Study: Malls will become ‘consumer experience spaces’
The mall of the future will have more in common with Disneyland than Roosevelt Field, according to a study prescribing that retail real estate must be in the business of helping people accumulate experiences, not merchandise.
Whether or not A.T. Kearney’s clunky rubric for the new mall — “consumer experience space,” or CES — takes root, the consulting firm’s premise is on solid ground: The Millennials and Generation Z-ers who will comprise the bulk of shoppers in the near future will have less disposable income, more proclivity to share possessions, and greater desire for experiences than mall shoppers of the past.
“The key is to control the shopper’s journey and direct the consumer to the proper place, and malls will transition from anchors to attractions,” said A.T. Kearney partner Michael Brown, a co-author of “The Future of Shopping Centers” study.
“Department stores will still play a role, but they won’t be the main draw. Whether the draw is office or residential space or an entertainment venue, every property that exists today may be converted to a new purpose,” Brown said.
The U.S. has a special challenge in a changing retail world because it has so much retail real estate in play. Its 23.5 sq. ft. of retail per person is more than five times that found in either the United Kingdom or Japan, the report points out.
“In Europe, zoning and regulation kept in check what happened in America as we chased the Baby Boomers who needed places to spend their money,” said Brown. Even China’s mall development boom has been more on-trend because shopping areas there have always been closely tied to family dining and entertainment gatherings.
A crucial concept for retailers to grasp, according to the report, is that owning is not as important to younger consumers as experiencing. What’s more, they will have less money to spend than their parents did at their ages.
Baby Boomers are living more than 15 years longer than was expected at the time of their birth and many will exhaust their savings within their lifetimes. That means less inherited wealth and more healthcare expenditures for their children.
As a result, eat-drink-and-be-merry will live alongside live-work-play at CES’s. A little more than a third of discretionary spending went to experiences and experiential products in 1985. That percentage, predicts, A.T. Kearney, will rise to 48% by 2030.
Nordstrom to move locations in Kansas City
Nordstrom is trading locations in Kansas City, announcing plans to move to the town’s largest open-air urban shopping center in 2021.
The upscale department store opened at CBL’s Oak Park Mall in 1998 and will continue operating there until the new store opens at Country Club Plaza, located near the Kansas City campus of the University of Missouri.
“We’ve been fortunate to be able to serve our customers in this market at Oak Park Mall for the past 20 years and look forward to offering them a new shopping experience at Country Club Plaza,” said Jamie Nordstrom, president of stores for Nordstrom.
Nordstrom’s new location will be within a 15-block urban center owned jointly by Taubman Centers and Macerich. The 1.3-million-sq.-ft. Country Club Plaza is home to the kind of high-end retailers Nordstrom likes to mix with. Among them: Apple, Burberry, The Coach Store, Sur La Table, lululemon, and Michael Kors.
CBL, which has been actively reclaiming department stores in its portfolio and replacing them with more experiential brands, views Nordstrom’s departure as an opportunity.
“The retail environment is changing rapidly and this decision provides us with an excellent opportunity to transform Oak Park for even greater success in the future,” said CBL Director of Public Relations Stacey Keating. “Nordstrom will remain at Oak Park until 2021. Between now and then, our team has ample time to evaluate various redevelopment scenarios in order to create the plan that makes the most sense for the market.”
Retail re-do at Empire State Building
The world’s most famous skyscraper is undertaking the first gut rehab of all its retail space since it opened its doors in 1931.
New York’s Empire State Building will be re-marketing some 50,000 sq. ft. of retail space, perhaps the most it has ever had available at one time, according to a report on Bloomberg.com.
Skyrocketing retail rents have forced many shops and eateries to abandon Manhattan, leaving scattered holes in the grid at street level. Rents are now dropping in the Herald Square area, as they will at the Empire State Building, whose main incomes stream comes from the 4 million tourists who visit its observation deck annually.
Joanne Podell, executive VP of retail services at Cushman & Wakefield, leasing agent for property, feels the Empire State has an advantage.
“Tenants that are in the market looking for a location with high density along a shopping corridor, I would think they would make this one of their priorities,” Podell said.
Empire State Realty Trust collected just $5.6 million in retail rents last year, down from $7.2 million in 2016.
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