Malls turning ‘inside-out’ to accommodate change, says industry expert
Malls of the future will be dramatically different, say retail experts, with some already turning inside-out to accommodate changes brought on by the pandemic and the subsequent boom in online shopping.
“One trend for malls is to have more outdoor space. There’s an inside-out movement going on,” says Madeleine Nicholls, Managing Director, Vancouver and head of National Retail Brokerage with Colliers Canada.
“Retailers want exterior-facing entrances, not just for fresh air flow but also to accommodate curbside pick-ups.”
Curbside pick-up, which allows customers to purchase orders online and pick them up at the curb or sidewalk of a store, has also exploded in popularity in the past year, says Nicholls. Yet the mall game board is being reset in an even more critical way: Landlords and retailers are embracing technology.
The most substantial technological transformation is, of course, e-commerce. The pandemic spurred retailers that hadn’t already shifted operations online to do so, says Nicholls. More than 75 per cent of Canadians have spent $40-billion on online purchases this year (nearly 10 per cent of all retail sales), according to Online Business Canada.
Malls have a tremendous opportunity to combine the physical and digital to facilitate a better customer journey, says Nicholls.
The “physical” shopping experience will include “innovations in augmented reality and in the fields of artificial intelligence,” says Nicholls. “You’ll try on clothes virtually, or imagine, as you walk into a store, AI crunches your online activity so that an associate can start pulling together outfits for you.”
IKEA and Home Depot are already implementing virtual reality, while The Bay and Gap use smart phone-enabled tools like 3DLook and DressingRoom so customer avatars can try on clothes – and hopefully decrease the number of returns, reports Retail Wire.
Technological innovation is impacting the physical space at malls as well, says Jane Domenico, senior vice-president and national lead of retail services with Colliers Canada Real Estate Management Services.
Landlords are increasingly implementing multistore systems for curbside pick-up and single-location returns. Shops are also transforming, making mini warehouses of stockrooms, says Domenico.
Imagine, as you walk into a store, AI crunches your online activity so that an associate can start pulling together outfits for you.
— Madeleine Nicholls, Managing Director, Vancouver and head of National Retail Brokerage with Colliers Canada
Companies such as Best Buy are using back stockrooms to hold extra inventory for digital purchases, not just to replenish store shelves, according to Retail Wire. Bed Bath & Beyond says stores are fulfilling 36 per cent of online orders.
As stores become hubs of omnichannel fulfillment, Domenico predicts retailers will shift the focus of their space. “Whereas stores are usually 80-per-cent front of house and 20-per-cent storage in the back, this is changing. In the long-term, the 80-20 ratio could flip.”
The remaining, smaller frontage will focus on “experience-driven shopping paired with technology,” like electronic screens that help define the brand and drive sales, says Domenico.
Along with technological innovation, Domenico says another major transformation at many malls is their redevelopment into mixed-use communities, especially at suburban malls connected by public transit.
“It’s all about redevelopment and intensification,” says Domenico. “Traditional malls are increasingly featuring other asset classes, including offices, residential, recreation-and-entertainment complexes, hotels and everything that one needs to live, work and play.”
While Mississauga Ont.’s 123-acre Square One mall makeover marks the largest mixed-use development in Canada’s history, Metro Vancouver is currently seeing the most mall redevelopments, with about a dozen projects on the go, says Domenico.
Colliers-managed Lansdowne Centre is Metro Vancouver’s largest mall redevelopment. Domenico says the mall will make way for an open-air high street brimming with local and international shops, restaurants, bars and services.
Its sprawling parking lot “will transform into a complete community” with 22 residential towers, two office towers, a community centre, school, daycare, seniors’ home and seven-acre park.
Craig Patterson, who authored the Retail Council of Canada’s Canadian Shopping Centre Study, released in 2020, says, “The move toward creating mixed-use communities is happening in most urban centres across the country, particularly in markets where land prices have risen over recent years, promising to fundamentally change the way mall landlords look at and develop their properties.”
Adding residential rental spaces to the shopping centre is a double win, says Domenico, creating a consistent income stream for landlords while adding people on site.
Patterson agrees. “By carefully curating compelling and productive retailer mixes and building more residential-and-office-complex options on their properties, shopping-centre owners in Canada are setting the groundwork for a renaissance.”
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