The once-vibrant, traditional department stores like Sears and J.C. Penney, which used to drive 70% of total shopping center traffic, now only drive 25% – 30%.
As a result, shopping centers across the country are looking for redevelopment strategies as those traffic-driving big box anchors start to go dark due to the fundamental shift in consumer shopping behavior brought on, in part, by the proliferation of online shopping.
So, while there’s no question that many American shopping centers are declining, retail developers have also made it no secret that they’re now placing a heavier emphasis on food, entertainment and experience as a way to drive sales in the stores. They know that they must take a “retailtainment” approach to their shopping centers to maintain relevancy in the face of a changing consumer culture and an omni-channel reality.
Instead of focusing on the potential negative outcomes and challenges, developers are shifting their focus and attention to determining how the vacant stores can be positioned and used as an advantage.
For example, developers can look at the fact that the square footage devoted to general merchandise, apparel, accessories, and similar items has dropped from 16.8% of total shopping center square footage to 15.5% over the 10-year period ending in 2013 in a positive light.
The dip in traditional retail square footage has created more space in many shopping centers, which developers can now devote to additional dining, entertainment and services options.
The savvy developers are already taking this “retailtainment” concept to heart and are undergoing renovations to create a more experience-oriented environment.
Some are clustering restaurants and putting them at the front of the shopping center, taking note of the fact that sit-down restaurants made up 7.1% of the total sales at U.S. shopping centers in 2013.
Others are building upscale movie theaters or bringing in various programs or events, such as fashion shows, outdoor family movie nights and even an ongoing concert series featuring local artists.
These types of additions, as well as new common areas for people to come together, are helping shopping centers create an entire experience where consumers can go every day, not just for major shopping trips.
The goal is to create a so-called third place – somewhere people can go that’s not work and not home.
However, it’s imperative to note that when it comes to what types of dining, entertainment and service options to offer, there’s not a one-size-fits-all solution.
The Bottom Line:
So, yes, by adding restaurants and services as well as creating experiences that cannot be mimicked online, shopping centers can ultimately be turned into destinations that provide customers with things that they can’t get online – factors that will draw people in.
However, as developers go back to the drawing board and begin asking themselves how to make their shopping center viable again, they must assess and measure their existing center’s performance, and identify not only the wants and needs of the consumers, but also how they want to live their lives.
If you’re considering a new development strategy, talk to us about how a customer analytic solution can optimize the success of your property, fine-tune the tenant mix based on changing consumer preferences, and discover what types of entertainment options would be most appealing to your customers.