The Destiny USA mall reopens as the coronavirus disease (COVID-19) restrictions are eased in Syracuse, New York, July 10, 2020. (Photo: Agencies)
The COVID-19 pandemic has accelerated the evolution of the mall in the United States and underscored the basics of natural selection: adapt or die.
Green Street Advisors, a commercial real estate advisory firm in Newport Beach, California, said as many as 50 percent of the 1,000 malls in the US are expected to close by the end of next year.
Most of the survivors will be upscale and offer goods and services. The presence of an Apple or Gucci store is a sign of health.
"The current concept of the mall is dead－especially with the growth of e-commerce," said Camilla Yanushevsky, an equity analyst at CFRA in Rockville, Maryland.
Movie theaters and restaurants long have been used to lure people to malls. But both have been closed to curb the spread of the coronavirus and neither will be enough to drive foot traffic in the future.
Next up: Make the mall a destination. This will involve creating an experience for shoppers by melding events with convenience and higher-priced goods, while moving away from the volume sale of clothes.
"Enclosed shopping malls have a tremendous opportunity to reinvent themselves," said Michael Brown, a retail strategist at Kearney Consulting in New York.
Time to transform
"The path for long-term success means reducing dependency on pure retail and increasing emphasis on social gathering. COVID-19 is a temporary accelerator of the need for change in the sector. We will return to public dining, enjoying entertainment and socializing in public. Now is the time for malls to transform and be ready for the resurgence."
The risk is that the virus forged a dramatic change in human behavior and people will continue to nest at home after the pandemic abates.
But Brown noted that Netflix once was viewed as heralding the end of movie theaters, much as home food delivery was seen as the death knell of restaurants.
Both sectors avoided the apocalypse by offering an experience: Big screen, big sound and 3D movies at major theaters and ambience at fancy restaurants.
Brown said it's likely that as social beings, people will want to get out of the house and interact.
Anchor tenants, typically large department stores, once drew shoppers to malls. Now, it's up to mall owners to make the mall a destination for a range of new activities to draw potential customers.
A mall in East Rutherford, New Jersey, offers skiing on freshly made snow. Some mall owners are exploring the feasibility of concerts in the parking lot or large public areas.
Despite the need to move quickly, there will be no immediate miracles because many mall owners are strapped for cash as some tenants miss rent payments.