How malls can thrive in the new world of consumer behavior

Change has been the name of the game for retailers. This isn't simply due to the Covid-19 pandemic, or any other one single factor in the past couple of years. Consumers are responding to an uncertain economy, shifting cultural trends, advances in technology, and even logistical hurdles such as supply chain constraints and rising gas prices.

All of these factors combined are creating a new world of consumer behavior in every dimension possible-in how they work, travel, dine. Most importantly to shopping centers, this also includes how they prefer to shop. To thrive in the new world of consumer behavior, malls must offer unique dining, retail, entertainment, and other experiences that shoppers cannot find just anywhere — or online.

Unique experiences expand reach

As the retail landscape changes in response to consumer behavior, shopping centers are becoming experience centers. Stores are offering interactive experiences and entertainment that are hard to find elsewhere, from art installations to mini-theme park experiences.

While experiences can and should be sprinkled throughout the mall — through novel tenants like escape rooms, features like interactive fountains, and integrations into more traditional retail — anchors have the potential to draw the furthest by maximizing the larger space with entertainment and more. Shared communal spaces made to be inviting with landscaping, seating, art, and more can also be attractive to customers. Ideally, a shopping center can provide both exciting tenants and an enjoyable setting.

Seismique, an interactive art exhibit that opened in Houston in December 2020, is a great example of the power of experiential anchors. The experience, which features 40,000 square feet of Instagram-friendly art installations, replaced a former big box retailer in a struggling center. As soon as it opened, the center saw a boost of visitors. In fact, the trade area for Seismique extends far beyond the trade area for the rest of the mall — with Seismique visitors traveling a median distance of 28 miles to get to the attraction.

Eatertainment keeps customers on-site longer

Beyond the standard mall food and beverage options, eatertainment combines the trends toward experiences and appealing to the evolving tastes of consumers. While casual dining chains have struggled in recent years, eatertainment has thrived thanks to more upscale menus and a focus on the experience. They have appeal to a wide swath of consumers as well — from teens to 20-and-30 somethings, to families looking for a place to please everyone. Customers also tend to stay longer and spend more money.

Punch Bowl Social is a Denver-based chain that includes large spaces around 25,000 square feet. They feature large dining rooms as well as arcade games, bowling, karaoke, bocce ball, virtual reality and more. Punch Bowl Social opened their Sacramento location in the Downtown Commons mall in 2017 to much fanfare.

While the chain faced significant challenges during the pandemic, it has bounced back and reports business similar to 2019 levels. A majority of all visits (56%) to Punch Bowl Social come on Friday, Saturday or Sunday, indicating it's an especially popular destination for weekend entertainment.

Mixed-use developments continue to trend

While mixed-use developments have been a trend for a couple of decades now, they are uniquely positioned to address some of the consumer behavior changes fueled by the pandemic. Many remote workers are looking to live in places with greater access to diverse restaurants, coffee shops, and stores. Multi-family residential buildings attached to shopping centers are well-poised to serve this need.

Multi-use developments are planned to create a community feel, with open park-like spaces creating an experience for residents and visitors alike to linger and enjoy.

Santana Row in West San Jose, California was envisioned as a 42-acre "village within a city" featuring mixed residential, office spaces, plentiful restaurants and a vibrant shopping district. While the mixed-use development has remained successful over the years, the format made it well-positioned to respond to consumer behavior changes.

The outdoor, town square feel to the center resonates with consumers wanting to avoid enclosed spaces. With its mix of residential, office and retail space, it saw an interesting shift in visitation pattern by time of day. In 2019, the peak visitation time was 7pm, aligning with after-work and dinner visits. However, by 2022 the peak visitation time is now more balanced throughout the day, and peaks at 4 p.m.

"Medtail" bring additional foot traffic

Having medical offices and medtail in malls offers several opportunities for both the medical industry and mall owners. Medical offices can bring in additional foot traffic to malls, potentially leading to increased revenue for the mall owners and other retailers. People visiting the medical offices may also spend time shopping or dining in the mall while waiting for their appointments or after their appointments are finished. Additionally, malls can be attractive to healthcare providers due to the infrastructure in place such as parking lots, security, and utilities.

Originally opened in 1965, the One Hundred Oaks Mall in Nashville, TN struggled to keep up and eventually closed in the 1980s. It eventually reopened as an outlet mall, before the Vanderbilt University Medical Center leased more than half of the mall in 2007. The healthcare emphasis of the mall has given the mall more resilience, especially during the pandemic and with an aging population. Visitors travel a median distance of 13.6 miles to get to the medical center, compared to 11.5 miles for the rest of the mall.

The prominence of the medical anchor affects the visitation patterns to the mall as well. While most malls see their strongest foot traffic on the weekends, One Hundred Oaks gets the highest visitation Monday through Friday when the medical offices are taking appointments, and lower visitors on weekends.

More malls fostering customer relationships

Consumers increasingly expect to be able to engage directly with brands, and malls and shopping centers are no exception. While shopping centers have traditionally left retailers to handle the direct interactions with customers, malls are increasingly connecting with customers across social media, loyalty programs, live streaming and more.

For shopping centers the benefits are clear — they have an opportunity to collect valuable customer data, which can help them better understand and personalize customer experiences. The shopping center can also establish their own brand, and in doing so grow loyalty and drive visits.

When it comes to mall loyalty programs, Westfield Group has been taking an innovative approach. The program is easy to use and has appealing rewards, from discounts to free meals, and its app even allows customers to reserve a parking spot. One popular Westfield location, Westfield Garden State Plaza, shows how their direct relationships with customers can pay off. Not only does the shopping center attract two to three times more visitors than other shopping centers in the area. It also keeps them around longer, with visitors spending an average of 58 minutes at Westfield versus 36 minutes for the average shopping center in New Jersey.

If there's any one constant when it comes to consumer behavior, it's change. The trends that are resonating now are likely to be different in a few years, or even a few months. In order to stay on top of the changes, it's critical to leverage data analytics to personalize the shopping experience, focusing on creating engaging and convenient experiences that keep customers coming back for more.

Malls and shopping centers continue to have a vital role for consumers, providing central gathering areas for shopping, dining, entertainment and more. But to future-proof centers for years to come, malls need to optimize toward unique experiences and utilize consumer behavior data to guide the way.