Wednesday, February 26, 2014

Rick Caruso Pronounces the End of the Mall Era

As the keynote speaker of the National Retail Federation's 2014 Big Show, retail development celebrity Rick Caruso predicted that shopping malls have passed their peak and are losing relevance for most American consumers. To stay attractive in the future, shopping malls will have to reinvent themselves and create an experience that evokes a community.  A synthetic mall that closes itself off from the world will continue to lose sales to the internet.

Reacting to Caruso's speech, a roundtable of retail experts convened by Apparel News ponder the future of mall shopping, and what type of approach the mall will need to stay part of the retail equation in the coming decades.

Hunter Communications Original News Source:
Apparel News

Link to article:

Excerpt: "The traditional mall is losing relevance. It might already be a dinosaur.

Making the provocative statements was Rick Caruso of Caruso Affiliated, who popularized mixed-use, lifestyle-center malls such as The Grove in Los Angeles and The Americana at Brand in Glendale, Calif. His comments were made last month as part of the National Retail Federation’s 2014 Big Show keynote address.

'I’ve come to the conclusion that within 10 to 15 years, the typical U.S. mall, unless completely reinvented, will be seen as a historical anachronism that no longer meets the needs of the public, retailers or communities,' Caruso told the crowd of retail executives. 'I believe the rebirth of retail will come as developers, retailers and cities understand the retail paradigm of the future is based on something timeless and enduring. People want to engage and feel a sense of community. They are driven by the experience.'

Caruso’s bombshell comments were accompanied by uncomfortable news for mall operators. ShopperTrak, a market-research firm that measures foot traffic in malls, found that consumer foot traffic plummeted 14.6 percent during the 2013 Christmas retail season despite a 2.7 percent increase in retail sales across several channels. The statistic suggested that while those shopping at malls made more purchases, many more were shopping at home through e-commerce...

California Apparel News spoke with a group of analysts, retailers and real estate players to gauge the state of the mall. While all agreed that the “A”-level mall will continue to thrive, the majority of speakers agreed with Caruso that the business will have to change.
Do malls need to change? How do they need to change?

FRASER ROSS: Malls are not bringing in freshness. You have got to provide more activities, fashion shows and celebrity signings so more people will have a reason to go. They have to be more experiential. Malls need to do a better job of integrating entertainment and dining. The cookie-cutter model is gone.

There are so many things that [mall operators] can do to keep people in malls, but [they] don’t do them. There should be stroller-rental services. You have to create a fun experience for kids in the mall—a kids’ store, a kids’ play area and a toy store. If kids visit the mall and have a great time, they’ll keep asking their parents to bring them back. Happy children equal a happy family. You need coffee shops and theaters. You don’t need another mass chain store in a mall. ... Malls are not looking at longevity, they’re just looking to get the highest rent.

I don’t see a great future for malls that open more stores for publicly traded companies that open their stores to satisfy their investors. In the long term, those stores won’t bring in much money. A lot of branded stores say, “Let’s open our own store and get double margin,” but you’re not getting the same sales. [Shoppers] come out of the store with one small bag—not 20 pieces. People want to diversify their wardrobes. A lot of people don’t know how to diversify stores quickly, and the market changes quickly. One minute, scarves are popular. The next minute, headbands are popular. In a boutique, you have the ability to be much more agile and to respond quickly to changes in taste.

It’s multi-brand stores that bring people to malls. We bring convenience shopping to the shopper. Stores also have to become mini department stores. That’s how you’re going to survive. You edit the best of the best collections. You have a beautiful cashmere sweater and a funny pillow next to it. You have every different price point.

If you don’t have a large, national bookseller in the mall, Kitson can bring people to the mall to buy books. We sold $3 million in books last year in minimal square footage due to the editing and attitude of the selection we provide.

Another point for consumers is that parking is important. [Malls] are overcharging for parking. That is one of the consumers’ biggest issues. Why do people have to pay for parking when they can have merchandise delivered to their home, no questions asked, no hassle?"

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