4 Trends Driving the Future of Retail
It’s no secret that retail has undergone major transformation in recent years – and as a new age emerges and as consumer preferences shift, a new model of the mall is rising. It’s one that blends full-price, value and fast fashion retail with dining, entertainment and incubation concepts to offer a new type of mall experience and shift traditional shopping centers to social destinations. The historic view of the mall, one that relies heavily on apparel and accessories, actually is dead – it does not align with the evolving needs of the consumer. So what does the mall of the future look like? Here’s a look at four trends driving the next generation mall.
Diverse Tenant Segments
There’s no cookie-cutter template for retail in 2018. Success lies in a diverse and dynamic roster of tenants, enabling malls to reinvent themselves and drive shopper traffic. Regardless of the format, retail real estate today needs to boast an array of shopping and experiential concepts such as dining, entertainment, fitness, grocery, beauty and everything in between. One great example is Plymouth Meeting Mall, located in a Northwestern suburb of Philadelphia, where half of the tenancy is dedicated to dining and entertainment, with concepts such as LEGOLAND Discovery Center, 5 Wits, CYCLEBAR and others redefining what it means to be a mall in today’s market. Diversifying the tenant mix is exactly where the consumer preference is – according to the International Council of Shopping Centers, 54% of mall shoppers expect carefully curated food halls and craft breweries (54%), 50% of shoppers expect community events like farmers markets or local artisan craft fairs, 46% expect entertainment, 43% noted grocery stores and 38% expect service establishments such as gyms and spas.
Flexible Store Front Opportunities
Just as traditional shopping centers are transforming their tenant models, traditional store formats have advanced. As brands consider their physical engagement with consumers, they’re looking for optimal space that fits their needs, and the answer is not always one-size-fits-all. Retail real estate is leveraging pop-ups, activations and other formats to fill that demand – particularly for e-commerce companies expanding into brick-and-mortar. For mall landlords, having flexibility in the length of the lease and space format is key to offering real estate beneficial for themselves, tenants and shoppers. At Cherry Hill Mall, located in a South Jersey suburb of Philadelphia, this holiday season, we have several that we’re particularly proud of – including Peloton and 47 Brand’s Eagles shop.
A strong mix of lifestyle and retail tenants is the foundation of malls today, but it is only part of the puzzle. Retail owners need to identify ways to engage with the community by demonstrating commitment to the people and neighborhood in which the property is located. This is particularly important in urban settings, where the retail center can play a significant role in shaping the surrounding market. PREIT’s Fashion District Philadelphia, located in Market East, will feature a robust public art program and Uniquely Philly, an initiative featuring local businesses – both of which are designed to celebrate artists and entrepreneurs contributing to the Center City neighborhood. By engaging with the community outside of traditional retail experiences, shopping centers further cement their place with local consumers.
Retail space today offers opportunities beyond shopping and dining. Densification, or adding residential or hotel units, is a natural next step for shopping center owners, offering the ability to enhance asset value while creating an all-encompassing experience at the intersection of life and style. Co-working spaces, art galleries and family destinations have also all successfully differentiated retail centers. For example, 1776, recently partnered with us to creatively utilize mall space at Cherry Hill Mall that will focus on innovation in retail. Through smart partnerships and innovative thinking, retail properties can become community impact centers.
The new mall is being revealed by thoughtful, strategic real estate owners who are creating a unique and well curated mix of tenants, meeting consumer demands. As we continue to be agile and drive the future of retail, we are confident, it will only get more exciting from here.