The Mall is Dead: Who Killed It, Why It's Not Coming Back and What's Next for Retail

Retail

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The Mall is Dead, the second SlideShare in a series exploring the future of retail from North American Properties - Atlanta (NAP), examines the decline of malls and how the hottest retail and restaurant concepts are increasingly choosing walkable, urban mixed-use locations instead of malls.

The first SlideShare in The Future of Retail series, “The Secret Sauce: Why Retail and Mixed-Use Projects Need Local Chefs,” was launched at the International Council of Shopping Centers (ICSC) RECon Convention in Las Vegas last month.
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  • THEMALLIS DEADWho Killed It, Why It’s Not Coming 
 Back and What’s Next for Retail
  • Lookslikesomethingfrom
 TheWalkingDead,right?
  • Themaindifference
 betweenthismalland
 TheWalkingDead...
  • The mall
 isn’t coming 
 back to life.
  • Let’s see what we learn 
 from examining the body.
  • Let’s see what we learn 
 from examining the body.
  • First, we’ll check the 
 vital signs, just to be sure 
 the mall is really dead.
  • 400+ MALLS Source: Yahoo! Finance were repurposed or closed 
 outright in last decade
  • Source: Yahoo! Finance No new enclosed malls have opened since 2006
  • Green Street Advisors, June 2012 10%of the 1,000 malls in the U.S. will FAILin next 10 years
  • ARE MALLS OVER? AMERICA’S ABANDONED MALLS ARE PLACES OF NIGHTMARES -BEAUTIFUL DECAY NORTHTOWNE SQUARE MALL FIRST TOLEDO MALL TO JOIN “DEAD MALLS OF AMERICA” -EXAMINER.COM
  • Yep, things are NOTLOOKINGGOOD for shopping malls.
  • (But it wasn’t always this way...) Yep, things are NOTLOOKINGGOOD for shopping malls.
  • Sales / occupancy rates at 
 malls are stagnant; only fortress 
 malls continue to thrive 2009 More than 60 new malls larger than 400,000 square feet open in U.S. 80s–90s First enclosed regional mall, Southdale Center, opens in Edina, MN 1956 First megamall opens 
 in Alberta, Canada with 
 over 800 stores 1981 Mall of America opens 
 with more than 35 million visitors in the first year 1992
  • FORTRESSMALLS are still succeeding due to population growth, a desirable tenant mix, sophistication of nearby residents, 
 and high-end amenities offered. Some
  • In 2012, these two fortress malls surpassed $1 billion in sales! South Coast Plaza Costa Mesa, CA 2.8 million sq. ft. Northpark Center Dallas, TX 2 million sq. ft.
  • So, who is to blame 
 for killing the traditional shopping mall?
  • GEN Y
  • Approximately 80MILLION18-to35-year-oldsliving intheUnitedStates
  • That’s more than 25%of U.S. population
  • In 2013, millennials spent about $600 BILLION
  • In 2013, millennials spent about By 2020, 
 millennial 
 retail spending 
 could hit $1.4 TRILLION $600 BILLION
  • What was Gen Y’s
 MOTIVE?
  • Malls weren’t meeting their 
 LISTOFDEMANDS
  • Walkability
  • UrbanFeelWalkability
  • UrbanFeel Local
 Restaurants Walkability
  • Unique
 Experiences UrbanFeelWalkability Local
 Restaurants
  • Source: ArchPoint Consulting of millennials say
 customer service is
 very important 48%
  • of millennials demand 
 an integrated, seamless shopping experience, regardless of channel.68% Source: Accenture
  • Online shopping offers a wider selection, better prices and 
 access to more information.
  • Naturally, malls are 
 struggling to keep up.
  • Amazon’s five-year 
 average ROI is 17%whereas traditional 
 retailers average 6.5%
  • During the 2013 holiday shopping 
 season, U.S. retailers received roughly HALFof the holiday foot traffic they 
 experienced three years prior.
