S.H.O.P.: What’s in store for the Store?

Welcome to S.H.O.P., our new series examining the changes in retail and commerce. Over the next four weeks, we’ll be exploring some of the key topics around the past, present, and future of retail, looking at the technologies and behaviors that have enabled – and transformed – shopping as we know it.

This week, we’re putting the S in S.H.O.P. and considering the role of the Store. On the podcast, Dee Reddy talks to writer Deborah Fallows about seeing the retail landscape of small-town America from the sky; Director of City Design at the City of Melbourne Prof Rob Adams about urban regeneration for the retail space and the 20-minute city; and Intercom’s SVP of Product Paul Adams about the development and future of ecommerce. Listen below, and read on for our companion post.

Retail is constantly changing: from stalls to malls, the way we shop is always evolving in tandem with cultural, economic, and technological shifts. So it’s no surprise that we’re currently witnessing the fastest transformation in retail in history, as more and more businesses are rethinking the traditional ways of doing things and fully harnessing the potential of ecommerce.

Malls have defined the retail experience for decades. Once upon a time, they represented not just the future of shopping, but a fundamental reimagining of our shared urban space.

A bygone golden age

The writer Deborah Fallows, who has extensively chronicled America’s transforming towns and heartland, describes the once-glamorous experience of going to the Southdale Center, America’s first and oldest enclosed mall, when she was growing up:

I remember it distinctly, going with my mom in a car to the mall to look around and shop. It was this larger than life, brand new experience. You felt like you were in Hollywood or something, because it was completely different from life in the suburbs, or even in the city where the focal point was, say, one department store. To be in this sprawling place where it was like a fairy land. It was like Disneyland. And that was all new.

That halcyon vision feels very distant now. Changing trends in retail have seen malls across the US shuttered and fall into disrepair.

Contemporary American photographer Seph Lawless is known for his haunting images of abandoned places. In his Black Friday: Abandoned Malls series, he traveled around the US to document “dead malls”, the name given to malls that have been vacated and neglected.

“Looking at these photographs today, they feel like a particularly fitting metaphor for the state of the store in 2020”

Through Lawless’s lens, we see empty retail spaces, completely devoid of people; husks of stores with cracked windows, frozen escalators – and even the occasional glimpse of nature, in the form of sprouting weeds breaking through the civilized facade.

Looking at these photographs today, they feel like a particularly fitting metaphor for the state of the store in 2020. Firstly, they make tangible and visible a process that has already been happening invisibly for years; that is, the decline of “old-school” retail spaces. And secondly, while they may initially seem like a grim sign of the times, they also suggest that – much like those plants peeping through – something new is growing to take its place.

The rise and fall of the mall

The COVID-19 pandemic is certainly accelerating the closure of malls: in June of this year, retail consultant Jan Kniffen told CNBC that he expects that a third of America’s malls will close permanently by 2021, nine years ahead of his initial predictions. But while the global COVID-19 pandemic may have expedited the inevitable, it was still the inevitable. Even before these Unprecedented Times™, we’ve already been seeing a well-documented and consistent shift away from malls as we know them.

Why? To understand the decline of the mall, it’s worth briefly considering why – and how – the mall came to be in the first place. The concept of the modern mall can be traced back to Victor Gruen, the Austrian-born architect who quite literally revolutionized the infrastructure of retail as we know it. Gruen didn’t just propose to collect numerous stores under one roof – in his initial imagining, the mall went beyond simply retail to also incorporate food, entertainment, and even green space, all in the same center.

“The mall was optimized for the widespread adoption of the automobile, and continued to evolve with it”

The Southdale Center, which Deb Fallows described visiting as a child, was one of Gruen’s first malls, and became a destination in its own right. But as Fallows’ anecdote suggests, it was a destination to be reached by car – Gruen’s vision of the mall was inextricably linked with the rise of another transformative technology: the automobile. In many ways, the mall was optimized for the widespread adoption of this technological advancement, and continued to evolve with it, eventually becoming a multipurpose site of leisure that was increasingly only accessible by car.

This is where Gruen’s idea and its real-world implementation start to diverge. Malls, being the sprawling behemoths that they are, often sprung up in suburban areas, and most required a car to get to them – two factors that have contributed to their decline in recent years.

