After three very productive days last week at ICSC RECon 2017 in Las Vegas, I can state with absolute certainty: The shopping mall is not an endangered species. Evolving yes, but not dying or in danger of disappearing anytime soon. Nearly 40,000 people gathered in the middle of the Nevada desert stand testament to the fact that the business of Shopping Malls is alive and kicking.
We're seeing a steady stream of press suggesting that malls are 'failing' with the shuttering of legacy anchor stores such Sears and Macy's, the proof of the pudding. It's these headlines that stick in the sub-conscious and cast a negative light on this close-knit industry. Because it only tells part of the story, this narrative has wide-ranging implications for businesses that depend on the industry such as services or ancillary income sectors. It's white noise but it's confidence-eroding nevertheless and that makes potential investors, particularly institutional ones, nervous and they may opt for 'safer' investments in other sectors over the mall business. By way of industry financial background, dividend yield on
shopping mall investments in the year to April 30th 2017 was second only to home financing and healthcare, according to the National Association of Real Estate Investment Trusts.
What needs to be made clear is that nothing stays the same in any sector and that the changing landscape we're seeing is a natural evolution of the industry as a whole. The business of operating a mall must adapt and change its offer to suit the local market. A mall can no longer be seen as one single concept, it must focus on the customer and the experience. From the owners we spoke to last week it's business as usual, tenants change all the time and alway have. Granted, the anchor store changes are a big shift in thinking but the management teams are well ahead of the curve in implementing new concepts. There are many positive stories out there of malls carving up space from anchor stores and bringing in multiple tenants - creating a new draw that, arguably, bests the traditional department store. This is a positive change of direction and we will no doubt end up with multiple concepts in the future tailored to local catchment requirements. Some malls will unfortunately find they no longer have a place in the market due to over saturation, lack of investment, or inability to adapt, but this re-shuffling of the pack will ultimately produce a leaner, fitter industry offering a more dynamic customer experience.
It'll be very interesting to see how the individual owners deal with these new challenges and which of the pioneering strategies that emerge in the next 12 months prove successful in the medium to long term. There are so many technological advances that can be leveraged to offer the customer a personalised experience and seemlessly combine their online, offline and in-store activities. The combination of a dynamic retail offering including brands, pop-ups, dining, and events such as fashion shows - with customer engagement powered through technology - benefits mall owners, retailers, and customers alike. Retailers in particular, need new ways to enable them to reach their customers - targeting consumers with offers directly at the point of sale - and react proactively to business conditions. These tools are already tried and tested and are set to become commonplace in the next 18 months. New malls and refurbishments must place the customer experience at the top of the design agenda so that customers view it as a desirable destination in its own right - leading to increased dwell time and spend.
So it's goodbye to Las Vegas until RECon 2018 where I'm sure we'll see at least another 40,000 people all connected in some way to a thriving, yet changing, Shopping Mall business.
Lastly, a big thanks to ICSC for a great show once again. #ICSCRECON