U.S. shopping malls see rapid store closures, but all is not lost

The changing landscape of US retail has not been without a slew of casualties. With 7,426 store closures so far this year in shopping malls, compared to 3,000 openings, there is anxiety and turbulence in the sector. The closures compare against 5,864 shuttered stores last year, according to data from Coresight, and closures are happening at the fastest rate in over nine years.

While landlords are struggling to fill vacant retail spaces, the mall has not yet been declared dead. With robust consumer spending mall owners are reinventing the shopping experience to attract a new generation of digital native customers, who seek multi-channel, experiential retailing.

The luxury sector is embracing experiential retailing

Luxury brands have always communicated an aspiration more than a product per se. The physical store remains an important touchpoint for shoppers to experience luxury brands and high-end brands are investing in physical stores to enhance the customer experience. Coresight states luxury brands are expanding in some second-tier US cities where mall experiences have been improved. Luxury brands have adopted the streetwear distribution mode of limited edition drops, providing an experience element many younger buyers are looking for and that can prove to be a traffic driver for physical stores.

Making the digital experience tangible in-store

Digitally native brands are coming to realize that a physical presence is key to success, and landlords are courting them to join mixed retail initiatives from inception through installation. Physical stores act as a complement to online sales and offer an easier and free way for customers to return items purchased online, says insight platform Practical Ecommerce. Customers who pick up and exchange items in store tend to buy extra items. And many shoppers still prefer to view, try on, and touch products before purchasing them. Importantly, brick-and-mortar shopping generates higher conversion rates than online only.

The New York Times last year noted that pop-up stores are proving to be a good use of vacant retail space. Filling the temporary locations offer benefits to both the retailers and the property owners. Landlords can earn rent on a property that would otherwise be vacant, and retailers can access space with less commitment and lower costs.

Photo: Pexels.com