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Do Malls Have a Future?

By Brian Kline | October 27, 2014

For commercial real estate investors the question about the future of shopping malls continues to be unanswered. As online sales grow, it's estimated that 400 of the once 1,100 enclosed malls across the country have either closed or been transformed for another use. Some investors believe malls will find ways to remain relevant in the future while others believe malls will gradually become completely irrelevant.

Retail Needs to Evolve

Most malls and retail settings have already made efforts towards becoming more competitive with online shopping but the results have seldom been effective. Technology seems to constantly be outpacing brick and mortar stores. One technology currently in development for brick and mortar stores are fitting rooms with devices that take your body measurements and deliver your clothing of choice in the right size the first time. Unfortunately for retail stores, this same app is likely to soon be available on smart phones so that shoppers can continue shopping from the convenience and comfort of their computer chair.

Visit the shops in city

If mall stores do survive another decade, the display side of stores is expected to shrink. Stores are evolving into mini-distribution centers. More sample merchandise can be displayed in a smaller area when the stock is kept in the back storage area instead of being stored in the display area. Automation will make inventory retrieval fast once a customer makes a purchase decision.

Another technology application that stores are experimenting with is a cash and carry smart phone app. When a shopper makes a purchase decision, they simply need to scan the bar code with their smart phone to complete the purchase. Stores see this as another opportunity to reduce the stores footprint by eliminating checkout stands.

24-Hour Delivery

Another possibility retailers are looking at is moving most inventory to remote distribution centers where costs are lower. The theory here is that as shoppers become more use to ordering online and waiting a day or two for merchandise to arrive the mail, that brick and mortar stores can do the same. The advantage would the shoppers' ability to touch and see sample merchandise but it would ship to their home from an inexpensive remote location.

The prominent brick and mortar trend is towards reducing operating costs by reducing expensive square footage in the malls. That indicates that commercial investors are going to see more vacancies in the future and little if any need to expand or build new retail space.

Mixed Use Space

What retail store owners and consumers want aren't always the same. Consumers aren't necessarily ready to abandon malls and strip centers. What they want are more mixed-use spaces. Along side the Macys and Sears in the malls consumers want other conveniences. Essentially, they want a single place that takes care of all of their needs. They want a grocery store in the mall, a gym, spas, and maybe a place to take community college classes. One stop shopping.

Another version being studied is the high technology store. Stores that incorporate interactive technology to WOW shoppers and give them a more enjoyable shopping experience. One version of this is the "endless aisle". This might be a kiosk where shoppers can view an endless number of products that are not kept in the store and even items that are no longer produced but are still in inventory at a remote location.

Whatever malls and shopping centers become in the future, it will be an evolution from what they are today.

Brian KlineAuthor bio: Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years. He also draws upon 25 plus years of business experience including 12 years as a manager at Boeing Aircraft Company. Brian currently lives at Lake Cushman, Washington. A vacation destination, a few short miles from a national forest in the Olympic Mountains with the Pacific Ocean a couple of miles in the opposite direction.

Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years with articles listed on Yahoo Finance, Benzinga, and uRBN. Brian is a regular contributor at Realty Biz News
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