Ala Moana Center, Honolulu. (CallisonRTKL)

This article appeared in the summer issue of Urban Land on page 62.

As designers and architects, we often are asked what can be done about the so-called retail apocalypse. After all, brands are closing stores right and left, the list of “dead malls” continues to grow, and we are told that consumer culture is on the decline. The truth is that people are shopping more than ever, but each year they are doing more of it online. With the convenience, competitive pricing, and increasingly experiential process of shopping online, how can retail stores and malls possibly compete? The answer is they cannot. But lest you think we are being defeatist, let us explain how thriving brands are combining their online and brick-and-mortar experiences to keep foot traffic high and regenerating communities in the process.

The Mall

Reports of “the death of the mall” have been greatly exaggerated. There has been—and likely will continue to be—a correction in the shopping center real estate market, but this correction was inevitable. The United States has 23.5 square feet (2 sq m) of retail space per capita versus the United Kingdom’s more balanced 4.6 square feet (0.4 sq m) per capita or even Canada’s 16.4 square feet (1.5 sq m) per capita. Something had to give, especially in rural and suburban markets that no longer can support that much retail. But Class A shopping centers, such as Tysons Corner Center in northern Virginia, the King of Prussia Mall near Philadelphia, and Ala Moana Center in Honolulu, Hawaii, are all breaking revenue records. The fact is, the best malls are just getting better.

These malls are not just competing with online retail—they are blowing it out of the water. What the highest-grossing malls have in common is that they are completely rethinking the model, to the point that they can hardly be called malls at all. They have become the de facto heart of communities and offer flexibility, adaptability, and a reason to get out of the house that goes beyond the transaction at the register. This comes down to programming, smart regeneration strategies, and urban planning as much as architecture.

Take Tysons Corner, for example. It is not just a shopping center; it’s practically a city. It has Metro mass transit access, an IMAX movie theater, a hotel, office buildings, an outdoor plaza, a children’s play area, and every kind of restaurant and retail brand imaginable. Shoppers are not heading to Tysons to pick up a single item—they are spending the entire day there.

The number of traditional anchors in shopping malls has diminished in recent years, and that has opened the door to new ways to anchor a retail environment.

The malls that are renovating and repositioning rather than closing down are considering all kinds of options that never would have been considered as “anchors” in the past. Everything is on the table nowadays. Food plays a big part in many of these concepts, including grocery store/food hall hybrids like a Wegmans or Whole Foods or a true food hall concept like Eataly. Community-based ideas also are coming up more frequently, like a seasonal or monthly rotation of pop-up concepts, or social/community spaces where people can take a class, play games, or just hang out.

And some shopping centers are expanding into other commercial sectors, with developers considering condominiums and serviced apartments or coworking concepts to anchor retail centers.

These moves toward mixed-use development and a more diverse program are in line with overall demographic and preference shifts, since the trendiest, most affluent suburban communities are the ones that also offer the best of city living, such as urban amenities, walkability, and transit links. For residents and office workers, it means having amenities and activities right at their doorstep. For the shopping center owner, it means a built-in customer base that can activate community spaces during times that would typically mean lower traffic.

The Hyatt Regency at Tysons Corner, Virginia. Tysons Corner Center has Metro mass transit access, an IMAX movie theater, a hotel, office buildings, an outdoor plaza, a children’s play area, and every kind of restaurant and retail brand imaginable. Shoppers are not heading to Tysons to pick up a single item—they are spending the entire day there. (©RTKL/David Whitcomb)

And what of the future? It is pretty bright for retail. Gen Z—the oldest members of which are turning 22 this year—are actually more likely to choose in-person shopping over online shopping, compared with the millennials who preceded them, according to research by IBM and reported on the website Marketing Land. If that trend holds true and shopping centers can do enough to encourage customer loyalty, then it could signal very good news for mall owners, developers, and tenants. In fact, according to PwC, almost two-thirds of teens age 13 to 16 say they prefer the mall over other types of stores. Could we be looking at a new heyday for the mall? Maybe, but it will happen only if shopping center owners continue to diversify and give people a reason to visit.

The Store

The mall must evolve to become an even better host to its main attraction: the stores. The program of a shopping center, planning for demographic changes, and leasing to the right mix of retailers for the location are all major drivers of a shopping center’s success. Today’s retailers are focused on brand exposure, layered experiences, and customer service.

Savvy retailers no longer distinguish between in-store versus online retail—a sale is a sale. The goal is to offer customers an omnipresent experience. That means offering a similar experience in store, on mobile devices, and online.

If you cannot compete with the convenience of online shopping, you have to make sure that the in-person experience is not to be missed. Gen Z, the next generation of customers, prioritizes touch and access to products, so visual merchandising is key, along with picking the right soundtrack. They also strongly prefer visible price tags to avoid awkward conversations at the cash register and the disappointment of finding out they cannot afford something they really want, according to a study by retail consultant Fitch.

Cosmetics retailer Sephora was one of the first adopters of these concepts and the results are obvious. Step into any of the retailer’s locations on a weekend and you are bound to see a line at the register. Look more closely at Sephora’s website, digital products, and online advertising and you will see a data-driven company on the cutting edge of retail. And in terms of merchandising, what’s not to love? Everything is hands-on and inviting, and the travel-size items that line the queue to the register are a touch of genius to increase sales at checkout.

