RETAIL: As Local Shopping Malls Develop, Experiential Retail Trends
SAN DIEGO – Fifteen years ago, an immersive experience like Minneapolis-based The Game Show Studio wouldn’t be found at a traditional shopping mall. The studio, which opened on Feb. 12 at Simon Fashion Valley in collaboration with Red Door Escape Rooms, brings large groups into classic game shows with parodies of “Family Feud,” “The Price is Right” and “Wheel of Fortune” led by lively hosts.
Today, The Game Show Studio’s opening represents a new staple in mall design: experiential retail.
While shopping malls began as a sort of “manufactured Main Street,” according to RDC Architecture Firm Associate Principal Derek Heeb, today they are increasingly designed to serve as community hubs.
“When regional malls were first proposed in the early post-war period, they were envisioned as a way to bring public, civic and urban amenities to the suburbs,” Heeb said. “And in some ways, the success of retail commercialism eclipsed that, and it became just about buying things. But a community needs all uses, not just the purchasing and dining that are traditional offerings at the mall.”
This shift has manifested itself in San Diego’s retail market, influencing the design of prominent shopping centers like University Town Center and Simon Fashion Valley.
The Evolution of What Defines ‘Great Retail’
According to Unibail-Rodamco-Westfield Executive Vice President of Leasing Colin Shaughnessy, there are five pillars of “great retail:” fashion, food, entertainment, luxury and health and wellness. Each pillar has adapted in recent years to meet consumer prioritization of experiences over transactions.
Traditionally, mall design was driven by “anchor” stores, usually large department stores. Since many of those anchor stores no longer perform the same role for consumers, Heeb said that malls have an “opportunity to reimagine their uses.”
“[Malls] will look a lot more like micro-cities,” Shaughnessy said. “Think less big department stores and more mixed-use – where we want to bring in residential towers, offices, maybe a hotel.”
One reimagining is the impending construction of 850 multifamily high-end apartment rentals at Simon Fashion Valley, accompanied by the closing of JCPenney and the addition of 100,000 square feet of new retail, restaurants and green spaces.
According to Simon Fashion Valley Director of Marketing Leila Ginsburg, a central ambition of the mall is to become a community gathering place.
“The more people are here…they start to build brand loyalty. They’re walking by the same streets, checking out new places and getting to know the people who work here,” Ginsburg said. “I do the same at some of the stores here, where I like to shop. It’s more of a community experience than I realized it would be. I thought working at a shopping mall would be about the transaction, but it’s not. It’s about the experience.”
Prioritizing Interactive Entertainment
Including activities that compel and engage customers is a key to fulfilling the entertainment pillar of retail, according to Shaughnessy. Movie theaters used to check that box. Now, shopping centers are introducing recreation like escape rooms, virtual reality experiences and golf simulators.
The Game Show Studio Co-founder Julian Wagner hopes that his company fills a gap in the experiential retail market.
“We asked, ‘What can we bring to that space that’s going to be moving? That’s going to give people an opportunity to have fun and do things that they’ve seen on TV?’” Wagner said. “And it’s bringing those game shows to life.”
By adding more dynamic entertainment, malls intend to attract more customers for a longer time, boosting sales and traffic. NewMark Merrill Partner John Hickman says that adding experiential retail has had a positive economic effect throughout the company’s retail portfolio.
“Sales opportunities for adjoining tenants increase with the frequent trips and traffic that restaurants and entertainment provide,” Hickman said.
Why Consumers are Looking for Experiences
During the COVID-19 pandemic, the in-person retail market suffered as consumers depended on online shopping. While malls still compete with the convenience of e-commerce, the pandemic has also boosted the rise of experiential retail, according to Wagner.
“The COVID-19 pandemic happened, and we were all in our homes. We couldn’t have that human interaction,” Wagner said. “Coming out of the pandemic, I think people value time with their friends, families and colleagues a lot more. Our goal is to have people put their phones down. We want to drive those interactive experiences.”
Especially when appealing to younger consumers, Shaughnessy said that experiential retail is growing in part because of its compatibility with social media.
“Everyone’s life plays out on their phone. You’re sharing with the world where you are, what you’re eating, what you’re experiencing,” Shaughnessy said. “I think the next generation is one that wants to go out and do things. What people spend their money on today is different. The younger generation is much more socially minded, sustainable and conscious. They’re not going out and buying fast fashion. They might be spending more money on experiences or food than people did 10 years ago – most people are. That’s what the data tells us.”
Hickman predicts that creating mixed-use community hubs will be at the center of mall development in the next several years.
“We’re shifting from just providing a service to becoming a destination,” Hickman said. “We’re becoming an active part of a community where people can be entertained, where they can learn and where they can meet other people.”
By Madison Geering for the SDBJ
Original article posted in the San Diego Business Journal: https://www.sdbj.com/retail/malls-will-look-a-lot-more-like-micro-cities/