Retail at a Crossroads
Rewind back to 2020, when many predicted that the COVID-19 pandemic would signal the death of brick and mortar retail. And it seemed that way; driven by fear and necessity, consumers swapped bustling aisles for digital carts. It begs the question: is the shopping mall becoming an obsolete artifact or a hub of innovation?
Despite initial fears, the shift towards digital was not a death knell for in-person retail, but rather, it marked the dawn of a new era. The acceleration of e-commerce necessitated an innovative approach – one where retailers and mall operators jointly curate a blend of physical and digital shopping experiences to meet evolving customer needs.
Amazon had already led the way with same and one-day deliveries, setting new customer expectations. With a fresh wave of pandemic startups offering as quick as 15 minute deliveries, retailers and mall operators faced the important challenge of how to manage these new demands while maintaining the appeal of physical stores.
Managing the Balance
COVID-19 posed an economic and social challenge for malls, yet the pandemic’s end didn’t translate into a decline in e-commerce’s popularity. While malls still held their appeal as social spaces, the ease and speed of online shopping had become irreplaceable.
As a result, an increasing number of retailers are understanding the benefits of blending physical spaces with digital transactions. As an example, the once controversial concept of ‘showrooming,’ or using physical storefronts more as display spaces for products that can be purchased online, is now gaining traction.
As we move into an era of digital-first, successful retailers will seamlessly weave together virtual and in-person shopping.
How can in-person retail can support e-commerce?
Before e-commerce dominance became so prominent, central distribution centers shipped products directly to stores. The rise of e-commerce has added complexity to retail supply chains, requiring innovative fulfillment models.
Large-scale retailers like Walmart have successfully built their own ship-from-store infrastructure. Yet, smaller retailers are often hemmed in by high shipping costs and pricey return processes. Enter mall operators.
With their strategic locations near population-dense areas, mall operators can repurpose underutilized spaces into micro-distribution hubs. This reduces shipping and return costs for retailers while enabling mall operators to cater to a broader range of customers, including digitally native brands and ghost kitchens.
As malls transform beyond mere storefronts, mall operators become pivotal in helping retailers meet omnichannel demands.
An Opportunity for Shopping Mall Innovation
Mall operators are recognizing the value of providing retailers with logistics and technology partnerships. They can aggregate fulfillment across the retailers they service, making mall locations an attractive proposition for potential tenants when they’re looking for a store location or renewing their lease.
Transitioning underutilized spaces and developing fulfillment-as-a-service not only broadens mall operators’ revenue opportunities, but also aids retailers in slashing delivery times and costs.
Key Takeaways
- By repurposing vacant spaces into micro-fulfilment centers, mall operators can meet the rising demand for last mile logistics, lowering costs for retailers while better serving shoppers in their trade areas.
- Malls are far from extinct; they’re simply evolving.