Another Big Building SOLD!

After spending the last few weeks writing about the grocery industry, it is time to discuss another industry that is in an even greater state of upheaval — the shopping mall industry.

The mall game has become a split between the haves and the have-nots. Class A malls are thriving, while Class B and C malls are struggling. That is especially true of Class C malls. Pictures of recently abandoned malls, like the one above, are some of the scariest things going on the internet right now. One smart, enterprising mall in Minnesota even plans to convert an old anchor tenant location, formerly a Herberger’s department store, into a haunted house this October. Talk about irony!

It is easy to see why all this is happening. Prior to the 1990s, malls were an incredibly efficient way for consumers to shop and to buy products. Everything was all in one place. Gap, Victoria’s Secret, Foot Locker, you name it, were all under one roof. Malls were a cornucopia of conspicuous suburban consumptive delight. They were the only and best game in town.

Then things changed with the rise of e-commerce. Now the entire product catalog of the world is available to the American consumer right from the palm of his or her hand, on the way to or from work, at work, or even sitting on the couch at home. The convenience factor of malls as a one-stop shop for “closet-loading” (my term to reference the specialty apparel equivalent of grocery pantry loading) is dead. Malls just aren’t worth the time investment anymore. If you are not a Class A, experience mall destination, chances are you offer no compelling reason for being. At the very least, you’re fighting an uphill battle.

The data bears this out. As search data shows, malls as a means of find, seek and destroy product acquisition are no longer relevant. According to Survata, when consumers know what they want to buy, 85% of the time they go to Amazon or Google to find what they want. It is easier to look things up and buy them online than it is to go to the mall — consumers can either buy the things they know they want on Amazon or discover the things they did not know they wanted on Instagram.

All is not lost, however. It it just takes chutzpah and the willingness to break from convention. The real irony in the whole situation is that malls actually could be just as important and relevant in people’s lives as they ever were. It is just that how and why they are relevant is going to look very different from the days when hearing the Gap was coming to your town was like Christmas in July.

Here are three actions malls could take today to reclaim their relevance with the American consumer in every town nationwide:

1. Adopt a New Retail, Data-First Mindset

Just as retailers need to know their customers at an individual level, so too do mall operators. This knowledge comes from putting into place the foundations for real-time data capture. Malls of the future should act and behave like video games. The mall goer should be thought of as the main player in the video game, and everything within the mall should act as a non-player character within the game, reading and reacting to the mall goer at all times.

That might sound super geeky, but it is actually really straightforward. Mall operators should strive to know, all things being equal, anything and everything going on within their malls — how many people come to them, how many people go to a given store, how many people use their restrooms, to even how many people throw coins in the fountain, for example.

All this starts with mall operators adopting the foundational pillars of New Retail, espoused by Alibaba and others: 1) Cloud Technology 2) Real-Time Data Capture 3) Location and Context Analytics. That way they can begin to treat their “malls” like a Silicon Valley product, i.e. not as something that will obsolesce over time but as an organic idea that will adapt itself iteratively, as the world around it changes.

2. Get Hippie with It

Malls are about so much more than leasing space to retailers. The mall itself, not the shops within it, is the product the American consumer actually consumes.

A box and four walls are no longer compelling enough value propositions for either the consumer or the retailer. As a result, new technology and architectural infrastructure needs to be part of the 21st century mall value equation.

Mall operators should get with their tenants and make like it is the 1960s, commune-style. They should become one with each other by:

• Creating front-facing e-commerce marketplaces
• Establishing cooperative backroom fulfillment operations
• Demanding a universal point-of-sale system
• Investing in architectural improvements for concierge services, like order pickup and curbside deliveries and returns

Step one — malls should build branded digital marketplaces. They should showcase all the retailers within their walls, “extend the aisle” of those retailers, and also exhibit local level retail that may not be ready for the prime time of everyday physical retail operations.

The fact that this has not happened already boggles the mind. For decades retailers used malls as their physical marketplaces, so why in the hell should they not use malls as digital marketplaces as well? Everyone wins at a relatively low cost, and, heck, many of the retailers to which the malls lease their space are already using Amazon for this very idea! It is hardly a change at all.

Step two — build the physical infrastructural guts to let the love flow. This effort starts with malls designing collaborative backrooms.

While this step also requires getting the retailers on board, it too should be an easy sell. For instance, what on god’s green earth is the benefit of every specialty retailer operating their own backroom? Stocking and replenishment (say nothing of shipping!) is now almost a white-label activity at this point for digitally-native brands, and yet, at malls throughout the country, Gap still thinks it needs to operate its own backroom logistics and J.Crew does too.

Stop the madness!