With things like search tools that help users find their perfect product, filters that let customers digitally “try on” makeup, and an online community of reviewers to rival Amazon’s, it is no wonder that Sephora is one of the retail brands doing exceptionally well in a time of store closures and Chapter 11 announcements.

The literal multimillion-dollar question is, then, how can other stores make money when they are competing with Amazon? The answer is: data. Stores that do not have a seamless and robust connection between their in-store presence and online presence risk wasting precious resources on inventory and warehousing issues, not to mention losing major market-share opportunities. Instead of trying to use brick-and-mortar tactics to compete with online-only retailers, stores should try to beat online retailers at their own game, using data and the best technology and research at their disposal to strip waste from their warehousing systems and make inventory as efficient as possible.

We see that strategy in stores like Target, where sales are still strong, but the retailer is moving into smaller, more urban spaces because that is where the money is. Target’s smaller stores drive more profit per square foot than their larger locations do, and they receive a greater number of weekly visits from customers. Focusing on groceries, clothing, and accessories, and choosing locations in urban areas and college towns, Target is a retailer that understands the brick-and-mortar business inside and out. While many of the retailer’s competitors are downsizing their corporate presence, Target plans to open 35 new small-footprint stores this year.

There are a lot of other bright spots on the in-store retail horizon. Companies that started out entirely online, like Untuckit, Everlane, Bonobos, and Casper, with one Warby Parker to rule them all, are not just opening one or two novelty locations—they have collectively announced hundreds of new locations for 2018. Brick-and-mortar cannot thrive without online shopping, and vice versa. The bottom line is that consumers are savvier than ever and are quick to figure out which brands cannot meet their needs and move on.

The Branding

Often, when people think about branding, a retailer’s name, logo, tagline, or ad campaigns are what come to mind. Savvy retailers and shopping centers know that, at its core, branding is about establishing a consistent story (throughout every channel) that resonates with shoppers.

You could sell the best products in the world, but in our oversaturated retail environment, most shoppers are going to choose a company they already know and trust. That does not mean they have to be existing customers—recommendations from friends and other influencers can have a major impact on purchase behavior. In fact, the younger consumers are, the less likely they are to trust or even listen to brazen advertising. Instead, they turn to their peers—often when they are in a store—to get real-time feedback on a potential purchase. Having an army of these “brand ambassadors” who recommend your products to their friends is a powerful weapon in any retailer’s arsenal. Brands that embrace influencer marketing (see apps such as like to know it on Instagram) are expanding their communities and their peer power beyond basic word of mouth.

While gen Z shoppers may distrust advertising and traditional marketing, trust and transparency are the driving force behind ever more of their purchases. Consumers have almost endless options when it comes to brands, so making them feel good about what they are buying is crucial to making sure they buy again. It is never too early to capture that loyalty; generation Z may seem too young to feel attachment to a brand, but more than half of that cohort say they trust the brands they grew up with, according to the National Retail Federation.

REI, the outdoor-goods co-op, is an example of a brand doing everything right. It has its in-store design down to an art and a science; it was among the first retailers to use its online and physical stores to complement each other; and it is a brand whose community of customers trusts implicitly because REI also gives back to society. (REI reported that 70 percent of its profits went to the outdoor community in 2016.)

Brands that are thriving understand that for everyday items, the convenience of shopping online may be too big of a draw to overcome. But for clothing and beauty retailers that can tap into the zeitgeist and offer the trendiest items, customers will want to see and touch goods before buying them whenever possible, and the retailers make that opportunity part of their complete brand experience.

To further complicate brand strategy matters, for gen Z and millennials, having access to an item often is better than owning it if they can save time, money, or space. They have been cited many times before, but companies like Airbnb and Uber typify this sharing economy, and they paved the way for other types of consumer brands to follow suit. For example, Rent-the-Runway, which gives people of average income the opportunity to wear high-end fashion, is yet another brand that started online and now has a number of brick-and-mortar storefronts.

Between digital stores opening physical locations and brick-and-mortar going online, the best brands are not stopping at “omnichannel” retail. Generation Z will come to expect “channel-less” retail, the idea that the channel itself should be almost immaterial, working seamlessly for customers and feeding into the same core brand experiences and data platforms. For retailers, the major advantage to this setup is a network that is less costly to maintain and gives them better data, allowing them to give their customers a more tailored, targeted experience. Widespread adoption of channel-less retail will take time, but it will make shopping easier for everyone.

In the end, for retailers to capture the attention of distracted, time-strapped consumers, they have to stand out from the pack. That means getting the programming, store design, and branding just right, and always innovating for the next generation of shoppers.

JEFF GUNNING is a senior vice president at CallisonRTKL and leads the Baltimore-based firm’s commercial practice for North America, including shopping/entertainment, hospitality, and residential. KYLE JEFFREY is a vice president in the firm’s retail practice. SARAH KIMES is vice president and leader in the Environments Studio, which specializes in human-centered design and the creation of branded environments. All three practice out of CallisonRTKL’s Dallas office. The firm designed Tysons Corner Center and Ala Moana, and REI is a client.