E-commerce Rules Over Retail: How Shopping Malls Are Going Obsolete

By Katelynn Rosa:

Spending the weekends with friends at the mall is becoming outdated as brand name stores close their physical doors. There is a rise in retail vacancies and decline in shoppers going out to stores.

There is some debate as whether the cause is the lack of stores for people to shop or vice versa, but the fact remains that, according to Forbes, the two trends are jeopardizing the future of over 1,200 malls nationwide.

The Wall Street Journal further explains that mall vacancy rates have increased by 9.1% in the third quarter, which is the highest it has ever been in seven years. Oliver Chen, managing director retail and luxury sector at Cowen and Company, a financial services firm, told Forbes that he predicts that roughly 30% of malls in the United States will fall or be re-purposed.

This is due to the big name brands closing their doors in shopping centers. Brands like Sears and Macy’s are closing hundreds of stores. Forbes provided a list of companies closing up shop as of 2018, which can be seen here.

 

According to a recent survey conducted by Assumption College students, of the 154 responses, over 60% of people preferred shopping in-store, majority only going out once a month. While this may be true for those in New England, overall 51% of Americans prefer to shop online, according to Entrepreneur, but 64% spend most of their shopping money in stores.

The anonymous survey asked if people didn’t shop on location, what were their reasons. Many of the answers were the same, its convenient. When it comes to big brand names, there are more options online than there are in stores, especially when it comes to clothes. Some stores offer a range of sizes, but they might not have the size you need that day. Others say it’s due to distance, where the closest shopping center may be 30-40 minutes away. Why go out when you can get the same thing from home with the click of a button?

Arlene DeWitt, MBA, associate professor of marketing and organizational communication at Assumption College, said the decline is due to a combination of factors:, people wanting brands, people wanting discount shopping, and people wanting to shop online.

“Consumer marketing behavior says that we as consumers, when we shop were not only shopping for the goods or services that we are buying, but for the brand,” said Prof. DeWitt. “We want to have North Face on our jacket. People are brand shopping.”

Department store companies have tried to focus on brand names to combat the lack of consumers coming to their physical locations, like Sears selling L.L. Bean merchandise at their stores, but this was not up to par. Prof. DeWitt experienced this herself once saying, “It was a very small section. I remember visiting it and it didn’t have much of a selection. I didn’t go back a second time.”

Another answer to why people didn’t shop on location, based in the Assumption survey, was when it comes to big brand names, there are more options online than there are in stores, especially when it comes to clothing. Some stores offer a range of sizes, but they might not have the size a person is looking for that day.

“What has brought down the decline in mall shoppers is the discount outlets,” said DeWitt. “We have Wrentham, which is the closest to Worcester. It’s row and rows of brand named stores at discount prices.” 

Besides loyalty to brand name products, consumers also rely heavily on discounts. According to DeWitt, people are more likely to shop at retail outlet centers than the typical shopping center. 

“People are also used to not paying full price anymore. Department stores and malls are associated with full price shopping. And people are thinking, ‘I’d rather go to the outlet malls where there are 78 brand name stores where I can get a discount.’”

That’s why stores like T.J. Maxx are still up and are running over stores like J.C. Penny.

Now, it goes further than that with online shopping. Apps, like Honey and Wikibuy, offer consumers discounts as they are at the checkout. It is changing the way consumers traditionally shop. Malls have been around since the 60’s, but with the rise of discount and online shopping, it doesn’t seem like they are going to be as successful as they once were.

 

Shopping online, however, is a completely separate entity. According to DeWitt, online shopping is hitting key points that consumers are looking for when it comes to shopping.

“There’s a marketing concept called utility. Utility gives value to consumers decisions in buying any products and services,” said DeWitt. And there’s four of them: place utility, time utility, form utility, and possession utility.

Online shopping hits all of these points and DeWitt explained it perfectly here:

“Online shopping gives us all those utilities. It gives us place utility because we can do it from home or office; it gives us time utility because we can order 24/7 or at 1 in the morning in our pajamas; it gives us form utility because we can order in bulk and not drag it into our car and bring it into our house; and possession utility mean[ing] you can buy it through convenient means, like credit cards.”

Other companies, like Dunkin Donuts, have put this technique into effect by attaching their stores to gas stations. It’s a one-stop shop. “You can get your gas, your morning coffee or donuts,  oh and while your here you can get a gallon of milk too,” said DeWitt. 

It’s because of websites like Amazon that online shopping has evolved so dramatically. Consumers are not only buying basic goods, but buying whole meals from places like UberEats and GrubHub.

To bring back the Assumption survey, people claimed that convenience was the main reason for shopping online over shopping in-store. Amazon has evolved even further, offering Amazon Prime to its users, which gives benefits, like free shipping and extra discounts, to those who purchase this feature.

Even the food service apps are jumping on board, like GrubHub. They offer free delivery for places like Taco Bell if people have an account on their site.

What do you think? Is this the death of malls and shopping centers and the rise of online shopping? Comment below or tweet me at @KRosa_AC301.

One thought on “E-commerce Rules Over Retail: How Shopping Malls Are Going Obsolete

  1. Online shopping does have its place but for some people there is a reluctance to commit to a purchase without actually getting to touch and inspect items. I’ve been known to go to a store to check out a product then purchase it online, usually with a good discount. With mall-based or stand-alone brick and mortar stores closing, I wonder if the thing we see next are catalog stores (like Service Merchandise) that were once popular.

    Like

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