On a recent Friday night family outing, I found myself in a Pittsburgh area shopping mall that bears the familiar scars found on thousands of other once-dominant temples of retail. One of the main anchors had been a 200,000 square foot Sears — now a dark, empty cavern waiting to be repurposed.
Gone also are a number of bankrupt retailers whose days were numbered well before the pandemic shutdown in March 2020. J.C. Penney is hanging on but occupies about half the space it once did. Traffic was notably sparse for a Friday night.
The past 30+ years of my professional life have been all about the retail and tech industry, developing tools and research techniques for forecasting and understanding the consumer. As I walked the mall I reflected on the fact that “the experts” have been telling us for the past few years that malls are dying. Yet I was surprised to find a few relative newcomers I’d never heard of opening stores in this mall.
Ticknors is a Beachwood, Ohio-based chain of nine upscale (bespoke) men’s clothing stores that is only four years old and opened its Pittsburgh location less than a year ago, in the middle of the pandemic. Fashion footwear retailer, Shoe Fly, operates about a dozen stores in Pennsylvania and Virginia. And Evereve, I learned, is a Minnesota-based fashion retailer of “brands curated for moms,” with about 100 stores they also opened a store here in the height of the pandemic and is still going strong.
I have been wondering if these are just dandelions sprouting out of the rubble of the mall meltdown, soon to wither and go to seed. Or perhaps is this evidence of the micro-targeting (vs. department stores) toward which the business of retail seems to be trending?
If malls are dead, how to explain a recent survey of traffic at malls in the Philadelphia area that found a clear bounce-back across income demographics? In a recent article, the Bucks County Courier Times reported that smartphone location data gathered by Placer.ai, which specializes in consumer foot-traffic trends, found that several malls in the Philadelphia metro area are fully or nearly fully occupied and about as busy as they were before the pandemic. Data also suggest that new stores are opening at a surprising rate.
Meanwhile, an investment consortium of a hedge fund and a mall operator, Simon Property GroupSPG, recently made a bid to buy Kohl’s, a traditional stand-alone retailer. If successful, Simon and Brookfield Asset Management would add Kohl’s to a portfolio that includes J.C. Penney and other well-known brands, hoping to profit by revitalizing and growing them.
These are all signals about the future of retailing, but none are exactly clear about where things are going.
Here are some of the signals. A recession seems at least imminent and may already be taking hold. Inflation is eating household budgets. In many communities, rent has reached unaffordable levels. Homeownership in many parts of the country was already expensive before mortgage rates began to spike. A decline in real estate values seems foretold in an economic environment that seems to be deteriorating.
All is not boom and gloom however.
There is the emergence of newness in tech and retail convergence i.e. the metaverse (also referred to as Web 3), defined by Chief Metaverse Officer at the Futures Intelligence Group, Cathy Hackl as, “what happens when the world becomes a billboard, robots have spatial reasoning and virtual assistants own the relationship with the customer.” If she’s right, who needs a store, let alone a mall?
It occurred to me that Pittsburgh may be one of those ground-zero locations where the future of retail is being decided, far from the centers of finance and fashion. Once known as “the Steel City,” it was recently ranked as the most affordable city in the world to buy a home and has become a tech hub of sorts with Carnegie Mellon University (CMU) and The University of Pittsburgh being leaders in software, robotics and bioscience research.
That may explain why Meta, the new name for Facebook, has located one of its next technology development hubs in Pittsburgh; is advertising 34 openings for scientists and engineers; and intends to open a Meta retail store where shoppers can try virtual reality gear and experiences. Uber has had a center of autonomous cars here for a while, and there are a number of robotic companies in the region.
Put it all together and the future of retail is about as murky as it has ever been. One thing is clear though, the customer is at the center of it all. They are alive and well and always interested in engaging with great brands, innovative companies, and unique products.
So, the challenge exists to companies to figure it out and take the right risks.