Shopping malls must provide better experiences to re-purpose their existence. Connecting operational data (O-data) and experience data (X-data) could do the trick.
Some shopping malls are dying while others are thriving. The ones that are dying are those that never moved beyond the opportunity to shop, eat, and watch movies. Those that are thriving are the ones that see themselves as an evolution of the community center, a third place to spend time after the home and work.
Dead malls are the legacy of a great American mall-building binge that took place between 1970 and 2015, when the number of U.S. malls quadrupled, growing more than twice as fast as the population. Most people growing up during that time have fond mall memories; it’s where they went to hang out, buy stuff, watch movies, eat and drink, and have fun. Today, people can do all that in the comfort of their homes.
It is no wonder there is a feeling of loss and nostalgia when it comes to these moribund shopping centers. There’s even a website, Dead Malls, with stories about the rise and fall of local malls. And though the epidemic of mall decline is mostly an American story, it has spread around the globe.
New Place to Be
As with most other areas of retail, there still is a future for the mall. There are also many opportunities to use the empty spaces in innovative ways. One mall in Maryland, for example, is renting space to a theater company; one in Michigan is now home to a cultural association that sponsors Chinese festivals. Another has a thriving art school, where walk-in shoppers can take classes in painting and drawing as well as crafty skills like pop-up card-making.
“A successful space is one people want to visit,” says Hichem Maya, general manager of Consumer Industries and Life Science for EMEA South at SAP. “You have to give people a reason to be there, and if they’re spending their time somewhere, they’re usually spending money too.”
In today’s world of digital commerce, a trip to the mall to shop or hang out is no longer an aspirational activity. That culture has passed, a generational shift has happened. Members of Generation Z, those born between 1996 and 2010, engage first and foremost online, rejecting the physical forums of old, including malls. They exchange ideas, socialize, and drive commerce in a virtual space. What role can the retail mall play in this new reality?
As someone whose job is to help retailers and mall operators deal with this dilemma, Maya is keen to understand what would bring people back into shopping centers. He had a chat with a 21-year-old man named Sami who was standing in front of a large mall in his hometown of Dubai.
“Sami told us that he did his shopping online because it was cheaper, faster, more convenient, and provided him with a larger variety of brands and offers,” Maya explains. “This young man obviously showed no interest in visiting the mall’s shops.”
As Maya sees it, the stores in the mall do not meet Sami’s expectations of an engaging digital experience or provide the thrilling entertainment he is looking for. The exception for him would be if one of his favorite brands popped up in the mall with one of the coveted, limited-stock items on his list of must-haves. Then queueing for three hours would not be a showstopper for Sami.
With consumers shifting more of their spending from physical stores to online and young generations looking for novel, in-person lifestyle moments rather than just products, mall operators must rethink their reason for being. To survive in the new economic and social environment, malls must reinvent their experience model.
Experiences does not have to be big and costly. According to Maya, they can also be focused around convenience. This might include taking a vacant unit and turning it into a central click-and-collect point with fitting rooms so customers can pick up, try on, and if necessary return clothes sold by an online vendor all in one go.
Maya explains the next-generation concept store as one that pulls together the customer experience, the employee experience, and the brand and service experience into one seamless event.
“SAP already enables this scenario today through a powerful real-time platform that seamlessly blends the physical environment and the digital ecosystem,” says Maya. What’s new is the fact that the worlds of O-data and X-data are now connected within a new paradigm, the Experience Management solutions from SAP.
How It Works
Generation Z urban citizens like Sami want instant gratification, social affirmation, entertainment, and seamless engagement. For someone of that generation, the dream journey for an elite shopping experience requires a frictionless experience at every stage of the journey.
For example, imagine that the customer’s experience begins with the discovery phase where a digital assistant virtually recommends an outfit based on lifestyle preferences via social media. The shopper replies with a voice message saying, “I like it; reserve it; I’ll try it on this afternoon.” The assistant tells the shopper that her favorite makeup artist is on the premises and would she like an appointment? Upon arrival at the mall, the shopper goes to the experience lounge to try on the outfit in a smart fitting room, get her makeup done, and opt for home delivery and frictionless pay. At the last stage the shopper has the option to provide feedback on the experience.
A state-of-the art solution is required to enable such an experience. SAP software is based on a platform architecture that offers the right technology at every stage of this journey. Customer identity technology, digital marketing campaigns, and an fashion recommendation engine based on artificial intelligence (AI) and machine learning all support the discovery phase. Real-time inventory, order management, social media, and ewallet and ecommerce technology enable the next phases. Biometric technology and the Internet of Things (IoT) enable the smart fitting room and the endless aisle opportunity. And Experience Management solutions from SAP enable the feedback process.
With this customer-first approach, SAP technology connects retailers and mall management to create a new seamless experience for the consumer, the tenant, and the mall employee that helps eliminate friction between the online and offline worlds. If something goes wrong, the technology enables all parties to respond to the question of what happened through operational data processing and the why it happened through the experience data management.
As the boundaries between online and offline business become increasingly blurred, understanding the customer experience is key for malls to constantly repurpose their existence. Experience management is the tool that can help reimagine, build, and run the future of malls.
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This article first appeared on the SAP News Center.