behind it. While I don’t believe that fast fashion is the answer for department stores in quick inventory turnovers, but in lifestyling product.
How to Properly Recycle Vacant Mall Buildings Fashion Jounral 7| Architechual Digest & Wall Street Journal
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he United States is swarming with vacant mall buildings that usually appear in lower income areas of less populated cities. According to the Esther Fung from the Wall Street Journal, “Sears, which is downsizing at a faster pace than its peers, had 1,104 stores at the end of the third quarter in 2017, down from 4,038 stores at the end of 2010. Some analysts estimate a quarter of the nation’s roughly 1,200 malls will shutter in the coming years as retailers pivot toward online sales channels” (Fung 2018). There is no denying that mall spaces are over allocated and much larger singular indoor facility buildings than they need to be. The United States is said to have more retail brick and mortar per capita than another other country in the world. But this does not mean that these empty buildings can not create a new opportunity for a different type of business all together. After all, mall spaces are often well constrcuted, located in valued destinations, and have the infastructure needed to suite most business requirements. Once the United States started importing the majority of their goods overseas, the locally produced manufacturing business completely deteriorated. Not only did this leave a significant amount of vacant factories and warehouses around the United States and mostly the southern states, but it directly impacted the towns surrounding many of these locations leaving them as ghost towns to this very day. As history tends to repeat itself, it would be the best for the national economy and the well being of the people in in these low income areas to reinvest a new form of businesses to forgotten and disserted facilities. The L.A. Westside Pavilion Mall plans to convert is desirably located building into office spaces. Other mall locations have transformed into entertainment centers, maker spaces, residential real estate, and medical centers. Accoridng to Architechual Digest, “At the Arcade Providence in Rhode Island, developers have taken the re-urbanizing impulse to an extreme and built micro-apartments where the country’s oldest mall stood until last year”(Voien 2017). Even if there is no path at
which the retail business can be revived in these empty places, there are many different solutions to experiement than resorting to the easiest but most harmful solution, abandonment.
Re-urbanizing The Suburban Fashion Jounral 8| Architechual Digest & Business of Fashion
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he future of the mall industry has been slowly transforming into spread out suburban seeming shop centers, rather than one limiting infratructure. In referencing the trend of turning shopping areas into a urban suburbann delvelopment, Goelda Voien from Architechual Digest agrues, “That might mean more experiential retailers, such as restaurants and movie theaters, but, in a properly executed urban-suburban development, the movie theater will have reclining seats and serve beer from a local microbrewery—a happy melding of convenience and urbane tastes” (Voien 2017). By nature humans are social people who thrive on a sense of community. It is found in many reports that millenials consumers particularly are the tarket market demanding locations to meet, socialize, and expeirence all together. Social media has only encouraged this behavior to capture moments that highlight your life, and being social with others is high on that priority. Creating urbanized villages, includes all alspects of social life in one centerilzed location. This means, boutique cafes, photo worth lunches, breweries, live music, lawn sports, and yes, shopping. Voien goes on to say, “Many redevelopment plans focus on entertainment. Rollercoasters and waterslides are sometimes under consideration. A plethora of outdoor space is a must, Andrus said. Americans once fetishized being away from streets and grime; now they crave an urban “feeling.” Or they do to a point” (Voien 2017). And many places are taking this model and excecuting it ver successfully such as Corneilus North Carolina, Nashville’s Edgehill Village, and Altanta West Side. Atlanta’s gentrified Westside neighborhood major successes turning the shopping center into a village. Laura Sherman from the Buisness of Fashion speaks,“The major driver, it seems, is food, which is more experiential, and a greater part of the popular culture, than ever. “Food with a capital F,” as Jamestown’s Phillips says. “It’s fundamental to creating a real place. After all, millennials spend 44 percent of their food dollars on eating out compared to 40 percent of baby boomers”(Sherman 2017). People will go out of their way to experience this type of community. That is how Starbuck’s became so successful. Instead of just being another cafe to grab coffee in the morning, they marketed themself as a community destination, a place where you can arrange work meetings, read, catch up with old friends. Starbucks was soley successful for being the “cool” place to be with the leather chairs and more sophisticated lighting. There is no reason to not turn the retail experience into another community hub.
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