The future of malls is brighter than ever due to a fast-growing development trend that reevaluates buyers’ shopping preferences while reconsidering the relationship between consumers and their local retail centers.
THE POWER OF PHYSICAL RETAIL
Even in the age of free same-day shipping, physical retail still holds significant power over e-commerce; a 2019 report from First Insight found that 78% of men and 89% of women will purchase items beyond their identified needs when shopping in physical stores, as compared to online with 67% and 77% respectively. The same report also found that 71% of consumers will spend over $50 when shopping in-store as compared to 54% online.
Younger consumers seem to be holding on to the same in-store shopping habits as older generations, with a 2017 study from Accenture reporting that 60% of Gen Z consumers prefer purchasing in-store, and nearly half of respondents (46%) saying they still inquire about a product in-store before an online purchase.
Meanwhile, e-commerce platforms have been largely unable to satisfy consumers’ continued demand for an immersive retail experience. A 2017 survey from Retail Dive found that 62% of consumers prefer browsing in-store where they can touch, feel, and test out products, and nearly half said they choose physical stores over online shopping because they can immediately take home their purchase.
THE RISE OF LIFESTYLE CENTERS
The traditional shopping mall has long been characterized by huge department store anchors and surrounding clusters of retail apparel chains. But now, property owners are diversifying their tenant portfolios with non-retail attractions like fitness centers, spas, entertainment venues, expanded dining options, offices, and even hotels – many of which are attached to open-air spaces that are ideal for socially distanced gatherings and events like Farmers’ Markets and live performances.
According to the International Council of Shopping Centers (ICSC), traditional retail’s leased square footage decreased 6.7% between 2014 and 2018, while non-retail saw a 5.6% increase, with space leased to restaurants increasing by 1.1%. Additional data shows that about 39% of mall visits include dining and about 16% include a personal service purchase such as a haircut or spa treatment.
These non-retail amenities drive valuable foot traffic to other tenants and are important catalysts for subsequent development like residential structures. Further, businesses like these that cannot move online have proved their resiliency in light of evolving consumer trends and volatile economic conditions. This is not to say, however, that malls are moving away from their retail-focused business models.
Lifestyle centers are often developed with an emphasis on luxury personal goods which, like non-retail businesses, have proven their strength during uncertain times; a 2021 market study from Bain & Company found that sales of luxury shoes, accessories, and jewelry have not only returned to but exceeded their 2019 pre-pandemic levels.
IDEAL OPPORTUNITIES FOR BRAND REPRESENTATION
Traditional malls provide advertisers with perfect opportunities for reaching their target market of consumers near points of purchase, in large part due to storefronts’ proximity to OOH advertising panels.
A late 2021 Consumer Insights and Intent report from OAAA and The Harris Poll found that 48% of consumers (59% of those in urban areas of 1 Million+ population) are likely to visit an advertiser’s physical store after seeing an OOH ad. These opportunities are elevated with additional non-retail amenities and outdoor experiences typically found in Lifestyle Centers.
The phenomenon of ‘digital burnout’ has also played a role in OOH’s increased value among advertisers, with 75% of consumers saying they frequently tune out ads on mobile and internet platforms, and 71% saying they actively try to get out of the house as often as possible.
The same report found that 60% of Generation Z and 58% of Millennial respondents notice OOH ads “much more” since the end of lockdown orders, proving overall that OOH is more powerful than ever before, especially among younger demographics.