“Pool the backrooms!” should be cry that rings out across the land, from sea to shining sea, and mall operators should then design the guts of their buildings so that retailers can operate out of these shared “fulfillment communes” behind the scenes. Intraday operations would not be affected and, lo and behold, the latest in automation and fulfillment tech could be used to pick and pack orders too, which leads to the next point.

Step three — design the mall to be a full concierge/style experience for consumers. An enticing marketplace front end and a more efficient back end fulfillment setup should be complemented with a universal mall mobile point-of-sale system, so mall goers can shop any store they want, however they want, both online and in the physical world, alongside amenities, like curbside pickup hubs and/or order pickup lockers, for both consumers and crowd-sourced delivery drivers alike, and for the products that may not even be carried within the four walls of the mall.

That way the mall becomes a choose-your-own adventure mode of convenience. Consumers can still go to the mall if they want, but they can also start to interact with it on their way home from work, on their way to the soccer game on the weekends, or even after a hard night out.

And, most importantly, they can walk from place to place, store to store, with their phones as a remote control in one hand and a glass of wine, beer, or coffee in the other and never have to worry about carrying shopping bags from more than one store or having to take out cash or a credit card ever, ever again!

3. Go with the Flow

What starts to emerge from the above is a new human, digital, and physical experience design, one part mall as we used to know, one part e-commerce, and one part local strip mall convenience.

Now put all this together and go the final step – malls operators should invest in new experience design improvements and partnership relationships that operate within the flow of the communities within which consumers live.

The most important question of all is, “Why come to the “mall” to begin with (and, I now use the term “mall” very loosely)?” The answers to that question and that question alone should guide this activity.

There is no blueprint here. For some communities, it could mean refashioning the above as senior citizen hovels. For others, it could mean giving millennials a new way to live, work, and play without lifting a finger. While still for others, it could just mean figuring out how to alleviate the pressures of everyday life and the unending mental dredge that is social media.

Is the answer grocery? Could be.

Is it gyms? Could be.

Is it doctors’ offices? It could be that too.

But, it is definitely not just the same damn retail that one can find anywhere. That is the art to it. That is where qualitative genius will come into play. The foundation is in steps one and two above, and the icing on the cake is in how one mixes the architectural design to allow for the amenities that matter most in the context of the jobs different communities of consumers have to get done every day.

Malls were invented to make things easier for Americans. It is time they go back to their roots. It is time they leave shopping at the door.

We have Amazon for that.

For years, modern and flexible office spaces were the stomping grounds of small, boutique startups and the self-employed creative types. And, while those groups still play a large role in the market, larger and more traditional companies are now beginning to see the benefits of flexible office spaces.

But what, exactly, is a flexible office space? Well, flexible office spaces come in many shapes and sizes (literally). Some are co-working spaces, or rather, offices shared simultaneously be an assortment of individual workers or even small companies. Others are simply a hybrid of different office types, combining cubicles with private offices, and soundproofed rooms with open concept conference spaces.

One thing that nearly all flexible office spaces have in common? Common areas.

Today, businesses are beginning to design office space with these common areas in mind, increasing the overall amount of square footage per employee, when all work settings are taken into account. Or, at least that is the conclusion that architecture and design firm Ted Moudis Associates came to in their recent report, after closely analyzing more than 2 million square feet of their office projects. Many companies are forsaking the traditional office setting and, instead, choosing to expand the selection of alternative common areas to get work done, such as a kitchen or cafe area, a relaxed living room type area, or even secluded quiet zones.

What’s more, designers and planners of office space say that they are seeing this shift across a wide range of industries, giving the trend mass appeal. TC Macker of Coldwell Banker Commercial WESTMAC in Los Angeles says,

“Whereas the focus used to be on more efficient workspaces, today’s employers are realizing the benefits of making offices more attractive by adding in open community spaces, working to choose for themselves how and where they work within the office. And employees and workers are responding.”

A recent study by Coldwell Banker Commercial Affiliates found that, believe it or not, the physical space of an office can actually help to keep staff happier. This study, which polled Younger Millennials (18-29 years old), Older Millennials (30-34), Gen Xers (35-49), and Baby Boomers (50-69), found that workers want both convenience AND a social scene at the office.

Among the top amenities workers are looking for are food courts, on-site restaurants, outdoor patios, and outdoor lounging space. In other words, as workers spend more and more time at work, offices are becoming more of a center for social activity, with workers continuously demonstrating that they want to be able to work in places other than just at their desk.

Open floor plans and common areas can help facilitate collaboration among colleagues and can bolster creativity within the office, but it is also crucial to remember to carve out private spaces throughout the office to provide employees a break from all the buzz throughout the office and to allow for focused working without distractions. As employee preferences continue to shift, it is imperative that office developers and commercial real estate professionals stay on top of the expectations and wants of today’s workforce.

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