Shopping malls have been in an identity crisis for a number of years. When department stores and other retailers struggle with underperforming, they must reinvent themselves to survive.
In the United States, there were 750 vacancies for mall anchor tenants in 2021. The pandemic, economic downturn, and consumer preferences have made it difficult to find the right tenant mix to attract buyers.
However, the solution could lie in some important changes in terms of positioning and communication. Near, an operational data platform that provides insights into people and places, recently conducted a study of US malls and found that some malls outperform others in identifying key strategies.
"Two standout strategies are cross-functional development and creating ways to connect directly with customers through broadcast, social media, loyalty programs and more," said Kate Zovod, vice president of product and industry marketing.
Though multipurpose developments have been on the rise for decades, they are in a unique position to address some of the shifts in consumer behavior brought about by the pandemic, Zovod said. As more companies embrace hybrid working from home, employees want to live in locations that are more accessible to a variety of restaurants, cafes, and shops. Apartment buildings near shopping centers are ideal locations to meet this need.
Visitors were found to spend more time in nearby malls than in other malls: in a recent study, they spent an average of 60 minutes in malls compared to 52 minutes in other malls.
"The longevity of mixed-use developments can be explained in part by the fact that mixed-use developments are designed to create a sense of community in park-like open spaces, creating experiences for residents and visitors to linger and enjoy," she said.
An example of a successful mixed-use development is Santana Row in Santa Clara, California.
Zovod In 2002, Santana Row began construction on a 100-acre mixed-use "village-in-a-city" development featuring homes, offices, restaurants and an upscale retail district. The facility gives the impression of an open-air urban space, which is suitable for consumers who prefer to avoid indoor spaces.
She added that the mix of residential, office and retail space shows interesting patterns of visitation depending on the time of day - patterns that have changed since the pandemic have highlighted shifts in consumer behavior.
"In 2019, the latest data shows that visits peak at 7 p.m., which coincides with after-work and lunchtime visits," Zovod said. “However, in 2022 peak attendance times were now more spread out throughout the day, peaking earlier at 4pm.”
In addition to mixed use, another strategy that has helped malls successfully transform consumer behavior is to engage directly with customers. Consumers today expect to be able to interact directly with brands, and malls and malls are no different, she said.
As malls move away from the traditional way retailers interact directly with customers, malls are connecting with customers through social media, loyalty programs, live streaming and more. The aim is to promote the center's brand as a whole and not to focus on individual companies.
"The benefits for shopping centers are clear: they have the opportunity to collect valuable customer data that will help them better understand and personalize the customer experience," said Zovod. "A store can build its brand and thereby build loyalty and increase footfall."
These touchpoints would have tangible benefits for buyers, she adds. An affiliate loyalty program allows consumers to earn rewards from their favorite brands, not just one. Live streaming marketing events - the digital evolution of home shopping channels - can be a fun and interactive way to shop from home. In addition, customers can enjoy a more personalized and engaging overall experience.
When it comes to shopping center loyalty programs, Westfield Group is a prime example of a group that offers multiple incentives to retain customers, Zovod said. The program allows customers to link their credit cards to their accounts, automatically earning loyalty points with every purchase. It offers great rewards, from discounts to free meals, and customers can use the app to reserve parking spaces.
A popular Westfield location, the Westfield Garden State Plaza in Paramus, New Jersey, shows how direct customer contact can pay off.
"According to the latest data, the mall not only attracts two to three times more visitors than other centers in the region, but also keeps them longer," Zovod said. "Visitors spend an average of 58 minutes in Westfield and an average of 36 minutes in Central New Jersey."
Zovod credits mall management with monitoring consumer behavior and understanding short-term and long-term trends. That's key to keeping malls alive given economic conditions and customer preferences, she said.
“The only constant in consumer behavior is change,” she says. “Trends that are resonating now may change in a few years or months. To stay ahead of change, it's important to use consumer behavior data to personalize the shopping experience while focusing on creating engaging and relevant experiences that keep customers coming back for more to learn more.
This article was created in collaboration with Studio B and Close. Bisnow News employees were not involved in the creation of this content.
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