Is the mall past the point of no return?

Paradise Valley Mall, an iconic mall and landmark in northeast Phoenix, has closed its doors for good to make way for a future mixed-use development.

The company that owns the 92-acre property announced it would close on March 29 after it first opened in 1978. The indoor mall, which included department stores, boutiques, cinemas and a food court and which helped introduce Chick-fil-A at the Phoenix Market, will change dramatically in the coming months. The new uses will include an “upscale grocery store, restaurants, multi-family homes, offices, retail stores and other items,” according to a press release issued by Macerich, which sold the property to the real estate company. RED Development based in Phoenix and will retain a 5% stake in the joint venture on the project.

READ ALSO: Macerich Sells Paradise Valley Shopping Center for $ 126.5M; major redevelopment package

The mall’s closure is not an anomaly, according to Hitendra Chaturvedi, a practice professor at Arizona State University’s WP Carey School of Business. An expert in supply chain strategy, global logistics, entrepreneurship, sustainable supply chains and the digitization of supply chains, Chaturvedi said many more shopping center closures are on the horizon.

ASU News spoke to Chaturvedi about this phenomenon, why it is happening, and what the future of US retail looks like.

Hitendra Chaturvedi

Question: Over the past few years America has seen the slow-motion death of shopping malls. What’s going on here?

Responnse: Traditional malls are approaching their expiration date, and some operators and owners are not realizing it and hopefully they will soon. A report by Coresight Research estimated that out of about 1,000 US shopping centers, a quarter will close in the next three to five years.

Traditional malls are a phenomenon of the 1970s and 1980s and target a different generation. This model worked then, but a lot has changed now, including customer profiles, demographics, customer preferences, sales channels, and technology. Gone are the days when teenage socialization meant piling into cars and going to the mall… Shopping was an event and an opportunity. The demise started with the real estate crash and has accelerated over the past three to four years, and the pandemic is putting the final nail in the coffin.

Shopping for the new generation of customers is a commodity, a commodity, a necessary evil… to be done in order to enjoy other things in life. Socializing for new generations has a whole different meaning, where social media is replacing what malls used to do for baby boomers. The other nail in the coffin is the rise of e-commerce, especially after the pandemic. Amazon has changed and transformed the way we shop. People are now so used to shopping in their pajamas. To beat or compete with Amazon, all traditional retailers are moving online, including Walmart.

So… buggy whips were a great product but became obsolete when internal combustion engines were incorporated into a contraption we now know of as cars and customer preferences changed. The same thing happens in traditional shopping malls.

Q: Are retail stores going to disappear completely? What role will technology play in all of this?

A: Shopping malls will need to embrace technology like never before, as traditional retailing will be forever changed. Technology already exists where you can try on clothes in the privacy of your home, or even virtually in a store. Tying this technology to a supply chain that will be personalized not to a demographic but to a target segment of that demographic will allow purchases and deliveries that will not only closely mirror the instant gratification of touch and feel. feel of a traditional retail store, but also customer service and personalization to the next level never possible in a traditional retail structure.

Retail stores will become “experience zones” and not inventory storage places where a customer can try out products in a real environment simulated by holographic technology. Integrating it into the next generation supply chain will ensure delivery even before you get home after your experience. (Artificial intelligence) will predict needs and recommend purchases and even control what we consider to be “spur of the moment” purchases.

Q: Once the shopping centers are destroyed, what do you think will be in their place?

A: Smart retailers, mall operators and mall owners are already experimenting with the future possibilities. Amazon reportedly held talks with Simon Property Group, the largest mall owner in the United States, to discuss converting empty retail space into fulfillment centers that pack and ship Amazon orders. To explore the options, we need to divide which malls are prime real estate and which are not. For prime real estate malls, options could include more service businesses, satellite office space for post-pandemic businesses as an alternative to working from home, incorporating high-end apartment complexes and condos with retail businesses, opening hotels. The car parks can be converted into green zones.

The future is a little darker for second-tier malls. There is a very high probability that these will end up being converted into warehouse space for e-commerce that seeks to be as close as possible to the customer.

Q: If you could look into a crystal ball, what do you see happening to retail in the future?

A: When I think of shopping centers, I have to draw a parallel with airports. Retail is discretionary, but air travel is a necessity, so we tolerate the most inhumane experience our airports give us, but change is happening here too. Singapore’s Changi International Airport has been rated the best in the world for many years in a row. The main reason is that Changi doesn’t look like an airport. In such a large airport where millions of people travel, it doesn’t seem to be overcrowded and every traveler can find their own privacy – and even waiting 12 hours is nice. Many international airports emulate the same experience with huge success and one of them is the new international airport in Mumbai, India.

Shopping malls have a greater urgency to change because unlike airports, customers cannot be forced to go if they don’t like the experience. So what should they do? Borrow a page from airports like Changi or train stations in Tokyo where shopping is not in your face but subtle. Shopping is not the main focus. Make it a destination for experiences that appeal to the new generation of customers. If they like the experience and find their calm, the shopping will happen automatically. Lots of things can be explored. For example, if you have a restaurant, don’t give the impression that you are sitting somewhere where everyone is watching you. Even in a mall, create an oasis for each customer… and while they’re waiting for a table, they may decide to step into a virtual rainforest created by North Face and end up buying a rain jacket. In my crystal ball, this is how the shopping of the future will unfold.

And while we’re at it, let’s change the name as well. Let’s not call it a “mall”… that name has a lot of baggage with it. Let’s find another name… or maybe no name at all.

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Peggy P. Gilmore