What can we learn about business adaptation from dead malls? The connection is even more clear than you might think.
“I want to live in a mall where the temperature is always the same and people are nice.” - Kevin Meaney, Comedian
I am obsessed with dead malls. What are dead malls, you ask? They’re the shopping centres that are neglected, abandoned and or scheduled for the wrecking ball. They are full of empty stores, broken glass, mould, graffiti, and distant memories. They are the sad reminders of the retail shopping experience of yesteryear. Business adaptation is not a concept malls latched on to well.
There are websites and YouTube channels devoted to exploring dead malls across the U.S. There is also a category of “urban spelunking” where brave souls enter condemned malls to capture the eeriness of retail in decay. I can’t get enough.
Interestingly, the dead mall seems to be more of an American phenomenon, as most of Canada’s shopping complexes are still profitable, even in the face of exploding e-commerce. Canada’s malls are more profitable per square footage than their American counterparts. And unlike the U.S., there is typically not another giant shopping mall blocks away from another huge mall competing for the shrinking physical store dollar.
“You don't come to the mall to shop or work. You hang out all day, act like you live here.” - "Mallrats" (1995)
Malls hit their peak in the 90s, but consumer habits were about to change in a big way.
In 1994, Pizza Hut made the first commercial online sale. A pizza opened the door for just about everything being sold online. It was the beginning of a new age of convenience. You didn’t have to go to the mall and come back empty-handed anymore. The smarter mall owners began pivoting early. They made the trip to the mall about the experience. Restaurants, theatres, mini amusement parks. Not to mention the tactile experience of actually touching what you bought.
There is a terrific documentary called “All Things Must Pass” about the rise and fall of Tower Records in the U.S. It too tells a mournful tale of an iconic retailer and changing consumer behaviours. The movie opens with a sobering stat: in 1999, Tower Records had sales of over a billion dollars. Seven years later, the chain was bankrupt. While much of their demise was due to their massive debt load from rapid expansion, online music downloads (through legal and illegal means) became the final death knell for physical music sales. By the time Tower launched their online sales site, it was already too late.
There was a shopping mall
Now it's all covered with flowers
- From the song “Nothing But Flowers” by Talking Heads
While going down the rabbit hole of many a dead mall link, I came across a new word: kenopsia. It’s defined as “the eerie, forlorn atmosphere of a place that’s usually bustling with people but is now abandoned and quiet.” It was coined by John Koenig, who runs The Dictionary of Obscure Sorrows website and YouTube channel. The word is apropos of the feeling you get when watching dead mall videos. It’s not hard to feel a slight twinge of nostalgia. This was a gathering place for many generations, somewhere to hang out and drink an Orange Julius. Mall culture was everywhere. Movies like “Fast Times at Ridgemont High,” “Valley Girl,” and “Clueless” showed us this was the place to be.
What does the future hold for malls?
Unfortunately, things continue to look bleak. The pandemic only served to fuel online sales. CNBC reports that 25% of malls in the U.S. will close over the next three to five years. Some former shopping centres have been finding new life. Many are converted into industrial parks, mixed-use residential/commercial developments and (perhaps fittingly) Amazon distribution facilities.
The mall is like a toytown set
piped music, lights, no strife,
that offers you the world wrapped up
set off from real life.
- “Mall Poem” by Jo Walton
Back in the 90s, when I worked in a mall, the conversation was usually around expansion. How can they add more stores? Property management companies and most shoppers never envisioned a day when people stopped coming to malls. All their needs were under one roof – what more could they need? They asked, “What are people going to want to buy in the future?” What they should have asked was, “How are they going to buy it?” When you're ready for business adaptation, you're asking the right questions before anyone else.
It might be time to rethink the bigger picture
The current situation has made companies rethink the bigger picture. Instead of focusing on what happens in the sales funnel, they’ve had to rethink the entire sales funnel. As a buyer’s journey is now 67% digital, customers now have access to limitless information. As shoppers could enter a mall through various doors, they can now enter (and exit) at any stage of the funnel electronically. Businesses must now rethink the best way to deliver the best value to their customers and tailor their marketing strategies accordingly.
Adapting to change is now more important than ever. But please, don’t take away the Orange Julius.