Shopping malls need to travel back to the future

The mall was once the heart of suburban American life: families shopped, teenagers hung out and Hollywood set films there. But its attractions have faded and coronavirus has made things even worse.

The mall’s malaise prompted two events this week. Simon Property Group, the biggest US mall operator, was cleared with Brookfield Asset Management to buy the department store chain JCPenney out of bankruptcy for $1.75bn. Meanwhile, investors blocked a capital-raising plan at the European group Unibail-Rodamco-Westfield, which runs 89 malls in Europe and the US.

The chief culprit for the turmoil is the internet, particularly Amazon, which has eliminated the need to drive to a mall to browse for wares. The way in which retailing has changed was also shown this week by the clothing group VF’s takeover of the streetwear brand Supreme for $2.1bn — more than JCPenney’s valuation, despite the latter’s 800 stores and 118-year history.

The shopping centre is not a lost cause. It could even gain from the pandemic in the long term, if more families take advantage of remote working and move to suburbs. They will not want to spend all their money online and gathering shops in a convenient spot remains a sensible idea.

But malls need to evolve from the two-storey, air-conditioned boxes that border many towns, with department stores such as JCPenney anchoring the ends and food courts in the middle. They must be more enticing, less uniform and smaller; they could even learn from the high streets they replaced.

The classic mall was created by Victor Gruen, an Austrian immigrant to the US, in the postwar move to suburbs unleashed by the car. Living in Los Angeles, with its traffic-laden streets, he imagined “a neighbourhood centre that would be located off a main road” with a single building “of a pleasant and modest design”, as he later recalled in his memoir, Shopping Town.

Gruen’s mall was intended to foster local communities, with a post office, public library and doctor’s offices, as well as shops. His first design was opened in 1954 in Detroit and the second in 1956 — the Southdale mall in Edina, Minnesota. Southdale was inspired by “European galleries and passages, especially the Galleria Vittorio Emanuele II in Milan”, Gruen wrote.

You could stare at most strip malls for a long time without being reminded of the iron and glass vaulted roof of Milan’s Galleria, which opened in 1877. That is partly Gruen’s fault, for his shapes were less elegant, but his utopian ideal was also degraded as philistine developers dotted them across the US.

Aesthetics are not the suburban mall’s biggest problem. More than half of US retail sales once took place in malls but they peaked in the 1990s, steadily sagging as city centres revived and ecommerce expanded. The foot traffic in Canada’s top 10 malls fell by 22 per cent from 2018 to 2019, before the pandemic.

A quarter of the 1,000-odd remaining US malls now look likely to close in the next three to five years, according to Coresight Research. It is not surprising, given that their business model of department store “anchor tenants” drawing in shoppers to browse other outlets is outdated.

Neiman Marcus, a fixture of upmarket US malls, went into Chapter 11 bankruptcy in May, along with JCPenney, emerging in September. “It feels as though the idea of the anchor tenant is an anachronism. Those stores are not anchors any more,” says Joel Bines, global co-head of retail at AlixPartners, the consultancy.

An end to the pandemic would help malls to stabilise, but they also need to recapture some of their former magnetism. They could take a lesson from Supreme, founded in 1994 on Lafayette Street in lower Manhattan as inner cities revived. It built a devoted following from its skateboard origins, with fans lining up outside its 12 stores (six of them in Japan) when it has a “drop” of its new designs.

Unlike the classic mall, a product of postwar plenty, Supreme has played successfully with scarcity and novelty — 45 per cent of its sales are outside the US and more than 60 per cent online. Gruen wanted to build communities of suburban shoppers but Supreme has created one of its own that spans physical and digital worlds.

Supreme is at the rarefied end of retail, a brand more than a merchant. But other store owners also have the strength to entice people away from Amazon and make them go out shopping. Apple has convening power, as do some luxury brands, grocery stores and restaurants.

The old mall is not returning, even if more families move out of cities — it was too big and bland. Some will be torn down and parts of the others converted to distribution centres for online retailers. Something smaller and quirkier is needed, perhaps closer to town, even reachable on foot.

The shopping centre of the future will not be Gruen’s mall — it could be more like a high street or the ornate arcade he once imagined re-creating. But when people are allowed to gather freely again, they will come.

[email protected]

Source Article