Malls are dying out. What’s in store for retail?
Gordmans, one of my favorite discount clothing stores, filed for bankruptcy this month. At first, I was devastated. Where was I supposed to get cheap yoga pants and inspirational-quote posters?
But then I thought, “Hmm. … I can’t wait for the sale!”
New priorities: discounts and convenience
The ever-growing hunger to find something on the cheap, discounted or price-matched has led to the explosion in online shopping.
Even Gordmans, as a discount store, was sometimes too expensive for my taste. $16.99 for one work shirt? I can get three for that price at my new favorite online distribution store, Wanelo. It calls itself “the mall on your phone” because it curates over 550,000 stores, driving down prices.
I also have an app called Honey that compares coupons across online stores and automatically finds the best one for the item I want. Because who has time to cut coupons anymore? My newspaper and its glossy ads goes straight from my mailbox to the trash.
With the power of the Internet, the best deals can be found with a few clicks, instead of walking around a mall for hours. The brands that get my dollar give me the best deals, and the most convenience.
E-commerce killed the retail star
Malls are melting due to consumer climate change, i.e., they just can’t compete with the heat of e-commerce. As more anchor stores close, including Sears, Macy’s and JC Penny, smaller chains are left to shoulder the burden of rental costs.
Retail analyst Jan Kniffen projected that that one-third of U.S. malls will shut down in the coming years, citing an oversupply of store space contrasted with the growing demand for an online customer experience. Some investors have even shorted the mall-backed securities market, predicting that the value of mall stocks will soon plummet.
To survive, malls will push “experiences”
Malls can no longer bet their success on items that can also be sold online. Their main draw needs to become experiences and services that can’t be obtained digitally.
Examples include hair salons, bars, bowling alleys and movie theaters. A mall in Michigan already features an aquarium, and a mall near me has added a stadium-seating movie theater and high-end, healthy fast-food restaurants that have become popular with nearby office workers — and that put the typical food court to shame.
Smaller footprint, BIGGER impact
Miniaturized versions of Target and Walmart are popping up in more suburban areas. This investment in small brick and mortar stores, which some are calling “small-box stores,” have significant benefits:
Shopko has already adopted this concept with its “Hometown” stores. In 2013, the company reduced overhead by 15%.
More store locations means more visibility. Instead of opting for one large store to draw customers from around the city, several smaller stores provide greater brand presence.
When a store is within walking distance for customers, or just closer in general, they will visit more often and spend more. A high walkability score also creates higher real estate values for surrounding homes, in turn bringing in more disposable income and a positive cycle of foot traffic to surrounding stores and shops.
More stores means delivering to consumers’ doors less expensive. Even Amazon, the granddaddy of online retail, is testing small brick and mortar stores.
Online retail will have to innovate, too
The real opportunity for e-commerce stores will be making it easier to buy products that are typically problematic. Virtual fitting rooms and grocery delivery on demand are innovations that can overcome previous obstacles to online ordering:
Virtual fitting rooms
Clothing returns from digital sales is one of the main issues keeping online apparel shopping from thriving. Online clothing orders are returned 63% of the time, often because of wrong fit.
3D body scanning could allow shoppers to upload their measurements into the e-commerce platform, so they’ll know which clothes from that store will fit them. This technology could be married with a virtual reality fitting room, where the 3D body scan creates an avatar of the consumer and lets them “try on” clothing.
The benefits for both consumer and retailer are many:
- Less need to stock all clothing sizes in brick and mortar locations; the consumer’s outfit of choice could ship directly from the seller’s warehouse
- Significant decrease in return risk
- “Virtual” engagement with a brand in a digital environment can increase loyalty
- Customer confidence that the clothes they’re ordering will fit
- Increased sales, as people from all over the world could “try on” clothes
Grocery delivery on demand
Groceries are another difficult digital sale, due to their often limited shelf life. People don’t want their milk to go bad before it’s delivered.
Again, success comes back to smaller storefronts that could efficiently deliver time-sensitive items. The issue of produce going bad would be greatly reduced, as each store could service a smaller area. It would be more of a pizza-delivery, “if it takes more than 30 minutes, delivery is free” model.
The future of retail is not all about e-commerce. There are good reasons to maintain a physical brand presence. But brick-and-mortar stores need to be integrated into the overall sales strategy, not just simply “be there.” And shop owners need to figure out how to engage the consumer online, as well, or their brand presence will wither away in this new digital age.
Now, please excuse me while I go to that Gordman’s sale.
Originally published at www.atssecured.com on April 4, 2017.