How Shopping Centers Are Adapting To Changing Consumer Behavior
In the past several years, shopping centers have experienced an identity crisis. Faced with the poor performance of department stores and other retailers, they have needed to reinvent themselves to survive.
In 2021, there were 750 vacant anchor tenant spaces in shopping centers in the U.S. The pandemic, the flagging economy and shifting consumer preferences made it harder to find the right tenant mix to attract shoppers.
The solution, however, can potentially boil down to a few key changes centered on layout and communication. Near, a data intelligence platform providing insights on people and places, found in a recent study of U.S. shopping centers that some outperform others by emphasizing key strategies.
“Two strategies that stand out are mixed-use developments and getting creative with ways to directly connect with customers via live streams, social media, loyalty programs and more,” said Cate Zovod, Near vice president of product and industry marketing.
While the number of mixed-use developments has been on the rise for decades, they are particularly well-positioned to address some of the consumer behavior changes fueled by the pandemic, Zovod said. As more companies transition to a hybrid, at-home workforce, employees are looking to live in places with greater access to diverse restaurants, coffee shops and stores. Multifamily residential buildings attached to shopping centers are the ideal setup to meet this need.
Near found that visitors tend to spend more time at mixed-use developments versus other shopping centers: The median dwell time at mixed-use malls in Near’s study was 60 minutes, versus an average of 52 minutes for other malls.
“The longer dwell time at mixed-use developments could be partially explained by the fact that many multi-use developments are designed to create a community feel with open park-like spaces, creating an experience for residents and visitors alike to linger and enjoy,” she said.
One example of a successful mixed-use development she cited is Santana Row in Santa Clara, California.
Zovod said that in 2002, Santana Row was a pioneer in the mixed-use space with its 42-acre “village within a city” featuring mixed residential, office spaces, restaurants and a vibrant shopping district. The development has an outdoor, town square feel that resonates with consumers who want to avoid enclosed spaces.
She added that the mix of residential, office and retail space saw interesting visitation patterns based on the time of day — patterns that shifted after the pandemic, highlighting the changes in consumer behavior.
“In 2019, Near’s data showed the peak visitation time was 7 p.m., aligning with after-work and dinner visits,” Zovod said. “However, by 2022, the peak visitation time was now more balanced throughout the day, peaking earlier at 4 p.m.”
Beyond mixed-use developments, another strategy that has helped shopping centers successfully navigate changing consumer behavior is directly connecting with customers. Today’s consumers increasingly expect to be able to engage directly with brands, and malls and shopping centers are no exception, she said.
While shopping centers have traditionally left retailers to handle the direct interactions with customers, malls are increasingly connecting with customers across social media, loyalty programs, live streaming and more. The goal is to promote the brand of the center as a whole, instead of focusing on individual businesses.
“For shopping centers the benefits are clear — they have an opportunity to collect valuable customer data, which can help them better understand and personalize customer experiences,” Zovod said. “The shopping center can also establish its own brand, and in doing so grow loyalty and drive visits.”
She added that these touch points also have tangible benefits for shoppers. With a coalition loyalty program, shoppers can earn rewards across a number of their favorite brands, instead of just one. Live streaming shopping events — a digital evolution of home shopping channels — can be an entertaining and interactive way to shop from home. Plus, customers can enjoy a more personalized and engaging experience overall.
When it comes to mall loyalty programs, Westfield Group is a prime example of a group that has provided multifaceted incentives designed to keep customers coming back, Zovod said. Its program allows customers to link their credit cards to their accounts, meaning loyalty points automatically get added with each purchase. It features appealing rewards, from discounts to free meals, and its app even allows customers to reserve a parking spot.
One popular Westfield location, Westfield Garden State Plaza in Paramus, New Jersey, shows how a direct relationship with customers can pay off.
“According to Near’s data, not only does the shopping center attract two to three times more visitors than other shopping centers in the area, but it also keeps them around longer,” Zovod said. “Visitors spend an average of 58 minutes at Westfield versus 36 minutes for the average shopping center in New Jersey.”
Zovod credits the mall’s management for tracking changing consumer behavior and understanding both short- and long-term trends. This, she said, is the key to keeping shopping centers afloat amid shifting economic conditions and customer preferences.
“If there’s any one constant when it comes to consumer behavior, it’s change,” she said. “The trends that are resonating now are likely to be different in a few years, or even a few months. In order to stay on top of the changes, it’s critical to leverage consumer behavior data to personalize the shopping experience, focusing on creating engaging and convenient experiences that keep customers coming back for more.”
This article was produced in collaboration between Studio B and Near. Bisnow news staff was not involved in the production of this content.
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