  • In 2014, it is forecasted that 
 online sales will account for 9%of total U.S. retail sales.
  • This will likely increase to 11%of total U.S. retail sales by 2018.
  • Source: ArchPoint Consulting 80%of millennials want 
 brands to entertain and 
 delight them during their 
 shopping experience
  • Don’t write off these new, 
 higher expectations as MILLENNIALS BEING MILLENNIALS*
  • * Millennials are stereotypically assumed to be spoiled, demanding, etc. MILLENNIALS BEING MILLENNIALS* Don’t write off these new, 
 higher expectations as
  • This evolution within the retail industry extends beyond adults ages 18 to 35. There is a NEWCLASSOF CONSUMERS
  • They expect 
 a new kind 
 of shopping experience 
 that has… Walkability Experiences Connectivity
  • and they are going to get it.
  • The new-class consumer 
 provides instant feedback. 
 She posts pictures of what 
 she likes on Instagram and 
 complains on Twitter about 
 bad customer service. She 
 spends money in places 
 where she enjoys being. 
 The smart retailers are 
 taking this feedback and 
 evolving their visions and 
 merchandising strategies. ! Liz Gillespie VP Marketing North American Properties
  • Top retailers GETIT
  • We've had a real 
 estate strategy of not 
 bundling or taking 
 weaker malls, and 
 we go to [lifestyle] 
 centers… which allow 
 us to really drive our
 business through 
 community. Christine M. Day Lululemon Athletica Former President and CEO
  • We rarely do malls. Our preference is to be on the street. In a suburban market, we want to be in a village atmosphere that has pedestrian as well as vehicular traffic. ! Wade McDevitt Representative for Anthropologie
  • And they aren’t alone. 
 Countless restaurants and 
 retailers are choosing this…
  • Alpharetta, GA
  • Instead of this…
  • Image of rundown mall
  • Some brands 
 are leaving 
 their current 
 Alpharetta 
 locations and relocating 
 to Avalon.
  • Others are completely 
 new to the 
 market and 
 chose Avalon 
 for their 
 first location. L O U G R E Y
  • And they aren’t alone. 
 Research shows that top brands and 
 up-and-comers, alike, are moving AWAYFROMMALLS
  • 2 STORES OPENED THIS YEAR 
 4 MORE OPENING The Woodlands in The Woodlands, Texas 
 (Lifestyle Center / March 2014) Shops Around Lenox in Atlanta, Georgia
 (Open-Air Center / May 2014) University Park Village in Fort Worth, Texas 
 (Lifestyle Center / Summer 2014) The Summit in Birmingham, Alabama 
 (Lifestyle Center / Fall 2014) Avalon in Alpharetta, Georgia 
 (Mixed-Use / Fall 2014) Classen Curve in Oklahoma City, Oklahoma
 (Mixed-Use / Fall 2014)
  • 3 STORES ANNOUNCED 
 TO OPEN THIS YEAR Belvedere Street in Tiburon, California
 (Standalone / June 2014) North Hills in Raleigh, North Carolina
 (Lifestyle Center / June 2014) Avalon in Alpharetta, Georgia 
 (Mixed-Use / Fall 2014) Planning to open another 5-10 before the year’s end; haven’t announced where or when
  • 78 FREESTANDING STORES The McLaughlins seek buildings with 
 character on street locations, occasionally 
 open in lifestyle centers, and shun malls. “Frankly, the mall atmosphere diminishes the brand.” – Kevin McLaughlin
  • Top developers and operators GETIT
  • THE GROVE’S 
 AWARD-WINNING CONCIERGE SERVICES Personal shopping Dining reservations Package check Store, area and 
 tourism information Foreign language 
 assistance Events and activity 
 assistance The Grove Gift Cards 
 by American Express
  • ONE OF THE BIGGEST TOURIST ATTRACTIONS 
 IN CALIFORNIA WITH 18+ MILLION VISITORS PER YEAR THAT’S MORE THAN DISNEYLAND!
