Mall of the Future
Feb 2, 2010 3:16 PM, By Elaine Misonzhnik
What a shopping trip might look like a decade from now.
...Steven Spielberg’s 2002 blockbuster Minority Report. In the film, Tom Cruise, when walking through a futuristic mall concourse, is bombarded with holographic advertisements addressing him by name. In a later scene, he walks into a Gap that asks about a recent purchase. In fact, Spielberg tapped high-level consultants in envisioning the technology that would appear in the film. So the fact that some of the technology is coming to reality shouldn’t be a total shock.
LCD screens with motion sensors combining video-streaming and face recognition are already available from companies like Microsoft. During the 2010 Consumer Electronics Show, Intel introduced 7.5-feet-tall multi-touch, multi-user digital signage screens that allow shoppers to take virtual store tours, access sales information and even share their finds with family and friends through social media and mobile devices.
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Meanwhile, many retailers have been launching mobile sites, where they can fuse several different sales channels—online, in-store and mobile—to improve customer experience, says Chris Goumas, senior vice president of retail and marketing solutions with Access 360 Media Inc., a Los Angeles-based mobile marketing agency focused on the retail sector. For instance, in November, apparel seller A|X Armani Exchange announced the launch of its mobile commerce Web site, which allows smartphone users to access the retailer’s merchandise selection and mobile customer service, as well as find A|X Armani Exchange stores nearby. Target and Sears have mobile sites as well.
“I would be shocked if every single retailer didn’t have a pretty robust mobile channel in three to five years. It supports your email channel really well, it supports your marketing channel really well, it supports your promotions,” says Goumas.
In addition, mobile marketing specialists predict that one day smartphone users will be able to pay for their purchases directly from their mobile device, rather than having to exchange cash or enter credit card information into the retailer’s system.
Today, it’s already possible to complete transactions from cell phones, as more and more companies partner with mobile payment service providers. In some parts of the world, including Africa, mobile payment, called “mobile money,” is already commonplace. People can buy vouchers to “top up” their accounts. Then they can transfer money to other users via texts.
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And in the U.S., the Red Cross and other aid organizations have been successfully in soliciting donations by having people send texts that authorize the Red Cross to charge a user’s cell phone account $10. In the future, the smartphone, or its equivalent could replace the wallet, says Kevin Foreman, CEO of Point Inside Inc., a Seattle-based indoor mapping developer. There might no longer be a need for the cash register, with its long lines.
All these changes toward easier and faster shopping might divide retailers into those whose products it might be more convenient to purchase online, including sellers of electronic devices, household appliances and household items, and those whose products appeal to the consumer’s need for a sensory experience, says Foreman.
“I would be as happy having something delivered from Costco as I would be loading it into the back of my SUV,” adds Yaromir Steiner, CEO of Steiner + Associates, a Columbus, Ohio-based retail developer. “But if I want to make a beautiful dinner, if I want to see and touch the produce, I will go [into] Whole Foods because it offers that experience. Our job as developers will be to adapt.”
Mall's new role
Mall owners and developers might have to rethink many aspects of their business, from leasing strategy to rent collection to layout arrangements, says Lisy. For example, as many stores shift from being the final point of sale to serving as a showroom and service center, the straightforward model of rent based on a percentage of store sales might have to be switched to one that takes into account online and mobile orders that customers complete while on site. Mall owners might also have to rely more on social spaces like restaurants, cafes and movie theaters to drive traffic.
This change has already been taking place over the past decade, but it will take on increasing importance going forward, notes Steiner. Moreover, when developing a leasing strategy, property owners will want to keep in mind that commodity retailers will continue to shift operations online, while retailers that make the shopping experience itself part of their appeal will prosper in the brick-and-mortar format.
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Mobile shopping, like online shopping before it, will never completely replace shopping in-store because people have an inherent need to go out into the physical world and experience new things in person, says Thomas Frey, executive director and senior futurist at the DaVinci Institute, a Longmont, Colo.-based non-profit futurist think tank.
The challenge for retail property owners will be to provide enough regular changes in their tenant offerings to keep shoppers coming back for the sake of the mall experience itself. The current practice of signing 10-year and 15-year leases for most tenants could become outdated over the next decade as consumers get tired of seeing the same stores on every shopping visit and opt to shop on the Web, Frey says. One way for retail property owners to combat their fatigue would be to rotate tenants on a much more frequent basis —for example, month to month—and allow space for emerging vendors to showcase their wares. The monthly rotations would best be suited to local merchants who might have a unique product offering, notes Underhill. In the future, the concept of the pop-up store might evolve into that of a pop-up mall.
In addition, Underhill advises retail property owners to start thinking about low-cost ways to make their centers attractive to children—for example by putting in aquariums or duck ponds or bubble machines near areas frequently visited by parents. “Often, the children define where we spend our time,” he notes. “If the children fall in love with the aquarium or the pond, those are things that are creative, but don’t necessarily cost a lot of money on an ongoing basis.”
The end result of all the recent technological innovations, coupled with America’s ongoing focus on New Urbanism, means that enclosed regional malls will continue to become obsolete. Adapting the same storefront to a rotating roster of retailers is much easier in an open-air center or in an urban streetscape than in a traditional mall, says Frey. Going forward, the shopping center industry will continue to redevelop those properties into mixed-use centers, creating vibrant, social spaces that will keep people coming back to physical stores for a long time.
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