The Mall is Dead, the second SlideShare in a series exploring the future of retail from North American Properties - Atlanta (NAP), examines the decline of malls and how the hottest retail and restaurant concepts are increasingly choosing walkable, urban mixed-use locations instead of malls. The first SlideShare in The Future of Retail series, The Secret Sauce: Why Retail and Mixed-Use Projects Need Local Chefs, was launched at the International Council of Shopping Centers (ICSC) RECon Convention in Las Vegas last month.
THEMALLIS DEADWho Killed It, Why Its Not Coming Back and Whats Next for Retail
First, well check the vital signs, just to be sure the mall is really dead.
400+ MALLS Source: Yahoo! Finance were repurposed or closed outright in last decade
Source: Yahoo! Finance No new enclosed malls have opened since 2006
Green Street Advisors, June 2012 10%of the 1,000 malls in the U.S. will FAILin next 10 years
ARE MALLS OVER? AMERICAS ABANDONED MALLS ARE PLACES OF NIGHTMARES -BEAUTIFUL DECAY NORTHTOWNE SQUARE MALL FIRST TOLEDO MALL TO JOIN DEAD MALLS OF AMERICA -EXAMINER.COM
Yep, things are NOTLOOKINGGOOD for shopping malls.
(But it wasnt always this way...) Yep, things are NOTLOOKINGGOOD for shopping malls.
Sales / occupancy rates at malls are stagnant; only fortress malls continue to thrive 2009 More than 60 new malls larger than 400,000 square feet open in U.S. 80s90s First enclosed regional mall, Southdale Center, opens in Edina, MN 1956 First megamall opens in Alberta, Canada with over 800 stores 1981 Mall of America opens with more than 35 million visitors in the first year 1992
FORTRESSMALLS are still succeeding due to population growth, a desirable tenant mix, sophistication of nearby residents, and high-end amenities offered. Some
In 2012, these two fortress malls surpassed $1 billion in sales! South Coast Plaza Costa Mesa, CA 2.8 million sq. ft. Northpark Center Dallas, TX 2 million sq. ft.
So, who is to blame for killing the traditional shopping mall?
Approximately 80MILLION18-to35-year-oldsliving intheUnitedStates
Thats more than 25%of U.S. population
In 2013, millennials spent about $600 BILLION
In 2013, millennials spent about By 2020, millennial retail spending could hit $1.4 TRILLION $600 BILLION
What was Gen Ys MOTIVE?
Malls werent meeting their LISTOFDEMANDS
UrbanFeel Local Restaurants Walkability
Unique Experiences UrbanFeelWalkability Local Restaurants
Source: ArchPoint Consulting of millennials say customer service is very important 48%
of millennials demand an integrated, seamless shopping experience, regardless of channel.68% Source: Accenture
Online shopping offers a wider selection, better prices and access to more information.
Naturally, malls are struggling to keep up.
Amazons five-year average ROI is 17%whereas traditional retailers average 6.5%
During the 2013 holiday shopping season, U.S. retailers received roughly HALFof the holiday foot traffic they experienced three years prior.
In 2014, it is forecasted that online sales will account for 9%of total U.S. retail sales.
This will likely increase to 11%of total U.S. retail sales by 2018.
Source: ArchPoint Consulting 80%of millennials want brands to entertain and delight them during their shopping experience
Dont write off these new, higher expectations as MILLENNIALS BEING MILLENNIALS*
* Millennials are stereotypically assumed to be spoiled, demanding, etc. MILLENNIALS BEING MILLENNIALS* Dont write off these new, higher expectations as
This evolution within the retail industry extends beyond adults ages 18 to 35. There is a NEWCLASSOF CONSUMERS
They expect a new kind of shopping experience that has Walkability Experiences Connectivity
and they are going to get it.
The new-class consumer provides instant feedback. She posts pictures of what she likes on Instagram and complains on Twitter about bad customer service. She spends money in places where she enjoys being. The smart retailers are taking this feedback and evolving their visions and merchandising strategies. ! Liz Gillespie VP Marketing North American Properties
Top retailers GETIT
We've had a real estate strategy of not bundling or taking weaker malls, and we go to [lifestyle] centers which allow us to really drive our business through community. Christine M. Day Lululemon Athletica Former President and CEO
We rarely do malls. Our preference is to be on the street. In a suburban market, we want to be in a village atmosphere that has pedestrian as well as vehicular traffic. ! Wade McDevitt Representative for Anthropologie
And they arent alone. Countless restaurants and retailers are choosing this
Instead of this
Image of rundown mall
Some brands are leaving their current Alpharetta locations and relocating to Avalon.
Others are completely new to the market and chose Avalon for their first location. L O U G R E Y
And they arent alone. Research shows that top brands and up-and-comers, alike, are moving AWAYFROMMALLS
2 STORES OPENED THIS YEAR 4 MORE OPENING The Woodlands in The Woodlands, Texas (Lifestyle Center / March 2014) Shops Around Lenox in Atlanta, Georgia (Open-Air Center / May 2014) University Park Village in Fort Worth, Texas (Lifestyle Center / Summer 2014) The Summit in Birmingham, Alabama (Lifestyle Center / Fall 2014) Avalon in Alpharetta, Georgia (Mixed-Use / Fall 2014) Classen Curve in Oklahoma City, Oklahoma (Mixed-Use / Fall 2014)
3 STORES ANNOUNCED TO OPEN THIS YEAR Belvedere Street in Tiburon, California (Standalone / June 2014) North Hills in Raleigh, North Carolina (Lifestyle Center / June 2014) Avalon in Alpharetta, Georgia (Mixed-Use / Fall 2014) Planning to open another 5-10 before the years end; havent announced where or when
78 FREESTANDING STORES The McLaughlins seek buildings with character on street locations, occasionally open in lifestyle centers, and shun malls. Frankly, the mall atmosphere diminishes the brand. Kevin McLaughlin
Top developers and operators GETIT
THE GROVES AWARD-WINNING CONCIERGE SERVICES Personal shopping Dining reservations Package check Store, area and tourism information Foreign language assistance Events and activity assistance The Grove Gift Cards by American Express