Is the conventional shopping mall really dying out?

The answer is yes. Does that mean your shopping mall is disappearing? No, don’t worry about that.

Reflecting upon it, a mall is not only a set of retail stores where you quickly enter and leave with your purchases: remember your high school years when hanging out with your friends at the mall was the “cool” thing to do after class. Well, the retail industry has been ceaselessly evolving to meet customers’ expectations and satisfy their endless needs. Nowadays, customers are looking for experiences that go well past traditional shopping. Most will argue that online shopping is actually making its way to replace it, as growth and private equity funding has substantially increased during these past years. Customers are driven by the convenience that online shopping offers: you have a never-ending product selection literally one click away. Although, according to industry analysts, what truly initiates buyers to purchase online rather than in store is the facility of price comparison. These conditions put hefty pressure on traditional retailers to lower prices, but simultaneously still have to support costs that online vendors don’t. Consequently, there is a never-seen consolidation effect in a previously small-business dominated industry. Operating on a large scale allows corporations to have more purchasing power, larger access to financial resources and be more efficient in cost-cutting. While several major players, such as Sears and Claire’s, are under financial distress, others have seemed to take the merger and acquisition way. According to McKinsey & Company, 40% of Europe’s retail growth has been driven from consolidation deals, exceeding an all-time high of 100$US billion in 2014, even though IPO volume and proceeds are continuously decreasing. Europe’s funds mostly went outbound to North America and Asia Pacific, while cross-border deals made up 52% of total M&A volume.

​However, malls are moving in another direction; not trying to challenge online-based retailer’s competitive advantages. They are adding value by broadening their offering in incorporating services that can only be fulfilled by being physically present; fitness clubs, movie theatres, art centers, spas, etc. The pioneer of these experiences is evidently the United Arab Emirates. It’s honestly crazy to think that the Mall of the Emirates incorporated an interior ski station or that the Dubai Mall features a massive aquarium and underwater zoo. Segmenting their customer base and targeting them differently has become a priority in order to maximize revenue by cutting where specific consumers were not captivated, therefore nor spending. Dubai Mall’s infamous “Fashion Avenue” incorporates every luxury boutique you have ever seen in London, New York or Milan with bespoke tailoring, valet parking, porter services and many more extravagances. It is obvious that the “mall culture” is less present in Europe than in America or the Middle East; although, The Galleria Vittorio Emanuele II in Milan or Galeries Lafayette in Paris also grew and developed different techniques in order to achieve customer attraction, and also retention. They have become significant landmarks to these cities.

​We may conclude that technology and shopping malls make two, but I will definitely reason against it. The digital era has unquestionably shaken every single industry in our society, and even eradicated some, but also created many new avenues of venture. Regarding retail, technology has brought us social media, which helped brands and businesses connect in diverse ways with their customer base. In our endless pluralist world, we have never craved that sense of personal identity more. Engaging with customers online means direct-targeted and persuasive content to create deeper relationships, in order to gain loyalty to maximize long-term profitability; but for the customer, it means connecting with a brand that is internally appealing and actually represents them. Clearly, technology has transformed the supply-chain and made it distinctly more efficient than it was beforehand; nonetheless the multichannel strategy opportunities that it has brought to businesses is fascinating. Aside from social media, information and communication technologies have permitted malls to track and collect tons of data on customers. Without digging in the whole privacy debate, malls have benefited from the analysis of this consumer behavioral data to evaluate satisfaction and improve experiences. From trivial things such as finding empty parking spots to more critical ones like facial recognized targeted ads, the digital era has really transformed the shopping experience; but nevertheless has not killed it.

Julien David Mousseau