All of this is to say that many malls have “died” because they’re no longer fit for purpose and simply don’t have the footfall to remain economically viable. And while part of that decline in footfall can be traced back to these location and accessibility issues, there is, of course, another major reason: the rise of ecommerce.

The shift to ecommerce

We know that ecommerce has been steadily upending the way companies do business for years now, but once again, the current global situation is accelerating the inevitable. 

Research completed as early as 2017 suggested that by 2040, 95% of all purchases will be via ecommerce. But with the more rapid shift to online shopping that 2020 has brought, that time could come even sooner: according to a recent report by IBM, the pandemic has expedited the shift from physical stores to digital shopping by five years.

“We’ve all suddenly realized that we don’t have to, in fact, live in a particular location to access the things we want to get”

Over the last decade in particular, ecommerce has reshaped consumer behavior around stores and shopping. Instead of having to plan and travel in order to make a purchase, the omnipresence of ecommerce means that purchasing can now happen at any time, from anywhere. This means that instead of needing to go to a physical store or mall, 71% of consumers now make purchases in “micro-moments” while they’re doing something else – and staying at home.

As Prof Rob Adams, architect, urban planner, and Director of City Design at the City of Melbourne, says, “I think the biggest thing that has changed is the way we’ve all suddenly realized that we don’t have to, in fact, live in a particular location to access the things we want to get.”

So when you divorce the physical store from the act of buying, what’s left?

Setting store by experiences

A funny thing about those dying malls: not all of them are dying. In fact, while there is likely to be a significant reduction in the number of malls across America, the ones that are successful tend to be really successful. 

So what’s the differentiating factor between the malls and stores that are thriving and the ones that are getting snuffed out? The successful ones are embracing the shift to ecommerce, and repurposing their physical spaces to complement that. 

Instead of the once-off retail transactions of old, businesses are pivoting to an omnichannel approach in which they can use their stores to create experiences and grow longer-term customer relationships. This is especially crucial for younger consumers, who “place a high priority on experiences, preferring to to spend their money on experiences rather than on material things,” Forbes suggests.

“Many brands and stores have realized the potential of turning their “real-life” stores into advertisements for a bigger online market”

Aventura Mall in Miami, for example – which the New York Times calls “one of the most successful [malls] in the country” – added a nine-story slide to its premises in 2017; these are the kind of embodied experiences it’s difficult (though not impossible) to have online. 

In many ways this harks back to what the original mall – or at least Gruen’s conception of it – was meant to be: not just a beacon of consumerism, but a place of community, where locals could gather, socialize, and enjoy themselves through personalized social experiences and tailored engagement. (Think: the sales assistant who gets to know you and makes bespoke recommendations, rather than simply pointing you to the appropriate shelf.)

Many brands and stores have realized the potential of turning their “real-life” stores into advertisements for a bigger online market. Apple Stores are glossy, beautifully designed physical extensions of the glossy, beautifully designed products within, where you can get specialized help and attention from their certified experts. Many athleisure apparel brands use their stores to host group yoga sessions, pushing the racks of clothes aside to make space for the inner peace the brand wants to help its customers find long-term.

Changing customer relationships

These kinds of in-store experiences don’t just create lasting customer relationships – they also help businesses to bridge the gap between “real world store” and “online store,” ultimately creating a stronger brand identity and allowing them to offer a more unified and consistent retail experience at every touchpoint.

But this return to what makes the real-world store special can also tell us a lot about what’s missing from many ecommerce experiences: the personal touch. In fact, evidence suggests that’s what consumers are looking for online, too.

Paul Adams, our SVP of Product, agrees. “No matter how good technology gets, there’s no replacement for face-to-face interaction,” he says. “Our species has evolved over thousands of years. And suddenly in the last 10 or 20 years, the internet is not going to radically change the deep structures and how our brains operate and work.”

In our next episode, we’ll be looking at this in more detail and considering some of the new shopping Habits and behaviors that consumers have adopted over the last few years which have accelerated in recent months.

Original artwork for this series was created by self-taught artist/illustrator Elijah Anderson. You can find out more about his work here.