Will Covid-19 kill the shopping mall?

Will Covid-19 kill the shopping mall?

Staff Writer
Staff Writer
Pinduoduo Content Team
November 9, 2020

The world’s first modern shopping mall opened its doors in 1956.

The Southdale Center in Edina, Minnesota had two department stores, a food court, a gaming arcade and space for 5,000 cars outside. It gave shoppers a brand new way to escape the suburban sprawl of post-war America, browsing between more than 70 retailers, while pleasantly cooled by air conditioners that blasted on every floor.  

They loved it.

Four years later there were 4,500 malls in the US. By 1975, there were 16,400. And only three decades after excited shoppers first queued outside the doors of the Southdale Center, there were 30,000 spanning all 50 states, at which Americans spent no less than $676 billion each year – 50% of all retail sales in the country.

In fact, the concept of the shopping mall helped usher in a new age of consumerism worldwide. It made shopping a leisurely, enjoyable experience, interspersed with trips to the movies or coffee with friends. It gave stores access to the kind of footfall they could only have dreamed about beforehand as thousands gathered under the same roof.

It was, in other words, one of America’s best and most successful international exports. From Bangkok, to Beijing, to Dubai, these gleaming climate-controlled shopping centres have popped up in almost every major (and minor) city round the world, welcoming millions and millions of us every day.  

But now? Well, some of them look more like ghost towns.

In areas struck hard by Covid-19, many have been forced to close their doors, sometimes for weeks or months at a time. Elsewhere, the same elements that once drew shoppers in – the chance to socialize, the crowds – are now putting them off, as anxiety around catching the virus remains high. For some, it’s marked the death knell. In June, shopping mall operator Intu – which owns 17 shopping centres across the UK – collapsed into administration. In the US, two more mall operators (which run around 130 malls between them) filed for bankruptcy, with empty stores unable to pay rent.  

This decline in the popularity of the shopping mall isn’t new in Europe and the US. There the huge rise in e-commerce has meant, for many years now, shoppers have been slowly drifting away from malls to browse for food, fashion and furniture online instead. “They'd been in trouble for some time, but now, now they’re in real trouble,” says Marty Weintraub, retail lead for Canada at Deloitte. “In North America, we started to see malls become challenged way before the pandemic. In February [before the virus had led to a lockdown] traffic was already way down, by double digits.”

In Asia, this decline is much newer and much more intricately linked to the pandemic. In fact, there were more mall openings in China than ever before in 2019, and a glut of huge interconnected malls up and running across the United Arab Emirates (including the world’s biggest, The Dubai Mall).

But wherever in the world the virus has struck, shopping centres now face a big uphill battle to tempt shoppers back.

All the experts that Pinduoduo speaks to insist that Covid-19 won’t mark the end for shopping malls. But it could accelerate a change in how they operate.  

In the short-term, for example, mall owners will need to address the elephant in the room: safety. From flicking through clothes racks, to small, enclosed spaces, and even the buttons on an elevator, a shopping mall looks like it's full of potential hazards for anxious consumers.

The solution that many malls are adopting, says Weintraub, is touchless and digital tech. At shopping malls in Las Vegas and New York, for example, malls have rolled out virtual changing rooms. Tech start-up Fit:Match has created kiosks into which shoppers can walk, and have a 3D scan taken of their body in under a minute. With that information they’ll know exactly what size they’ll need, at any of the mall’s different retailers, without the need to touch or try on anything. At malls in Dubai meanwhile, owners have installed state-of-the-art disinfectant gates at entrances which reportedly kill 99.9% of germs plus take your temperature.

“The pandemic has changed consumer’s shopping habits and has undoubtedly accelerated the adoption of these technologies,” says Sonia Navarrete, content analyst at software expert GetApp. “Today, over half of  women consumers are willing to try AR and VR and a third of consumers aged 26-35 are interested in trying AR in store.”  

Once the pandemic is over though, shopping malls will still need to make changes beyond these health and safety measures in order to survive, warns Weintraub. “The definition of what the mall is and what purpose it serves needs to change, even after the pandemic,” he says. “The space needs to transform.”

With the option to buy everything we need online, there needs to be an added reason to traipse to the mall, explains retail consultant Ian Scott. Particularly while malls are plastered with warnings about face masks, social distancing and bottles of sanitiser. “You've got to give shoppers a reason to come in and enjoy the experience.”

That’ll likely mean a bigger and bigger chunk of retail real estate eaten up by leisure activities in the post-pandemic shopping mall. Not just coffee shops, cinemas and food courts, but spaces for community classes, pop-ups with up-and-coming chefs and even theme parks. Yes, really. In 2019, American Dream opened to the public, complete with a professional ice rink, a ski slope, 40 water slides and a Nickelodeon theme park, complete with rollercoasters, merry-go-rounds, and indoor train rides.    

There are so many options to innovate, argues Catherine Shuttleworth, CEO and founder of Savvy. “Children’s play spaces, virtual reality gaming zones, theatres, centres for extra tuition for children, learning zones to facilitate learning a new hobby, doctors’ surgeries… The ideas are endless.”

Plus, malls need to start using online retail as a complementary channel, rather than a rival one. In Asia, collaborations between ecommerce platforms and bricks-and-mortar stores are already common. In April, Pinduoduo even invested 2.5 billion yuan toward promoting Shanghai’s shopping festival as the lockdown eased in the city. Physical stores could act as simply a place to “try before you buy,” suggests Scott, “or a brand experience” rather than a competitor to online shopping.

At the end of the day, “Covid is a unique, temporary influence on retail,” he adds. “And I don’t think this is the death knell” for shopping malls. But to survive they “have an awful lot to do with innovation and development over the next 12 months.” In other words, the shopping mall needs a thoroughly modern makeover and can’t get stuck in the fifties if it wants to make it through the next 70 years intact. Or as Weintraub put it: “It’s not your grandparents’ mall anymore.”

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