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Guest view: New mall model transforms the future of retail

Don Smith, general manager of Capital City Mall
Don Smith, general manager of Capital City Mall - (Photo / )

The historic view of the mall is a thing of the past.

Once focused on apparel and traditional retail, the long-established mall model is not structured to cater to the evolving needs of shoppers. To adapt to this industry-wide shift, retailers — both brick-and-mortar and online — are experimenting with new methods to optimize physical retail space and innovate to be relevant to the consumer.

In recent years, online retailers including Warby Parker, Bonobos and Amazon have expanded their footprint into physical space. Earlier this year, Amazon broke into the food retail industry with the acquisition of Whole Foods; it now owns over 400 grocery stores and offers over 40 Amazon pop-up stores across the country. While it’s feared that such developments are causing a "retail apocalypse," the growth of e-commerce retailers into physical spaces further underscores the value brick-and-mortar brings to a retailing strategy.

Retailers also now understand the importance of customizing in-store shopper experiences to keep pace with a shifting retail landscape. Recently, Nordstrom introduced a new service-oriented store with no merchandise inventory. Complete with personal styling, a nail salon and drinks, Nordstrom Local is bringing customer experience to a new level. Fast-fashion retailer Forever 21 also launched a beauty store, Riley Rose — blending beauty bars, makeup trials and products into a new concept targeting millennials and Gen Z.

These changes represent the new mall model rising — one heavily focused on diverse tenant offerings and consumer experience.

Retail landlords are transforming the traditional mall model by curating a diverse tenant mix in their portfolios inclusive of retail, dining, entertainment and experiential concepts. At Capital City Mall — a property owned by Pennsylvania Real Estate Investment Trust, or PREIT — proactive department store recaptures and portfolio-wide remerchandising efforts are a key focus to ensure the property leads the way in the future of retail.

Just six months after Sears closed at Capital City Mall, Dick’s Sporting Goods replaced the department store, opening its doors last month. The replacement marks the fifth of six new store openings in former department store spaces across PREIT’s portfolio in 2017 alone. Since 2012, PREIT has reduced the number of Sears and Kmart locations in its portfolio from 27 to seven, replacing them with high-performing retail and experiential concepts to reflect evolving consumer behaviors.

A key competitive advantage of brick-and-mortar retail is experience. Malls are no longer designed for just shopping; they’re a place for socializing. Dining is a rapidly growing category, from fast-casual to fine-dining restaurants. Entertainment is exploding with new in-mall concepts, from bowling to karaoke to escape rooms. These social interactions can’t be replicated with an online transaction, and mall owners are taking note. Dining and entertainment make up about 20 percent of PREIT’s portfolio, while the once-reigning apparel category makes up less than 37 percent of occupied space.

As the mall industry shifts toward adding more experiential concepts, Capital City Mall is curating a diverse mix of tenants beyond retail. As part of the mall’s multi-year remerchandising strategy to enhance shopper experience, Fine Wine and Good Spirits will join Dick’s Sporting Goods in November 2017 and Dave & Buster’s will open at the property in 2018. These additions complement other recent enhancements, including H&M, Pandora and a new prototype Victoria’s Secret store.

With the only DSW, Forever 21 and Field & Stream stores in the region, Capital City Mall is realizing the ultimate vision of shifting from a traditional shopping center to a dynamic destination for consumers in the area.

Retail is cyclical, and just as the industry is changing, mall owners are shifting their strategies to continue to drive shopper traffic. Adding new and diverse concepts will allow property owners to reimagine retail environments to provide more options for consumers.

Don Smith is the general manager of Capital City Mall in Lower Allen Township, Cumberland County. The mail is owned and managed by Pennsylvania Real Estate Investment Trust, which owns and manages a mix of retail properties.

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