Investment in new shopping malls has declined significantly worldwide.
In some parts of the globe, investment in retail space is down over 50%. In the US this year, it’s trending to be 30% less than last year’s low level.
Where new space is being developed, it’s no longer out-of-town retail malls, but mixed-use destination developments closer to, or right in the middle of, our towns and cities.
Back in the day, the out-of-town mall was a car-free high street built inside a climate-controlled, large concrete box. Shopper marketing guru Paco Underhill, in his book The Call of the Mall, once described the entrance to these formulaic concrete boxes as a “mousehole in a concrete wall”. Pretty and welcoming they aren’t.
Now, a new mall is more like a small village, complete with dining, services to pamper our bodies, physical activities for kids and adults, hotels, offices and some residential. Oh, and a Tesla, Beemer or Benz showroom too. Less fashion, fewer big-box retailers and no department stores. Plus, light trains run into or under them.
Newly global mall operator Unibail-Rodamco-Westfield (that trips off the tongue) has confirmed that future sites, all defined as ‘destination malls’, will be built with half the space for non-retail tenants. The pure retail mall is no more. Offices, hotels and apartments will occupy half the space in a new mall. That’s people working and living in the mall, but not shopping physical retail.
So how different is this new mall offering?
Well, I walked, ate and experienced the new Jewel mall at Singapore’s Changi Airport last week. Stunning. Grand. Busy. Vibrant. Architecturally awe-inspiring.
‘A world-class entertainment experience’ is how I would describe it. Oh, and it has shops too. Lots of them. But I can shop anywhere, anytime, and they actually didn’t have any truly standout retail formats or offerings. The stores didn’t appear to be the reason so many locals, transit passengers and longer-term tourists were visiting and staying.
They were visiting to take in the hanging gardens, aerial walkways and central six-storey-high circular waterfall. Visitors gawked at the trains running across the top of the tropical valley, the restaurants and bars, and the giant climbing net strung in the roof space above the mall. It’s organic and alive. And truly worth booking your next trip across the equator via Singapore.
And, that’s the main reason it’s been built. Jewel is not just a destination mall, it’s a global destination mall.
It’s a reason to book an airline that flies through Singapore just to see it. It’s a reason to transit and spend longer on the ground, just a few hours more, to experience it. It’s a reason for local Singaporeans to visit from around the island, and for Malaysians and Indonesians to travel there for a weekend or national holiday.
It’s not perfect.
A transit passenger with carry-on luggage can’t take a baggage trolley into the mall. The connections between some of the terminals are a long walk.
And although it is beautiful and innovative, even world-class malls like Jewel won’t stop the decline in physical retail sales.
These new malls will grow and sustain food retailers, hotels, nail parlours and operators of experiences for young and old. They’ll provide a more stable rental base for mall operators and return for their shareholders.
But they won’t stop the decline in footfall into fashion stores and electronic retailers. And they won’t slow the decline in the value of retail real estate any time soon.