From Mall Madness to Sadness: Why Shopping Centers May Soon Be Obsolete

Why shopping centers are becoming obsolete

Experts have long predicted the demise of shopping centers, but the COVID-19 pandemic may have put the final nail in the coffin. Some mall retailers are drowning in debt, while many others were forced to close permanently due to the pandemic. According to the National League of Cities, more than 12,000 retail stores permanently closed in 2020. By April 2021, the number of open small businesses was down by more than 33 percent from January 2020. 

Some retailers have bounced back, but it isn’t hard to see that the traditional shopping model isn’t what it was during the heyday of shopping malls in the 1980s, ’90s and early 2000s. Even more ominous, according to Capital One Shopping Research, up to 87 percent of large shopping malls are predicted to close over the next decade. 

Here are a few reasons why shopping centers are becoming obsolete.

1. Online purchases are easier. 

Online shopping is easier than visiting a store, especially if you’re searching for an item that’s difficult to find. Even if you can’t determine the exact name and brand of the product you’re looking for, it’s typically straightforward to find similar products through online stores. This often makes online purchases more cost-effective and easier than traditional in-store purchases. Add in the fact that you’re not spending money on gas or stuck navigating large crowds, and online purchases become even more appealing.

“I think shopping centers are closing mainly because it’s easier to shop online,” noted Brandon Hartman, founder of e-commerce company BeyWarehouse. “While malls have everything from makeup to electronics, walking long distances, dressing up, traveling and navigating large spaces feels like too much work for many people. I know from experience that online shopping is faster and often cheaper compared to buying in a mall.” 

2. Online shopping has become more social.

When malls reached their peak popularity, it wasn’t just about buying the items you needed — there was also a social element. Friends and families would meet, visit the food court and see a movie together. However, things have changed. “Younger generations who used to hang out at malls now connect through social media and online games, so malls aren’t as important for socializing anymore,” Hartman explained. 

Today, social media platforms have become central to digital socializing, and social selling has emerged as a popular online shopping experience. Facebook, Instagram, X (formerly Twitter), TikTok and Pinterest all have e-commerce and direct sales elements. Users can head to their favorite social platform, notice a product they like on their feeds and purchase it with a few clicks. Products may go viral as their online popularity spreads, and online reviews guide consumers toward purchases, adding to the social aspects of online shopping. 

3. Online stores provide unique customer service.

Shoppers may prefer an online store over a brick-and-mortar retailer because of fast, efficient customer service. AI chatbots can provide immediate assistance with locating items and answering questions, and many e-commerce stores have perfected returns, exchanges, refunds and more. 

Additionally, many online businesses have handy FAQ pages, customer knowledge systems and extensive product and training resources, allowing customers and prospects to dive deep into research. Today’s online consumers can avoid phone calls, long waits and face-to-face encounters and have their questions answered and problems solved quickly. 

4. Brick-and-mortar stores are more expensive to maintain than online stores.

When it comes to operating brick-and-mortar versus e-commerce stores, business owners face much higher costs trying to run, staff and maintain a physical establishment. Simply put, the high costs of operating physical retail stores are driving brands out of malls and into e-commerce spaces. 

“High operating costs for brick-and-mortar stores, coupled with decreased foot traffic, have made it harder for malls to remain profitable,” explained Kaveh Vahdat, founder and CEO of RiseOpps, a fractional CMO agency. “Retailers have been facing increasing pressure from [digital-only] brands that don’t have the overhead of physical locations, making it difficult to compete on price and convenience.”

How brick-and-mortar stores can embrace e-commerce

Brick-and-mortar stores that successfully survived the shift to e-commerce were able to adapt. Instead of resisting this change, these companies integrated their online and offline stores, creating a seamless experience for shoppers. Here are some effective strategies to embrace e-commerce in your business.

Build an e-commerce brand.

You should develop an e-commerce brand that complements your existing brand and sets you apart from competitors in the online space. When you set up an online store, ensure your company’s message is consistent in your physical stores and on your e-commerce website. 

While you should align your product offerings across digital and physical locations, consider which items might attract customers more as online-only or in-store exclusives. Continually study the trends in consumers’ online purchasing habits and be ready to adjust accordingly.

Offer multiple fulfillment options.

One advantage of having both brick-and-mortar and e-commerce aspects to your business is that you can provide multiple fulfillment options. Hartman says such omnichannel strategies can help your business stay relevant. “For example, [businesses] can let customers order online and pick up in-store or work with delivery services for same-day delivery,” Hartman suggested. 

You can also offer curbside pickup as an added convenience. This will fulfill an online order while reminding customers that you have a physical location. 

Use one system for everything.

Using one comprehensive software suite to manage all business components is a great way to streamline operations as you expand into online sales. 

Our review of Oracle NetSuite CRM describes an excellent example of such a system. In addition to its traditional CRM features, it includes enterprise resource planning tools, a CPQ (configure, price, quote) module and a web portal you can personalize for customers. You’ll have everything you need to manage traditional sales and e-commerce.

Get on social media.

Social media is an excellent way to build customer relationships and expose consumers to your products and services. Consider establishing or improving your social media presence to reach your target audience and sell to them directly. Start by identifying which platforms your target audience uses. For example, if your ideal customers are on TikTok, focus on your TikTok presence. If you have a more professional customer base, a LinkedIn focus may make sense. 

Once you determine the best platforms for your business, start connecting with potential customers and highlight your online and offline offerings. Don’t be discouraged if you don’t see immediate results — social media is a long game, and it takes time to build an audience and create a social media marketing strategy. 

How to keep your mall store thriving

While malls likely won’t rebound to their prior status, physical retail stores aren’t going away. Many consumers enjoy the benefits of both online and in-person shopping. Consider the following best practices to help your mall-based business thrive: 

• Create an experience for your customers: The best way to keep customers visiting your physical store is by providing an experience they can’t find online. “Stores can offer special events or personalized services to give people reasons to visit that online shopping can’t provide,” Hartman advised. For example, consider hosting community events, offering customers drinks and snacks, and featuring experts who can provide custom shopping advice. Look for ways to make coming to your store a memorable experience.
• Implement BOPIS: “Buy online, pick up in store” (BOPIS) offers the convenience of online shopping while allowing customers to receive their items the same day at your business’s brick-and-mortar store. When they stop by, customers may be incentivized to spend more once they see your other offerings.
• Provide exceptional service: Deliver excellent customer service by ensuring your store is adequately staffed, especially during busy seasons. Invest in employee training, so your in-person team can resolve customer issues promptly, make upselling and cross-selling recommendations, and provide an overall positive experience. Focus on developing client relationships to help ensure they value their interactions with you and your team and prefer a personal touch to the impersonal process of buying something online.
• Offer in-store discounts: Offer specific in-store discounts customers can’t use online. Provide perks if clients make a specific number of store visits. If you host a promotional event or discount window, be sure to track sales data to see if your in-store traffic increases before, during and after.

An omnichannel experience can help your mall store succeed

E-commerce has permanently changed the way consumers shop, and shopping malls are not what they once were. But there is still hope for mall-based and brick-and-mortar retailers. By merging the benefits of online and in-store shopping, you can create a unique experience your customers won’t forget.