The Mall is Dead, Long Live the Mall: Pop-Up Shops Help the American Mall Remain Vibrant and Relevant

In 2017, Credit Suisse released a report that seemed to sound the death knell for the American mall. According to the report, between 20 and 25 percent of American malls were expected to close within five years.

It’s been about a year and a half since that report was published, and in many respects, it appears to be prescient. Some anchor stores, like Toys R Us, have gone away entirely while others, like Macy’s and J. C. Penney, have shuttered hundreds of locations. Given the recent troubles experienced by Sears, this trend seems unlikely to slow. As anchors stores disappear, soon the entire mall follows. (In an interesting bit of irony, several shuttered malls are being converted into Amazon fulfillment centers.)

Still, the mall refuses to die.

In fact, new complexes are still being built – although they are not like the malls of old. Miami will soon be the home of the largest mall in the United States. Known as The American Dream Mall, the $4 billion retail and entertainment complex will cover 6 million square feet. In addition to over a thousand retail options and dozens of dining possibilities, the mall will feature an artificial ski slope, an ice rink, and an indoor water park with a giant pool.

While existing mall complexes are unlikely to add water slides and ski runs, mall owners and retailers are taking several innovative steps to ensure that the mall remains (or, becomes again) a relevant destination for shoppers. For example, Willow Bend Mall in Plano, Texas just announced they would allow shoppers to purchase and consume alcohol as they wander throughout the mall and shop.

While shopping under the influence has yet to catch on across the country, one idea that is becoming accepted nationwide is the notion of the mall as a destination for pop-up stores.

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It used to be impossible for a mall retailer to secure anything other than a multi-year lease (often 10 years or longer for anchor stores). Today, however, Macerich Co., which owns more than 50 shopping centers across the country, is offering retailers the option of a 180-day lease. Simon, the country's biggest shopping mall operator with over 300 shopping centers, is workshopping “permanent pop ups” by devoting a set amount of space to a rotating series of stores and eateries at its Roosevelt Field location in New York.

The attraction of these shorter leases and inviting pop ups into the traditionally long-term mall space is similar to a giant, indoor theme park or the novelty of drinking while browsing: the goal of all of these solutions is to turn shopping at the mall into an event.

"The emergence of entertainment as part of the shopping mall is becoming very important," David Smiley, the Assistant Director of Columbia University's Urban Design graduate program said to Business Insider. "It keeps people in the center longer. And even if they weren't going to shop for something, they get lured in."

Another reason that malls are favoring pop ups is that it helps them control the turnover rate of previously reliable tenants. It’s not just the anchor stores that are no longer secure, the stores along the aisles are increasingly unstable. J. Crew, Abercrombie & Fitch, Michael Kors, Foot Locker, Gap, and The Children’s Place are just a few examples of retailers that closed several locations in 2018.

Empty storefronts are anathema to a thriving mall. In fact, they seem to be infectious, with one empty slot soon becoming three which becomes five, etc. The sooner that the mall’s owner is able to fill a vacant slot, the better it is for everyone with a stake in that mall’s ecosystem. 

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That’s why it is sensible to off the real estate to a retailer that is invested in filling it, even if that is only for a short time. Maybe it’s even better if it’s just for a short time. Remember that the goal is to make a trip to the mall into an event. It used to be that people went to the mall because they knew what they were going to find. Now that it is possible to buy practically anything from the comfort of your couch, the thing that will get people to the mall is not knowing what they will find. The anticipating of the journey is half the fun, and it’s an experience that shoppers cannot find online.

On the flip side, what is enticing about bringing a pop up into retail space, especially into a struggling environment like a mall? Well, despite the struggles, people still make purchases in person. While ecommerce is thriving, it still represents a small part of the overall retail market – less than 10 percent in 2017.

Pop ups also give ecommerce retailers an opportunity to reach out from the virtual world and interact with consumers face-to-face. A pop-up shop also provides consumers with the opportunity to take your products out for a spin. Your customers can see how they look when using your products, test the fit, and feel the weight of them. Also, any concerns or questions they may have are immediately addressed in person.

This is especially true if the product you are selling is technical or takes some explanation to understand. A pop-up is an excellent platform to use for product demos and educating your customer base. Not only can you and your staff take consumers on a step-by-step journey through the use of your product, but consumers will also gain a further understanding by going hands-on with the product themselves.

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Even those anchor stores are getting in on the act. After years of struggling with declining sales and store closures, Macy’s finally experienced positive comparable sales growth in Q4 of 2017 after 12 quarters of decline. One reason was adding some innovation to the retail stores, including The Market @ Macy’s, a program that allocates space on the ground floor to a rotating selection of pop-up brands. These pop ups pay a one-time fee for the space, retain all their sales, and the length they stay is very flexible (options begin at one month and increase from there).

“Overwhelmingly, what we think makes this so attractive for Macy's and our customers is it continues to drive customers to stores by giving a constant break of discovery,” Marc Mastronardi, Executive Vice President of New Business Development and Innovation at Macy's said to CNBC.

“For really minimal company investment, we were able to take the capabilities that we already have and package them in a way that is creating a new revenue stream, product discovery and something that is good for the customer.”

By offering a rotating selection of pop ups, malls are finding ways to remain relevant and vibrant in the new retail world. Pop ups make shopping an adventure, where a new, fun concept may be just a short drive away. Also, since these stores are intended to be transient, people who don’t make it to the mall in time will miss out on the experience entirely. It’s a concept that benefits everyone who has a stake in the survival of the mall – including the shoppers.

If you would like to translate a retail concept into a pop-up experience – destined for a mall or any location – give one of our Event Architecture experts a call at 972-323-9433.

TTG Marketing