Foot traffic at enclosed malls anchored by department stores has fallen by 2% year over year, according to data analytics firm Thasos. Retailers are hurting and real estate tracking from Coresight research shows there will be 598 less store openings this year over last. So what gives? Malls no longer have the pull they once did--and it's not because the mall concept has died, but rather because the retailers inside are doing three things wrong. They have strayed from their core mission, they have failed to create true value, and they have stopped serving up newness.
Mission matters more now than ever. Every study around shows that millenials and those coming up behind them care about principles. While what's important to them may vary by geographical location, by upbringing, or by causes close to their hearts, one thing is evident: they shop where their money aligns with the things they are passionate about. Whether it's the right to love who they want, the desire to protect the environment, or just the possibility of being constantly connected, they want a reason that resonates before opening their wallets. Most mall-based retailers, on the other hand, have lost their way trying to be everything to everyone. They have watered down their wares to reach the greatest common denominator, and abandoned their once successful practices of serving a very specific target customer. In the process, they have both confused and disenchanted their once faithful customers whose pilgrimage to the mall was once a journey to affirm one's identity, but is now only a disappointing search for anything that speaks to them.
Price has replaced value, and customers don't need the mall for that. When e-commerce really began to take off, retailers quickly became worried about the fact that shoppers would showroom, visiting stores to browse, but then looking for the lowest price online and making their actual purchase wherever the merchandise was cheapest. Mall-based shoppers, however, never went to the mall for the price. They went for the experience--shopping with friends, finding things that created wonder, meeting new people, getting expert advice, finding the perfect dress in the morning that would be worn on a first date the same night. Unfortunately, retailers stopped paying attention to the experience. They made their stores look alike from one mall to the next, they hired people who didn't care about the company's mission or the customer's moment, and they relied almost solely on price wars to bring in business. Shoppers can get price from the comfort of their living room--there is little reason to go to the mall for it. And who wants to hang out in a place that feels like Kmart at its most uncool?
Newness is nowhere to be found. In the heart of America especially, mall retailers were once the gateway to newness. A trip to the mall in the heyday was a way to spot trends, to get the goods seen on the pages of fashion magazines, and to purchase something that confirmed who you wanted to be. However, many retailers started obsessing over guaranteed sell-thrus and short-term success, entirely missing the big picture. To be successful at retail long-term, you have to be okay with missing the mark sometimes, if it means that your reputation as a purveyor of excitement remains intact--because it's that excitement that brought mall-shoppers back time and again. Sadly, the thrill of going to the mall and coming home with something that wows is now a thing of the past, because retailers traded in their edge for sure bets when it came to their merchandising. Buying teams were told to stop experimenting, to cease making being ahead of the game a goal, and instead, to focus only on confirmed bestsellers. In turn, mall shoppers found their once interesting selection reduced to the same things week after week, and from store to store, forcing them to look for alternatives elsewhere.
If the magic of the mall is to be rekindled, retailers are going to have to return to their old ways. They will need to be clear about who they want as customers, convey the true value of their experience via their merchandise mix and the world they create around it, and start leading, rather than following again. Until they do that, the mall halls will remain empty and attrition to online purchasing will run rampant.