ICSC: International Council of Shopping Centers

E-commerce is no match for retail centers, RECon attendees say

Publish Date: May 19, 2014

Category: SCT Newswire Articles
Topics: e-commerce, malls, omnichannel, recon, reits

The mainstream media and economic pundits have declared the mall dead ever since they figured out that people could use a computer to shop for goods. But, as Amazon.com is set to celebrate its 20th year in business in 2015, all but a sliver of consumers’ shopping is taking place in stores. During last year’s fourth quarter, retail sales through the Internet only made up six percent of total retail sales, according to U.S. Department of Commerce. But that’s not to say that retail real estate executives and mall owners aren’t taking e-commerce seriously.

Just ask the exhibitors and attendees at RECon 2014. Many are trying to be proactive and use the Internet to their advantage. “For shopping center owners the Internet creates the opportunity to have a direct relationship with our consumers,” said William Taubman, COO of mall owner Taubman Centers, which owns upscale facilities nationwide. “Remember, it has always been indirect — our relationship was fundamentally through our retailers. This should give us the opportunity to customize the shopping experience for our loyal customers in a way that will make it a much better experience, one customer at a time.”

Though e-tail sales still only account for a small amount of overall revenue in the industry, they are increasing about 12 percent a year, pointed out Gene Spiegelman, vice chairman of brokerage in the New York City office of Cushman & Wakefield. But brick-and-mortar stores and mall operators are finding out how to tap into this uptick, he said.

For example, several major mall owners are using the services of a Silicon Valley-based company called Deliv that provides fast home delivery of items straight from malls that shoppers either purchase in person, and don’t want to lug around with them, or remotely buy online.

“The landlords are really working on adapting,” Spiegelman insisted. “The brick-and-mortar retailers are looking at a lot of different techniques to make sure they compete in both the traditional retail environment and the e-commerce environment.”

One landlord that is not about to lose sales to pure e-commerce is the Syracuse, N.Y.-based Pyramid Management Group, which owns 19 malls in the Northeast, including the 2.5 million-square-foot Destiny USA, in Syracuse; and the 2.2 million-square-foot Palisades Center, in West Nyack, N.Y., just north of New York City.

Last year management rebuilt its entire social media platform, with a focus on promoting the best sales that stores are offering in its malls. It also launched a mobile app to promote tenants’ special offers.

At the same time, Pyramid’s leasing team striving to have its malls offer something e-commerce never can, by signing tenants that provide entertainment and dining experiences that cannot be replicated on the Internet.

“Everyone needs to step up their game,” said Josh Amidon, Pyramid’s corporate manager of marketing and social media. “There’s always room for improvement. We are always trying to get people within our stores and our companies to try to participate more, to push themselves and push us, to do better. Ultimately, if the stores are not doing well, we as a mall and as a company are not doing well.”

Retailers with a physical presence still have the upper hand and will continue to as long as they are able to use their “online presence to enhance the in-store experience,” remarked Rick Chichester, president and CEO of Irvine, Calif.-based commercial real estate services firm Faris Lee Investments.

Chichester said he sees the future of online retailing being more driven by the sale of commodity items, rather than purchases made as a result of emotional impulse. It will be very hard for Web sites to recreate the experience a consumer has going into a store and physically interacting with products.

“The fact is that you’ve got the digital experience where people are constantly researching or shopping online, and you’ve got to use that to draw the customer into the store,” he said. “If it’s emotional, I can see it, feel it and it’s experiential, I want it right now. The in-store experience beats it all the time.”   

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