Welcome to the the Ivey HBA Retail Marketing Management blog. Retail marketing is an exciting, dynamic, important, and very visible aspect of the overall field of marketing. Throughout the year, students will be posting comments regarding contemporary retailing issues. Although this is intended to be used by Bus 4411 students, industry marketing professionals are also invited to join in if they like.
Tuesday, March 24, 2009
The death of the shopping mall as we know it....
The concept of a shopping mall is a tried and tested formula. Similar to a large retail store, the principal idea is to get the customers in for something specific, and through different practices, create impulse buys. Like a store features aisles, a mall features high and slim halls, designed to increase browsing and decrease exits. Often times I have found myself lost in a mall that I have even been to before, a product of a purposefully convoluted design. The result is usually a visit to many stores I had no interest in visiting in the first place, and unfortunately more often than not, a purchase of something completely useless. This is the retail value proposition of a mall to its stores. Unlike a mall would have you believe however, it has very little control over the quantity or quality of its customers. And therein lays the problem that shopping malls are currently facing.
The demise of the shopping mall has been a steady one for some time. Its very retail value proposition keeps people in the mall for too long during peak times, turning would be customers off from the overcrowding. The rise of online shopping has given those shoppers the option to shop in solitude from their own home. The recent economic recession has not helped matters, dramatically hastening the traditional shopping malls fall from grace. Historically, it has been the large retail and department stores which have served as “anchors”, drawing people to the mall. Many of these long time anchors are going bankrupt or closing locations.
A recent Boston Globe article pointed to The Independence mall, which is in financial trouble as a victim of the bankruptcies of Steve & Barry’s and Linens N’ Things. For smaller retailers in malls like that, the loss of those spill-over customers, as well as the effects of the recession on their own business, has lead to their closure as well. What is even more alarming is the fact that no new shopping malls have been built in the United States since 2006.
These days, it is not uncommon to see numerous empty storefronts at shopping malls across North America. I saw four of them myself in a brief visit to Masonville mall recently. A further issue is that retailers during recessions are at risk of being marginalized by the migration of many customers to either premium products or cost efficient ones. Traditional Shopping malls are facing the same sort of issues, and same risks of possible bankruptcy. As such, I think that outlet malls and high end, designer-brand-laden, smaller shopping centers are the future of malls, given their placement on opposite ends of the retail value chain. The eventual elimination of some of the traditional shopping malls is devastating for high-schoolers cutting class, but is inevitable given the economic and retail climate that exists today.