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— Retail Properties Quarterly — September 2015
Y
es, it’s true. If you Google, “Is
the shopping mall dead?”
you will find a number of
articles citing facts and fig-
ures relative to changing
demographics, shopping habits,
decreased sales per square foot,
downsizing of national department
store brands, mall
closings, lack of
new mall construc-
tion and limited
funds available for
remodeling.
In actuality,
about 80 percent of
the country’s 1,200
malls are con-
sidered healthy,
reporting vacancy
rates of 10 percent
or less, according
to CoStar Group (a
leading provider
of data for the real
estate industry). However, in 2006,
94 percent of malls were considered
healthy. Nearly 15 percent of malls
are 10 to 40 percent vacant, up from
5 percent in 2006. And 3.4 percent
of malls, representing more than 30
million sf, are more than 40 percent
empty, a threshold that signals the
beginning of what many refer to as
the “death spiral.”
Industry executives freely admit
that the mall business has under-
gone a profound bifurcation since
the last recession. Yet even with
all these facts and figures at our
disposal, many of us have failed to
recognize that the mall is not dead
or dying, it just isn’t what it used
to be. In fact, it’s not even located
where it used to be. Traditionally
conceived of as an oasis of retail in
the midst of suburban sprawl, the
“new mall” is growing before our
eyes, extremely profitable, respon-
sive to its target demographic, in
tune with rapidly changing technol-
ogies, and respectful of its context
and culture.
So where is this “new mall?” The
next time you take a trip abroad
or to many of our major airports
throughout the U.S., take a moment
to look at the changing retail envi-
ronment within the airport. Almost
every major airport either has
recently upgraded its retail environ-
ment or has plans in place, ongoing
or in the works, to completely over-
haul its retail component. With an
average retail vacancy rate of only
5.4 percent, airports are essentially
rebranding themselves into a ser-
vice retail mall by recognizing how
critical it is to the bottom line to tap
into an existing captive audience
of millions of people – a captive
demographic that is shifting such
that the tradition of trinket shops,
duty-free liquor, fast food and news
stands is no longer appropriate.
As in most growth-oriented
retail typologies, there typically is
a formula that can be applied to
enhance the potential for success.
It’s true for airport malls as well,
yet the formula is quickly evolving
as airports redefine their brand and
technology merges with bricks-and-
mortar construction.
We know, for example, that there
is a correlation between dwell time
and propensity to buy something,
yet the old adage of “the more they
shop, the more they will buy” is no
longer true in airports. Convenience
is the buzzword for airport retail.
In fact, new data from retail kiosk
maker NCR shows 24 percent of U.S.
travelers will buy a gift this holiday
season at the airport as last-minute
shoppers use the downtime before
their flights to top off their Christ-
mas lists. To enhance convenience
shopping, many fashion and cloth-
ing stores have discarded the dress-
ing room. These stores recognize
that shoppers’ desire for speed and
convenience rarely allows for lin-
gering and trying on various outfits
so the product line includes more
tops and accessories.
Other convenience-related solu-
tions include phone apps that allow
users to connect with terminal res-
taurants and have food delivered
directly to a gate, pop-up stores
and kiosks located throughout
the terminal that link back to the
bricks-and-mortar hub store, and
users now can pre-order before they
arrive at the airport and have prod-
ucts delivered to a gate, or pack-
aged and ready to go at the retailer
checkout counter. Some airports are
allowing stores to physically merge
with waiting and seating areas,
blurring the line between the public
concourse and retail store.
Most of the recent trends are
coming from airports overseas
where high-speed transit systems,
guaranteed price match with inner
city stores, on-the-spot shipping
abroad and stores located outside
of security are stimulating the
rebranding of the airport as a desti-
nation mall and commerce center.
Following are a few additional
trends that are leading the way in
the revitalization of airport retail
and restaurant services.
Local and Regional Specialization
In an effort to differentiate and
connect to local and regional cul-
ture, airports are actively seeking
out local vendors for food service
as well as retail. Portland’s Inter-
national Airport focuses on craft
breweries and local retailers like cc
McKenzie Shoes & Apparel, Colum-
bia Sportswear and Powell’s Books.
Johannesburg’s O.R. Tambo has local
artisan stores with the same quality
of arts and crafts found throughout
South Africa. Our very own Denver
International Airport attracted local
restaurants like Elway’s, Modmarket
and Root Down to cement its brand.
The new mantra at airports is
to offer differentiated product, in
a captivating environment, and
deliver in the most efficient man-
ner. Does that sound familiar? It
should, since this is exactly what
bricks-and-mortar shopping centers
and malls outside the airport are
focusing on as well. The tradition of
lining up one nondescript national
brand after another is quickly fad-
ing.
Convergence of the Digital
and Physical Channels
Surprisingly, only 10 percent of
all retail purchases are completed
online. Which most likely is why
webrooming (researching items
online, then purchasing them in
a store) is rapidly replacing show-
rooming (shopping in a bricks-and-
mortar store without purchasing an
item while searching online to find
a lower price).
To enhance the in-store purchase
process and experience, retailers
not only are integrating self-serve
kiosks and bar code scanning
checkout, but also radio-frequency
identification that triggers promo-
tional messages when you pick up
a product in the store. Soon RFID
readers will replace the antiquated
check out process we are all famil-
iar with, instead scanning your bags
when you leave a store, and pay-
ment is automatically made via a
suitably enabled mobile phone (or
tiny chip embedded in your forearm
or teeth), which is linked to your
bank account or credit card. Yet,
even with all the new technology,
retailers have recognized that they
do need to alter the physical layout
of their airport stores. Aisles have
to be wide enough for luggage, and
pristine storefront displays used in
malls often have to be discarded in
favor of more open concepts and
the stacking of merchandise at the
stores entrance.
Rethinking the Order, Purchase,
Checkout and Delivery Process
Restaurants are leading the way
with delivery to your gate (look up
Airside Mobile’s “B-4 You Board”
app, presently available in five air-
ports, but expanding rapidly) and
digital order kiosks. Our recent pro-
posal for an Icebox Café restaurant
at DIA includes digital and physical
ordering, delivery to the gate, and
even connectivity to an Icebox res-
taurant at the other end of your trip
so your order is waiting for you at
your next destination.
Blurring the Sectors
While coffee shops merge with
bookstores and supermarkets offer
medical assistance, airport malls
are blurring the sectors on a much
larger scale. Amsterdam’s Schi-
phol Airport has a super mall that
Perspective
Jeffrey
Sheppard
Co-founder and
design principal,
Roth Sheppard
Architects, Denver
Photos courtesy: Roth Sheppard
Ice Box Cafe is a restaurant that is opening in the Dallas/Fort Worth International Airport. There is one proposed for DIA as well.
