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Maturing Gen Z Is Dumping The Mall; Here’s How To Catch Them

Retail brands and fashions come and go, but one trend shopping mall operators should never take for granted is this: 16-year-olds are gaining influence, and they can have long memories.

Photographer: Carlo Gabuco/Bloomberg

This fact is coming back to haunt many shopping centers and their retail tenants. The oldest members of Generation Z, who in recent years have faced mall curfews, purchasing limitations and predictable store lineups, are fast maturing into adults and they’re applying their formative shopping lessons to their purchase decisions.

More than half of adult shoppers, 54%, shop at malls less often than they did five years ago, according to a January survey by the market research firm Morning Consult. Among those ages 18 to 29, 38% said they shop malls less now than one year ago, while 40% said they shop more now than a year ago, an uncomfortably close split.

Members of Gen Z, those born around 1995 and later, fall in this group — the oldest now approaching their 23rd year and making substantial lifestyle spending decisions. The findings indicate these young adults are still interested in the mall, but are at risk of being lost. Maintaining their interest, fortunately, is not a lost cause.

Bye-bye, Claire

The burden is on mall operators, not just their tenants, to remain relevant to this age group. Recent retail troubles suggest they struggle to do so.

Store closures are expected to rise to more than 12,000 in 2018 from about 9,000 in 2017, according to Cushman & Wakefield, a marketing and data analysis firm. Recent reports support the outlook: Shopping mall regular Claire’s, a youth jewelry chain, has filed for Chapter 11 bankruptcy protection, and so have Bon-Ton department stores and Toys “R” Us, which is liquidating all its stores.

The challenge for malls is finding replacements that attract young shoppers, who actually do like physical stores. A 2017 study by IBM and the National Retail Federation found 67% of Generation Z shoppers prefer to make most of their purchases in-store. What’s unclear is if that store is American Eagle Outfitters or Sephora.

What is clear is the split between certain destination malls and the run-of-the-mill historical mall experience. Claire’s, in its bankruptcy filing, cited data that traffic to malls has declined by 8% in the past year.

Gen Z shoppers want the stores they shop to offer engaging experiences, and that expectation extends to the malls that encase them. Malls that offer little more than storefronts and food courts are being upstaged by entertainment-themed centers that feature live events and activities, from rock-climbing walls to ski slopes.

Shopping malls that sport such attractions generate something more important than sales when it comes to capturing Gen Z — they generate stories.

Stop Generating Zs — 4 Steps

Not all malls can install ski slopes, but they do have some power to recapture the interest of wavering Gen Zers. Here are four steps shopping centers can take to remain relevant.

Stop boring them. The mall is asking for too much, in terms of time, if all it offers is shopping. Further, the predictability of standard brands, food courts and water features make repeat visits routine, not exciting. The mall should serve as a portal through which a stream of activity flows; it should act like a community. Yet just 19% of 18- to 29-year-olds in the Morning Consult study used the word “community” to describe malls. The same elements that make neighborhoods vibrant, such as art, farmers markets and locally sponsored events, can enliven a mall.

Treat them like (young) adults. Teens typically do not have credit cards, which limits their power as consumers. Merchants can provide them more spending power, and responsibility, by promoting app-enabled layaway programs that allow them to set their own payment schedules. Indoor purchase-pickup kiosks (for home shopping) can include interactive screens that show what’s happening at the mall, games or makeover stations. Other brand experiences that feel mature but are age-appropriate, such as cooking classes or dress-for-success events, should encourage young shoppers to come back.

Get them a paycheck. Teen employment has steadily declined for nearly 40 years, according to a story in the Wall Street Journal, citing the U.S. Bureau of Labor Statistics. Teen participation in the labor force fell to 43% in July 2016 (a big summer job month), compared with its peak of 72% in 1978. Closing stores do eliminate job opportunities, but emerging services such as online order pickup can introduce new ones. Importantly, those who work at the mall can stay after hours to shop. Malls also can host job fairs and other events to attract young adults and foster positive feelings.

Change the name. It’s simple, but apparently it works. A number of shopping centers have just dropped the word “mall” from their names and replaced it with “center,” “shoppes,” “square” and “village.” These alternate terms generate a sense of social interaction and the promise of experiences, which is important to members of Generation Z.

But really, such elements are important to all ages, as is the desire to be respected. For Gen Z, all that requires is recognizing their potential, not just as consumers but also as people who will shape the future of the retail industry. If malls can do this, Gen Z will remember.

This article originally appeared in Forbes. Follow me on Facebook and Twitter for more on retail, loyalty and the customer experience.

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