Covid-19: Why it’s not shutters for shopping malls just yet

The impact of the recent news that shopping centre giant Intu crashed into administration, leaving thousands of shops and livelihoods on the line, cannot be underestimated. Whilst it was no secret that it was on the brink of collapse – Intu is the UK’s largest shopping centre owner with some of Europe’s most popular retail destinations to its name, including the Trafford Centre in Manchester and Lakeside in Essex – it’s still another heavy blow to a struggling retail industry where suffering brick-and-mortar stores are still trying to get back on their feet in the wake of the Covid-19 crisis.

Intu has had a difficult decade in a challenging retail environment, racking up a mountainous pile of debt and unfortunately, Covid-19 was the straw that broke the camel’s back. Even before the pandemic, consumer shopping behaviour was changing at an unprecedented pace, shifting to online but, even more importantly for companies like Intu, becoming truly omnichannel. The pandemic has accelerated that change even further and, sadly, left retailers and shopping centre owners facing the difficult realisation that they weren’t prepared at all. Most companies who were looking at their business plans for the next five to 10 years now realise that in fact, that predicted situation is happening a lot sooner than planned.

So, what does that mean in today’s terms for struggling shopping centres? It means we’re seeing, and will continue to see, a higher than ever before proportion of online, or omni-channels sales. For bricks and mortar stores located within big shopping centres and the shopping centre itself, this means a greater emphasis on will need to be placed on ‘experiential’ environments to tempt people over the threshold time and time again. Mere presence and geographical saturation are no longer enough for retail brands; consumers want more. They need an experience that they can’t get online, or why bother to get off the couch. In this period of semi-isolation this is going to be even more critical, and difficult, but for the savvy retailer/shopping mall that can move quickly, does provide opportunities to differentiate.  

For a while at least, creating an experience in a social distancing world will involve more practical solutions, such as online booking to visit the store/mall, ability to check in when you arrive, contactless click and collect/returns, and contactless payments. Any physical store experience today needs to be as un-physical as possible. Longer-term though, expectations will rise again and shopping centres will need to transform, fast. More ‘flagship-style’ stores will become the norm and the ability for customers to move between online, physical and delivery channels seamlessly will be paramount. For shopping malls (and high streets) in particular, this omni-channel experiential environment is even more critical.

As mentioned, in order to persuade customers to come, they need to provide something that couch surfing doesn’t - they need think in terms of services, and become destinations that combine the best of retail with the best of experience. The traditional mall, whose value is measured solely in footfall and revenue per square foot will struggle, and eventually die off, replaced by a destination that a family, or group of friends can go to meet up and spend some quality time – doing a bit of shopping, catching a meal, maybe a movie, bowling, mini-golf, bars, and possibly even night clubs. That said, it’s not just about the services the mall offers but also the overall environment – keeping it fresh with events and popups, free wi-fi (critical to younger consumers), digital wayfinding, coordinated store booking to help you plan your trip in a socially distanced world, possibly even premium services such as ‘skip the queue’ fast passes or ambient intelligence checkout (think Amazon Go, for the whole mall). Anything that a mall can do to persuade customers to spend more time there, shopping or otherwise, is money well spent. 

While online shopping is very clearly a big part of the future for mission driven retail, this does not mean that footfall in shopping malls will drop to the point that they are forced to close – if they transform themselves. Shopping malls are actually at an advantage to stand-alone stores or high-streets in that they can be seen as destinations in their own right. People visit them for the ‘experience’ and will continue to do so, even post lockdown, once people feel confident enough to return to stores again. People love to shop, they love experiences: days out when the weather is bad, combining a shopping trip with dining, or the cinema, and malls are uniquely positioned to deliver that. Unfortunately, many locations in shopping malls are today a long way off being fit for purpose to be this new store of the future. But there is still time to turn it around.

So, whilst the future of Intu hangs in the balance, it’s not quite shutters for all shopping malls just yet.

Photo credits (iStock): miodrag ignjatovic