Is this the end of shopping malls? | Overnights on Radio ABC Local
One of the most often asked questions I get around the future of retail is whether today’s shopping malls will still be around in the near to mid future?
The answer is emphatically YES.
In 2014, 40 cents out of every one (1) retail dollar in Australia was spent in a shopping mall (approx. $110 billion per annum), 9 million Australians owned shares in shopping centres and Australia’s largest 9 shopping centres had billions of dollars of refurbishment underway.
Add to this that the mall’s very existence is hard-wired into our DNA, we are herd animals, we love to get together and the local village square, shuk and market have for millenniums offered this little oasis, a place to shop, meet, greet, catch up on the gossip and take time out of from our usual routine and chores.
With all of this pent-up consumer demand, shopping centre investment and societal need colliding together, the future picture isn’t so bad.
Shopping centres, like every other industry on the planet, are being disrupted. There are new players, new brands, new forms of engagement, digital and physical opportunities and a global reach and transparency the likes of which consumers and retailers have never had before.
These can be both threats and opportunities and again like every industry and throughout mankind the wise and profitable do as they have always done, see lemons and make lemonade and the remainder choose to blame, become sour and wither.
There is no doubt that retail and shopping centres are going through upheaval, but put into context shopping malls have only been in Australia for 50 years and to bring them online the strip shopping centre suffered.
Our centres are not as straightforward as we think. We often think of the large retail brands as being the majority of shopping centre tenants, but in fact in terms of sales volumes it’s closer to 41% supermarkets, 37% specialty stores (small businesses often franchisees), 13% discount department stores (Kmart, Harrison Scarfe, Big W etc.), 7% mini majors (JB Hi Fi etc.) and then 2% department stores.
We also have to take into account the new global retailers that have entered our centres – Uniqlo, H&M, TopShop, Zara (a prediction I made on TV in 2009), the changes to stocking, merchandising and customer service they have brought with them and the many international retailers, including Chinese, that we have not yet seen will also greatly influence the future of our malls.
Yes we’re in for an evolution. There is change ahead. We will come out of it very different, but in the end we will still have physical shopping centres and malls, but what we have them for and how we use them is up to us to decide as we evolve our way into the future of shopping.
In my semi regular chat with Rod Quinn of Overnights on radio ABC local we explored the past, present and future of the shopping mall; queried whether a shopping centre, mall and arcade are the same thing, looked around the world at good and bad examples of malls and took lots of listeners calls on their thoughts and experiences of the shopping mall.
Have a listen now (45 minutes)…
Frequently Asked Questions
Q: Is this actually the end of shopping malls, or is the disruption narrative overstated?
The honest answer is: not the end of shopping malls as physical places, but potentially the end of the enclosed mall as the dominant retail format in Australia’s suburban landscape. The disruption is real and structural — the migration of commodity retail to online is not reversing; the anchor tenant model is genuinely broken in many locations; and the demographic and behavioural shifts driving lower foot traffic are not cyclical. But the disruption is also selective: the best-located centres with strong catchments and capable management are adapting and remain viable; the centres most at risk are those in secondary locations with limited catchments and management organisations that have not yet grasped the depth of the required reinvention. The end of the mall is not a binary event — it is a decade-long differentiation process that will produce both successful reinventions and significant failures.
Q: What is the difference between a mall that will survive and one that will not?
The survival differentiators include: location fundamentals — a strong, dense, and growing catchment population is the most reliable indicator of long-term viability regardless of the reinvention challenges; management quality and adaptability — the organisations managing their centres as community assets and making bold reinvention decisions are consistently outperforming those defending the retail model; diversification of revenue away from traditional retail tenancy — centres generating meaningful income from healthcare, dining, entertainment, and services tenancies are more resilient than those dependent on retail rent; and the quality of the physical environment — centres that feel welcoming, current, and community-relevant are generating the social and experiential visits that sustain foot traffic in a digital retail world.
Q: What should retailers currently in shopping centres be doing in response to these signals?
Retailers in shopping centres should be: monitoring their centre’s foot traffic trajectory and diversification strategy as a leading indicator of their own trading environment; negotiating lease terms that reflect the changed trading conditions rather than accepting rent structures designed for pre-digital foot traffic levels; assessing whether their product category is genuinely suited to physical retail (sensory evaluation, immediacy, service) or whether the centre’s declining traffic is a structural rather than cyclical problem for their category; and developing an omnichannel capability that makes their physical presence a complement to digital rather than an alternative — the physical store in a changing mall environment needs to offer something that the online channel genuinely cannot, or its purpose is unclear.
Q: How can I book Morris Misel for a retail strategy, consumer behaviour, or disruption and adaptation keynote?
Contact the team at morrismisel.com/event-organisers.
One of the most often asked questions I get around the future of retail is whether today’s shopping malls will still be around in the near to mid future? The answer is emphatically YES. In 2014, 40 cents out of every one (1) retail dollar in Australia was spent in a shopping mall.
When signals like this the end of shopping malls emerge, organisations that engage early have the advantage of choosing their response rather than reacting to events. That gap between those who prepared and those who did not is where competitive positioning is actually made or lost.
The most important question is not whether this the end of shopping malls will matter, but how quickly it will matter in your specific context. Leaders benefit most from mapping the ripple effects early — not just the direct impact but the second and third-order consequences that arrive later and hit harder. That is the practical work of foresight.
