The Transformation of Shopping Malls

(Inside view of Dubai Mall)

I’m not actually a person who going out much. But occasionally I did, for the sake of not stuck at home or office desk, staring at my laptop 24/7. But even when I went out, usually it’s either for a proper lunch/dinner or enjoying some great movies (The Avengers, anyone?). So that’s the only time I enjoy going to a shopping mall. Except that I always tried my best to go there during less peak-hour time. Finding a parking spot on Sunday afternoon in a jam-packed and crowded mall is not really an outdoor activity that I enjoy the most. Not to mention that I occasionally forgot where did I actually parked my car, especially at the not-one-of-my-favourite shopping mall!

But in the age of ecommerce and delivery service, what is the role of shopping malls? Or if we really want to ask a blunt question, do we still need a shopping malls? Let’s be honest, how many of us actually went to a shopping mall just to confirm the exact size of their favourite shoes or pants, and proceed to bought them online from Amazon, Lazada or Zalora? I know I did. And I’m sure there are million others did the same too. And apart from proper dining and watching movies, I don’t even remember the last time I bought anything from shopping mall. The patience to endure hours of traffic jam, the battle to find a parking spot and the sales assistant keeps trailing me if I need to buy anything makes my visit more like ‘only if I have to’ rather than something that I really enjoyed.

The only time I religiously went to s shopping mall (or something similar) is when I need to buy some groceries. But I’d rather go to some hypermarket like Tesco (Aldi or Lidl were nowhere to be found within 100 km radius from where I live) than some shopping mall. I guess even that would be a matter of time before I just head to my laptop and order it online. Whether or not what they deliver actually fits to my liking would be another topic.

 

The Rise and Fall of Shopping Malls

(South China Mall goes deserted. Image from Wikipedia)

Since  the turn of 20th century, shopping mall has become a place where people congregate among friends or families (besides well, shopping). It also used to be a place for teenagers to start their first gig of employment (including me, although not in any particular department, rather a fast-food outlet located inside a shopping mall). And not only teenagers, even adults or retirees also chose shopping mall as their their lifetime or next employment opportunity, even when they’re at their 50s or 60s. And the rise of real-estate investment after dotcom bust had only make this trend of building a bigger and bigger shopping malls went upward, as easy credit and low interest rates (and securitisation of assets) has made a commercial real-estate environment as one of the most profitable investment (remember Sir Philip Green? Or China’s great economic boom from mid-2000 until quite recently?).

Then the dotcom made a comeback with the likes of Google, Facebook and copycat-factory like Rocket Internet. But instead of erecting malls, they’re building IT infrastructure to support ecommerce instead.

With the rise of ecommerce, traditional shopping malls has found themselves more and more threatened. The news of another shopping mall closing down or laying off employees are no longer a news, but rather a norm. Sears already filed for bankruptcy. J.C. Penney is still limping through. And it’s not only in the U.S. South China Mall in Dongguan (opened in 2005) already been dubbed as ‘dead mall’. And not only ecommerce has spawned a company like Amazon and Alibaba, even a technology companies like Tencent (through their super-dominant app WeChat), Google (in partnership with Walmart) and Facebook (with Facebook Marketplace) has tried to get their slice of pie of the business.

 

(Grab is already running a beta of ecommerce services in Thailand called Grab Mart. Image from Grab Thailand)

However, not only giant IT companies that tried to get their hand into the business, even a  ride-sharing company like Uber and Grab already entered ecommerce, either selling it as part of their existing business or through delivery gig. And you can’t blame those ecommerce companies who manages to thrive when traditional shopping malls are counting their days towards demise. After all, those IT companies doesn’t have few thousand square-feet of buildings to build or maintain (except their data center). They only need to add few servers, storage, databases and human coders to move into new business. And they don’t need to apply for any construction license (unless those companies move into distribution of fulfilment centre like Amazon or FedEx). And not having to pay for things like electricity or sales assistant salary or commission certainly boost their margin even further. Just ask Amazon or Alibaba.

So if the the days of traditional shopping malls are numbered, what should they do? What kind of customers that they should try to attract? Or the most precise question, what should be defined as shopping malls in this 21st century and onwards? Shopping malls of the future would no longer be a place to sell things. It’d be a place where people flocked into it for its experience. Shopping mall operators should think what ecommerce or IT companies can’t offer to people so that they would stay relevant. Instead of crying over whether Amazon fairly paying the appropriate local or state taxes, they should look into what kind of experience that Amazon, Alibaba or Rocket Internet couldn’t offer.

 

What Future Shopping Malls Would Look Like

 

I like what Jeff Bezos has said in one particular area of innovation. He said that “All businesses need to be young forever. If your customer base ages with you, you’re Woolworth’s”. So in the age of millennials and Generation-Z who valued experience more than monetary or physical ownership, that’s the first thing shopping malls to pay attention to stay relevant. Shopping malls should be a centre that sells experience, not hard, physical products.

Experience Centre

(Ski Dubai of Mall of the Emirates)

How many of us are expecting a ski arena in a shopping mall? Or a waterpark, complete with sand? Maybe not in New York or London, but those in Dubai and China has developed exactly that.

