Malls are getting inventive to attract shoppers

BI Intelligence

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Mall owners Simon Property Group and General Growth Properties (GGP) are introducing a concierge bot and physical pop-up shops for e-commerce pureplays, respectively, in the hope of revolutionizing the in-mall shopping experience, Retail Dive reports. The companies operate 335 malls between the two of them, and are looking to boost sales as the brick-and-mortar retailers they depend on struggle to pull in foot traffic.

• Simon has launched a Facebook Messenger chatbot that can provide information about the mall and its stores, as well as daily promotions. The concierge bot can also send shoppers personalized recommendations and content from Simon SAID, the company’s lifestyle publication. Consumers have a growing interest in using chatbots for customer service purposes, and Simon is looking to capitalize on that interest by using the chatbot to personalize the shopping experience, which could improve sales.
• GGP is working with a retail strategist to create brick-and-mortar pop-up shops for retailers that are otherwise exclusively online. The concept is called IRL (in real life), and will debut on August 24 at GGP’s Water Tower Place location in Chicago. The 4,000-square-foot space will house multiple brands that fit a rotating theme, but will not hold any inventory. Instead, orders will be drop shipped to customers’ homes. IRL will offer e-retailers the opportunity to collect valuable consumer data from brick-and-mortar locations, and could benefit malls by increasing traffic as customers come to see the formerly exclusively digital brands.

As brick-and-mortar retail struggles, mall owners are trying to revitalize their sales with new technologies and store concepts. Approximately 20-25% of US shopping malls will close by 2022, according to estimations from Credit Suisse. Malls are getting inventive to avoid this fate, and Simon’s and GGP’s efforts may find success as Gen Z still likes shopping in stores, and these new innovations play to their digital sensibilities.

Brick-and-mortar retailers are caught on the wrong side of the digital shift in retail, with many stuck in a dangerous cycle of falling foot traffic, declining comparable-store sales, and increasing store closures. Over 8,600 retail stores could close this year in the US — more than the previous two years combined, brokerage firm Credit Suisse said in a recent report. Meanwhile, e-commerce pureplays are riding the rise of digital commerce to success — none more so than Amazon, which accounted for 53% of online sales growth in the US last year, according to Slice Intelligence. 

In response, many brick-and-mortar retailers have started to use omnichannel fulfillment methods that leverage their store locations and in-store inventory in order to better compete in e-commerce. These omnichannel services, including ship-from-store and click-and-collect, can help retailers manage the transition to digital by:

• Increasing online sales by offering cheaper, more convenient delivery options for online shoppers.
• Limiting the growth of shipping costs as online sales volumes increase by leveraging store networks for delivery.
• Keeping stores relevant by turning them into fulfillment centers that pull customers in to pick up online orders.

However, few retailers have mastered these new fulfillment services. While these companies have spent years optimizing their supply chain and logistics networks for delivering goods to their stores or directly to customers’ doorsteps, most have yet to figure out how to profitably bring their store locations into the e-commerce delivery process.

Jonathan Camhi, research analyst for BI Intelligence, Business Insider's premium research service, has laid out the case for why retailers must transition to an omnichannel fulfillment model, and the challenges complicating that transition for most companies. This omnichannel fulfillment report also detail the benefits and difficulties involved with specific omnichannel fulfillment services like click-and-collect, ship-to-store, and ship-from-store, providing examples of retailers that have experienced success and struggles with these methods. Lastly, it walks through the steps retailers need to take to optimize omnichannel fulfillment for lower costs and faster delivery times. 

Here are some of the key takeaways from the report:

• Brick-and-mortar retailers must cut delivery times and costs to meet online shoppers’ expectations of free and fast shipping.
• Omnichannel fulfillment services can help retailers achieve that goal while also keeping their stores relevant. 
• However, few retailers have mastered these services, which has led to increasing shipping costs eating into their profit margins.
• In order to optimize costs and realize the full benefits of these omnichannel services, retailers must undertake costly and time-consuming transformations of their logistics, inventory, and store systems and operations.

 In full, the report:

• Details the benefits of omnichannel services like click-and-collect and ship-from-store, including lowering delivery times and costs, and driving in-store traffic and sales.
• Provides examples of the successes and struggles various retailers have experienced with omnichannel delivery.
• Explains why retailers are having trouble managing costs with their omnichannel fulfillment efforts, which are eating into their profits.
• Lays out what steps retailers need to take to optimize costs for their omnichannel operations by placing inventory where it best meets customer demand.

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