Mall Of The Future - What we learned and key takeaways
The Mall of the Future Summit, organised by Future Place in Sydney on 1 March 2023, was a sell-out affair. The enthusiastic audience included a diverse range of leading retailers, shopping centre owners and managers, real estate agents plus suppliers and service providers to the industry. GapMaps’ team of Tony Dimasi, James Turnbull, Fraser Brown and Kolt Luty were among the participants and conducted a popular round-table discussion focused on the optimal tenancy mix for the Mall of the Future.
What became clear from the wide range of presentations and round-table discussions is that the bricks and mortar shopping centre, despite the ravages of the COVID pandemic, has well and truly returned to play its crucial role as by far the primary avenue for meeting shoppers’ needs. This might seem somewhat paradoxical, given the obvious boom in online sales that exploded during the COVID years, however, what was universally acknowledged by both landlords and retailers is that the bricks and mortar store and the online channel are co-dependent parts of the one healthy total.
The COVID-19 pandemic put a blowtorch on the bricks and mortar channel, and on shopping malls in particular, testing their relevance and importance. It became accepted wisdom during the pandemic to pronounce the death of the shopping mall. However, just as the age-old aphorism tells us – that which does not kill you makes you stronger. The reality is that shopping malls, at least in Australia, have come out the other side of COVID-19 battered and bruised but, somewhat ironically perhaps, their reputation for resilience, relevance and importance to the customer, has been enhanced rather than diminished.
But that’s not to say that there are not significant challenges which need to be addressed and COVID-19 had the effect of amplifying the scale of some of those challenges – e.g. the transfer of retail sales to the online channel – by cramming the equivalent of 4-5 years’ worth of anticipated change into 1 year. The bad thing about that was the enormous stress that was placed on retailers and mall owners to adapt more or less immediately. The good thing is that, by and large, adapt they did and the hard yards done during the pandemic effectively “brought forward” the future and showed that it is not something to fear.
The focus of the summit was on those challenges for malls which now remain under the “new normal”, including the implications for mall design; the ever-increasing roles of technology; the changing perspectives of investors and capital markets; the importance of ESG in driving greater sustainability across both retail real estate and shopper experience; and, of course, the optimal tenancy mix for the mall of the future.
"An overwhelmingly positive energy across participants from all mall-related sectors about the general outlook. Not because anyone sought to downplay either the severity of the pandemic impacts or the challenges remaining but more because, as I have noted above, shopping centres’ reputation for resilience has been enhanced rather than diminished."
The main take-aways from the day were:
First, an overwhelmingly positive energy across participants from all mall-related sectors about the general outlook. Not because anyone sought to downplay either the severity of the pandemic impacts or the challenges remaining but more because, as I have noted above, shopping centres’ reputation for resilience has been enhanced rather than diminished.
Bricks and mortar presence drives online sales and, for any retailer aspiring to grow a large, profitable and sustainable business, is essential.
Centres/malls will need to be even more customer-centric than they have been in the past. That might sound a bit glib, but it needs to be taken seriously and means different things for different customer segments. As an example, sustainability and ESG are top of mind concerns particularly for Gen Z and Gen Alpha consumers.
“Mixed-use” and “experiential” are two words (or is that really three words?) most often used to express the ways in which malls need to change. These are not overnight changes, the reality is that Australian malls have been on this journey for some years. However, the urgency with which the changes need to be made has increased greatly.
And finally my wrap-up: don’t throw the baby out with the bathwater – it has also been the case that retail sales in Australia increased strongly during the COVID-19 period, by 8.9% in 2019/20 and 5.9% in 2020/21 while results for the first half of 2022/23 show a year-to-date increase of 13%. In other words, there is still a lot of demand for good old-fashioned shopping at our shopping centres and that demand continues to grow.