If current discussions on matters to do with the retail sector are to be believed, strip malls are on their death beds and it is only a matter of time before they face the wrecking ball. There are many people who believe strip malls will not survive the proliferation of online shopping as we move into the future. In fact, when you consider the trends in local businesses, the death of strip malls may seem as almost assured. Factor in that the period following the 2008-2009 recession that saw numerous retail businesses file for bankruptcy and or close, you will be convinced that this is true.
So, does this mean that this part of our culture will disappear as we move into the future? Herein we will explore whether these sentiments are true or not.
More Internet Shopping Affecting Brick And Mortar Vendors
More and more consumers are increasingly willing to make purchases online if Amazon’s growth in the last several years is anything to go by. Between 2010 and 2017, Amazon’s revenue in the North American market grew from $16 billion to $178 billion. Market research has shown that over half of the households in the U.S. have subscribed to Amazon Prime. You can comfortably say that Amazon has taken over the retail market.
However, Amazon is not the only success story in the online retail revolution. There are numerous startups that have garnered great success while serving consumers on the internet. The apparel niche, which is the largest e-commerce niche, has created numerous success stories including Bonobos, Casper, and Warby Parker. The rise in online shopping popularity has come about due to cheaper pricing, easier, and largely risk-free (as a result of favorable return policies). Nonetheless, it is important to note that all of these success stories have come about at the expense of traditional brick and mortar stores.
Mobile Shopping Is Growing
The proliferation of mobile shopping does not bode well for traditional shopping. In 2010, mobile commerce accounted for paltry 2% of all digital spending. Fast forward to 2016 and that figure had grown to more than 20%. Additionally, you should consider the fact that 2016 marked the first time in the history of the internet where more people were accessing the internet through mobile devices than desktops, the growth in mobile commerce will only grow as we move into the future.
What this means is that there is less and less traffic to visit strip malls than it has traditionally been. In a way, this will affect the existence of strip malls.
However, when you dig deeper into the subject matter, things are not as they first appear to be. The purpose of strip malls will change as the businesses occupying these store change. But the strip malls as part of our culture and landscape is more or less here to stay. There are many indicators that point towards strip malls surviving unlike what is expected to happen to the shopping malls.
Great Experience Versus Buying Material Items
Granted that more and more people are fulfilling their shopping needs through the internet, there is a new trend among consumers seeking experiences rather than just purchasing items for the sake of it. A Harris Group research study found that over 72% millennials prefer spending their money on experiences instead of material goods. Importantly, this sentiment is not just a preserve of millennial. It cuts across various generations.
Many landlords recognize these changes in consumer behavior and they are actively seeking ways of fulfilling customers’ needs. For instance, many strip owners are looking to have a healthy mix of internet resilient retail enterprises such as quick-service restaurants, smartphone stores, fitness facilities and financial services providers.
Additionally, players in the health sector are now finding value in bringing their services closers to people. In what is being termed as ‘medtail’, health facilities offering specialized outpatient services such as physical therapy and MRI services are being set up in strip malls for sale which are convenient for residents.
New High-Tech Brick And Mortar Stores
Additionally, many of these success stories in the e-commerce field are opening new brick and mortar stores closers to the communities, on strip malls, Blue Nile, Bonobos, and Warby Parker are investing in new high-tech stores that are unlike any other traditional stores. These stores are technology driven and they are designed to yield a new kind of experience. For instance, in the case of Bonobos stores, customers can try all the clothes they are interested in, order, and just walk out of the stores. The clothes are then delivered to their homes in a far more convenient shopping experience. This strategy is more in-line with providing great experiences and not just merchandise for customers to purchase.
With this in mind, the key to success for many strip malls will be to find a healthy mix of internet resilient businesses and service-oriented enterprises. With a healthy mix of such businesses, strip malls will have a good shot at challenging the perception that they are on the verge of dying. In fact, there is a high chance that they will thrive.
The Influence Of New Technologies On The Retail Sector
Another consideration to make while trying to answer the question of whether strip malls are a thing of the past is the future technology. Mobile commerce will undoubtedly influence the retail market and even cause a seismic shift in how we buy things. However, further down the line, there is a possibility of new technologies emerging and changing the tide back to strip malls and shopping.
For instance, self-driving cars will make the journey to a strip mall more of an experience to be enjoyed rather than a chore. Such technologies combined with strip malls providing stellar experiences might influence people’s shopping preference in favor of strip malls.
Finally, while analyzing the decline of store occupation in strip malls across the country, you need to consider the fact that we have had a glut in strip mall supply for a long time. With the changes in the retail market, market forces have forced many strip malls to close, especially those that serve no strategic purpose. This has exacerbated the situation by making it seem like all strip malls have no place in our current or future society. However, in some regard, these changes are only introducing efficiencies in the strip mall market by removing the malls that serve a strategic purpose to the communities. However, it is not really over for strip malls. Not just yet!