  • THE AMERICANA 
 AT BRAND’S CONCIERGE SERVICES Bellman service, 
 package assistance, package check Restaurant and travel reservations Assistance with 
 concert/event tickets Postage, mail, shipping and delivery assistance Gift giving and 
 shopping assistance Gift cards by 
 American Express
  • THE AMERICANA 
 AT BRAND HAS 16+ MILLION VISITORS PER YEAR GENERATES ANNUAL SALES OF $1,100 PER 
 SQUARE FOOT OUT 
 OF ITS 70 STORES
  • And…
  • The Southeast’s preeminent 
 experiential development – a place where resort-inspired hospitality, specialty retail, entertainment, restaurants, residences, offices, hotels and public spaces come together to create a truly unique experience. 
  • 60+leases signed with Avalon in the past year
  • 97%leased when Avalon was still 6 months away from grand opening
  • Consumers are ENGAGED
  • Their feedback is not only plentiful, but positive as well.
  • RETWEETS 624 MENTIONS 3,375 REACH 17.8M
  • PAGEIMPRESSIONS 1.2M POSTIMPRESSIONS 678K ENGAGEMENT 40K
  • MEDIABUZZ
  • $600M MIXED-USE DEVELOPMENT IN ATLANTA SUBURB GETS GREEN LIGHT —COMMERCIAL PROPERTY EXECUTIVE ALPHARETTA’S AVALON PROJECT SNAGS 1ST TENANT —ATLANTA BUSINESS CHRONICLE One of Atlanta’s Hottest Restaurant Groups Signs 
 at Avalon
 — North American Properties “ALPHARETTA’S AVALON IS DRAWING IN-TOWN RESTAURANT, RETAILERS” —11ALIVE “ALPHARETTA LIVE-WORK-PLAY DEVELOPMENT TAKES NEXT STEP” —WSB–TV “AVALON GROWTH APPROACHING 
 TO BOOST ALPHARETTA” —GEORGIA NEWS
  • The mall may be dead…
  • but retail is alive and well.
  • Experience it at
  • Opening October 2014
  • This SlideShare brought to you by
  • Feel free to share it with your 
 friends or leave a comment, and let 
 us know what you think! DIDYOUENJOYTHIS PRESENTATION?
  • Shutterstock / 35694751 AMC, The Walking Dead (Fair Use Doctrine) Shutterstock / 148370285 Wikimedia Commons Wikimedia Commons Flickr / “South Coast Plaza, Costa Mesa, 1980s" 
 by Orange County Archives Flickr / "(Formerly) My Drive Home" by SteevzStuff
 Flickr / "Northpark Center" by Terrance Gilbert Shutterstock / 160438778 Atlantic Station / North American Properties
 Flickr / “The Grove in Los Angeles” by Eric E. Johnson
 Angie Mosier Shutterstock / 3666347 Atlantic Station / North American Properties
 Shutterstock / 119152066 Lululemon / Media Assets Flickr / “Anthropologie" by Dave Pinter Wikimedia Commons Kendra Scott Blog Flickr / “Vineyard Vines Hingham in-Store" by Jeff Cutler Flickr / "The Grove (Los Angeles)" by Prayitno Photography
 Flickr / "LA Farmers Market" by Prayitno Photography Flickr / "The Americana at Brand" by Chris Yarzab Shutterstock / 94124290 CREDITSSlide 2, 3, 4 Slide 5, 6 Slide 8 Slide 10 Slide 11 Slide 16 
 Slide 19
 Slide 22, 23 Slide 26-29
 
 Slide 30, 31 Slide 36
 Slide 38 Slide 40 Slide 41 Slide 45 Slide 48 Slide 49 Slide 52, 53
 Slide 54, 55 Slide 65
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