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Shopping Mall of Tomorrow: How Westfield, Walmart are Stripping Convention (Part 4)

Just as hemlines go up and down, retail history is patterned after the influences of its past and present. To envision the mall of tomorrow, we would benefit to first reflect on what was fashionable a decade ago.

Consumer behavior expert Paco Underhill tried to capture it in the last chapter of his 2004 book “Call of the Mall.” In it, he explores how traditional enclosed malls had been repurposed into recreational complexes, government centers and newly conceived high-end, open-air malls.

“We’re bored,” he writes of the Baby Boomers’ attitude toward shopping centers. “Teenagers and children are still excited by the mall, but it’s all still new to them, isn’t it?”

And that was before the word “Millennial” entered the lexicon of retail angst.

Today, consumerism has evolved from mega-malls to power centers to online shopping. However, while the figurative hemlines of shopping centers have changed, the fabric across which this history stretches contains one common thread: The desire for a connection. This basic consumer need exists regardless of age group or ethnicity.

Today, as retailers balance the physical and technological needs of Baby Boomers and Millennials, from online shopping to power centers, the future of shopping formats appears to hinge on its destination, both real and virtual.

This is my fourth and final in a series of stories that examines how digital technology and its rapid adaptation, across all age groups, is challenging retailers to identify and serve an increasingly fluid customer. Last week we looked at how Ikea is testing a variety of digital concepts to bridge the online and in-store experiences. This week I will explore the future of the shopping mall format and how two major players are exploring ways to preserve the shared, relationship-based shopping experiences people still crave.

Westfield’s future mall

Retailers watching their financials need only know a single figure: One.

That is the number of super-regional shopping malls built from 2011 to 2014, according to the International Council of Shopping Centers. Yet the overall number of centers built in that time has advanced by almost 850, to 114,957 from 114,096. This is thanks to the expansion of more conveniently located strip centers and other open-air type malls with tenants that range from high-end shoe stores and supermarkets to day spas and dentist offices.

Not all developers are convinced the enclosed mall is out of fashion, however. Westfield Group, one of the world’s largest owners of shopping malls, has been investing in new digital strategies to overhaul the mall. Among its tested concepts are “click-and-collect” services through which shoppers order online and pick up in the store; digital food ordering and large in-mall screens featuring hundreds of products mall-goers can finger-swipe through and purchase via digital device.

The developer’s Westfield World Trade Center in New York, to open later in 2015, will combine some of these innovations with the ultimate in destination. The center is actually a transportation hub through which 200,000 commuters are expected to pass daily. Before arriving, visitors can use a dedicated mall app to search for and choose the items they’d like to purchase, and then upon arriving they receive personalized digital greetings and can use the app to map their shopping journeys.

“I think the mall of the future is really a personalized experience,” Kevin McKenzie, global chief digital officer at Westfield Group, told the Business of Fashion in January. “And the way that we are going to get to that is through technology. No question.”

The Walmart Downsizing Effect

On the other side of the mall and technology spectrum, seemingly, would be Walmart. However the world’s largest retailer, like shopping centers, is also seeking new destinations and has been opening in traditional malls for some time. In 2011, for example, it opened two small-format Walmart.com stores in Southern California malls to showcase its online efforts while also stocking some essential items.

Walmart_NeighborhoodMarketWalmart at the same time has been taking a page from the open-air-mall playbook and maneuvering into densely populated areas through its Neighborhood Market store, a model that averages 42,000 square feet.

As of Jan 31, Walmart operated roughly 640 Neighborhood Market and other smaller-format stores, according to its annual report. It opened 235 of them in 2014 and in the fiscal first quarter of 2015, it opened 25.

Yet despite their smaller size, these stores generate significant sales volumes. Sales at Marketplace stores opened at least a year rose 7.9 percent in the first quarter, far outpacing the 1.1 percent growth rate of all Walmart stores. According to Market Realist, Walmart has targeted $17 billion in revenue through the smaller-format locations by fiscal 2017.

“Customers continue to see the benefit of Neighborhood Markets to meet their everyday needs, including convenient access to services such as drive-through pharmacies and fuel stations,” Greg Foran, president and CEO of Walmart U.S., told analysts in a quarterly earnings call.

Hard-wired shopping trends

The takeaway by these experiments is that despite our many changes, the axis upon which all retail spins is unchanging, as long as humans are hard-wired to congregate. Sure, Amazon.com and Google may put detergent, socks and cereal into our hands through a single click, but that hardly passes as a shared experience. There is room, in our variable lives, for both types of shopping.

Consumer behavior expert Paco Underhill, who in 2004 declared the mall boring, wrote in a recent Wall Street Journal column that as the consumption baton passes from Baby Boomers to Millennials, the shopping relationship will be reformulated. The result, he wrote, is that malls are becoming “alls.”

“We will go to the mall to be entertained and live our lives; to recreate, not just to shop.”

But hasn’t it always been that way? The future of the mall – as a lumbering dinosaur or a runway success – will depend on how it manifests the destination. But make no mistake, the nondescript, cavernous architecture upon which the industry was built is no longer cutting it.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.

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