Mall of Emirates was opened to public in 2005, and not only it includes a retail stores like Debenhams and Marks and Spencer, but it also has indoor ski area with an area spanned for about 22,500 square meters. Surely it won’t beat the one in Aspen or Alps, but how many shopping mall on this planet that has indoor ski area? In a hot and humid place like Dubai? Maybe they were thinking something like “if we can’t bring them to ice and snow, let’s bring ice and snow to them”. And surely it has raised the bar for new shopping malls everywhere. Who knows maybe it can push the sales of skiing equipment or winter clothing (not to mention a booking trip to Switzerland or Colorado by Emirates or any of ME3).

(Paradise Island Water Park located inside New Century Global Centre, Chengdu, China)

 

If indoor skiing is not your thing, how about an indoor water park? You have to head to Chengdu, China if you want to see and experience it. Located in the world’s largest building (18 million square feet of floor space), the water park feature amenities like wave pool, surfing simulator and even artificial beach. Since Chengdu is not actually located close to any beaches (Hainan Island is close to 2,000 km away anyway), this indoor water park not only serves as alternative to people living nearby during weekend, but it could also boost tourism to local China beaches during holidays.

 

Dining and Entertainment Centre

(4DX Cinema. Image from VOX Cinema UAE)

The first and only time I ever had any experience with 4D cinema was when I attended a conference in Orlando in 2008 and the organiser held a fun visit to Universal Studio after the conference was over (What’s the movie? Shrek). I wasn’t really enjoy it that much but it seems the rest of the audience loved it. Regardless of what’s my verdict, seems like 4D cinema experience could become the next trend in outdoor entertainment. It could be much more cost-effective than installing one in our home, and not all latest movies are immediately  available on Netflix.

But with the opening of VOX 4DX Cinema located in Mall of the Emirates (among others), watching movies is no longer constrained to just staring into the screen for 2 hours (or more). You could even experience a breeze or storm (depending on a movie, and if they rerun Twister it’s going to be much more fun), water effects (again, Twister) and even feel the movement of the on-screen action (not sure if they’re going to rerun Top Gun or Rush) where it’s relevant. This should give a new kind of experience to the movie-goers and if you came out nauseated, don’t say that we didn’t warn you.

And as for dining? Yes, we have Uber Eats or Deliveroo to deliver our food, but if you order something to be delivered from Chili’s or TGI Friday’s, I doubt the experience would be the same. After all, those people in Chili’s or TGIF (just to name a few) knows how to entertain and serve their customers. Netflix or your 42-inch LED TV can’t do that yet. Let’s not even started with dining from the established restaurants like Nobu. I’m not sure Robert De Niro  would allow food from his restaurant to be enjoyed outside its premise.

Online-to-Offline Stores

(Nike by Melrose. Image from Nike)

How many of us used to browse through our favourite stores and found the shirt that we love, only to find that it’s running out of your size? It’s a lost-lost situation for customers and stores alike, and it means millions of potential dollar revenue went down the drain.

But with the introduction by the likes of Nike by Melrose, not only stores are filled with locally-relevant products, but brands no longer relies on independent retail stores to sell their products. A brand can open a store big enough for potential customers to touch-and-feel their products and buy them online after that. No longer brands have to stock up their merchandise inside the store and reducing their costs (taking up valuable space, delivery and logistics issue, security etc etc). Not only customers could see how the products actually performed, but it could also boost sales as stores located in i.e Los Angeles might offer products relevant to its surrounding (walking and running shoes) than the one say in London where soccer shoes could be the more popular item.

As we have yet to have a technology that can transfer or send smell over the Internet, brands like Hugo Boss (Disclaimer: it’s my favourite brand) could also opening up a dedicated store where customers can have a taste (or is it smell?)  of their latest offerings. For existing customers whose already had their own preferred choice, they might be simply head over to Amazon to buy it, but if brands launches a new line of fragrance, it’s important to have online-to-offline stores to attract potential customers.

Who knows maybe one day even Etsy will open their own dedicated stores.

 

Coworking Space

 

Why shopping malls should have coworking space? Answer: Why not? Westfield already launched a startup accelerator inside a shopping mall to take advantage of technology in retail. Consider they’re one of the biggest shopping mall company, it’s obvious that they have plenty to lose if they don’t get their act together.

But why stop at only startup accelerator? Coworking space could thrive as well inside the (previously vacant) storefront, especially the one that either getting a corporate support from i.e Westfield or Walmart but also the one that concentrates on retailtech. And as shopping malls become more of experience centre, those startups could work on technologies like augmented reality (AR) , big data, voice-assisted technology, smart mirror/screen and even artificial intelligence in deducing customer’s preference based on i.e purchase history, culture and well, peer pressure.

Shopping malls are not dead. It’s just transformed from a place where we do the purchase to a place where we enjoy the experience. If shopping malls operator and brands manages to nail this, it could open up a new business opportunities to them. And that’s what I love about free market and competition. Those who manages to stay innovative will stay relevant, and those who are not or unwilling, well there are Chapter 7 or 11.

 

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