Malls are the casinos of middle class suburbia

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The department stores are empty but the malls (or at least the malls here in Australia and nearby in China and South-East Asia) are full. Why is there such a difference when department stores and malls seemingly offer shoppers the same thing: Chanel, Yves Saint Laurent, Prada, Vivienne Westwood and Alexander McQueen (and a bunch of lower status retailers) all under one roof?

While department stores have been in decline for at least the last thirty years{{1}} many malls have never seemed busier. The crowds we expect at the mall during Christmas are popping up every other weekend, forcing us to park at the far corner of the back parking lot before running through the rain only to arrive at the mall proper just in time to catch our film.

[[1]]Winners and Losers in Retail @ PEG[[1]]

As I pointed out in The Destruction of Traditional Retail{{2}}:

[[2]]The Destruction of Traditional Retail @ PEG[[2]]

Department stores [bring] together a collection of departments, each selling a different type of product, where a department could be a small to mid-sized store on it’s own.

Department stores traditionally offered the aspirational suburbanite or rural visitor an opulent setting where they could while away the day drifting from shoes to cosmetics with a stop for a light lunch and a visit to the bookstore, florist or hairdresser. They would make the long trip to the centre of town (or to the city even) for that much needed pair of shoes and formal dress, only to find themselves spending the entire day there.

Malls, though (again from The Destruction of Traditional Retail):

… took this model to the logical extreme by collecting together a large number of separate stores to create a shopping destination.

Ironically, many malls were often built around a department store playing the role of anchor tenant. The department store provided that critical mass of products that would convince shoppers to try their luck at the mall rather than head somewhere else.

If malls and department stores so similar then why is one succeeding while the other fails?

The first difference is the Gruen transfer.

The invention of the classic indoor mall is generally credited to Vienna-born architect Victor Gruen. Gruen first outlined his vision for malls in a 1952 article in the US magazine Progressive Architecture. Most Americans were moving out to suburbia but still shopping downtown. Gruen considered suburbia soulless and heartless. The mall, he thought, could remedy these problems by recreating the town marketplace or public square and providing the suburbs with a cultural focus.

Gruen’s malls were extremely effective both at luring customers and holding them captive. The later effect was named the Gruen Transfer, much to Gruen’s chagrin as it was one aspect of the his invention that he disavowed.

From the FAQ on The Gruen Transfer’s{{3}} web site{{4}}:

[[3]]The Gruen Transfer is also the name of a television program on Australia’s ABC1 network. The show discusses the methods, science and psychology behind advertising.[[3]]

[[4]] What does ‘The Gruen Transfer’ mean? from the The Gruen Transfer FAQ[[4]]

The Gruen Transfer refers to the moment when we as consumers unwittingly respond to cues in the shopping environment that are designed to disorientate. Factors such as the lighting, sounds, temperature and the spatial arrangements of stores and displays interact, leading the customer to lose control of their critical decision making processes. Our eyes glaze over, our jaws slacken, we forget what we came for and become impulse buyers. So if you go into a mall to buy a mop and walk out with a toaster, a block of cheese and a badminton set, then the Gruen Transfer has probably played a role. Or maybe you just really like cheese.

The second difference is in the portfolio nature of a mall.

A department store is a single business that operates a number of departments. While it might include a merry-go-round and large man in a red suit at Christmas, the focus is firmly on shifting product. The department store is a shopping destination: it’s somewhere you go when you have a need to be filled.

Malls, on the other hand, operates a portfolio of businesses. While the portfolio might include retailers (or, as has been the case to date, dominated by retailers) the focus of the mall is keeping punters in the mall and keeping them circulating. As along as the punters are circulating they’re spending money, and the mall will be taking their percentage.

The mall is less concerned with shifting product than keeping you at the mall bouncing between stores, as the more time you spend there the more money you’re likely to spend. Turn up for a movie, end up having a meal, get a foot massage and have your toenails painted, and you might even buy a pair of shoes.

Consumer behaviour, as I’ve said before, is changing though. We used to head out the door to find some product we needed: soap, some nails, or a suit for the wedding next weekend. Now we head out to be entertained: to see a movie, meet friends at the food court, or even just to hide from the heat in the mall’s air-conditioning (that foot massage sounds good too).

Department stores are contracting because we don’t head out the door on a shopping mission as much as we used to. Their addressable market – people who want to spend the afternoon wandering between racks of products while they pick up a few things they need (or even things they don’t need) – has shrunk.

Malls, though, are having no problem attracting punters.

Victor Gruen was right: we do need a place that we can gather as a community. What he got wrong is that we don’t want a market place or public square. What we’ve ended up with is a casino; somewhere exciting and entertaining where we can bounce between activities or even just catch up with friends in amongst the hustle and bustle. Malls have become the casinos of middle class suburbia.

The challenge malls have is to find the mix of business that provide us, the consumers, with the most engaging visit possible. Revenues might be down a little at the moment{{5}} but it’s not a long term trend (as with department stores), the malls are still full and there’s lots of possibilities to explore.

[[5]]Sarah Danckert (18 October 2013), Mall growth plans reined in, The Australian.[[5]]

Image source: Alpha.

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