Some Malls Aren’t Dying

Mar 26, 2022

Some malls aren’t dying, and this company is helping them hang onto the customers they still have

By Nate Berg

Originally featured on Fast Company

The death of the shopping mall has been widely reported. Dying malls are seeing anchor tenants fail or flee, and the rise of e-commerce has led many shoppers to do much of their buying online instead of in-store. Physical malls and shopping centers seem to be a dying breed. Except where they aren’t.

“Consumers in big numbers are still going to physical shopping centers,” says Peter Tonstad, CEO of Placewise, a digital marketplace management company. In the U.S., foot traffic at shopping malls exceeded pre-pandemic levels in July 2021, and some markets saw traffic at retailers jump nearly 300% in 2021. This is in stark contrast to retail overall, which has been pummeled by the pandemic, but for some malls and shopping centers–especially in smaller towns and suburban areas–customers have surprisingly not disappeared.

Placewise is working with these shopping centers to hold onto those customers before they do. The company helps mall owners and operators get in on the e-commerce bonanza that’s rapidly transforming the way their tenants do business.

“Malls have been sitting on the side, looking at consumers and tenants become digital, but they themselves are just doing what they’ve always been doing,” Tonstad says. “For shopping centers to succeed in the future, they really have to have a direct consumer relationship.”

Building that relationship requires rethinking what the physical shopping center does today. Placewise works with more than 1,100 shopping centers around the world to create digital platforms that can enable malls themselves to become hybrid online and physical marketplaces.

Through exclusive offers, loyalty programs, and other discounts offered to shoppers, Placewise works with malls to create apps and digital marketing to lure shoppers back through their doors. Instead of the individual e-commerce system each of their tenants have, malls use Placewise to provide shoppers a mall-wide platform, centralizing online shopping, promos, deliveries, and returns in one app.

In an era when nearly every store has an e-commerce channel, it may be hard to imagine going to multiple stores in a digital shopping mall instead of just heading to the more established websites of those stores. But Tonstad says this concept makes particular sense in some smaller communities, where many such centers remain some of the only shopping options around. Adding ways to access these places digitally can help them broaden their relevance.

In the U.S., they’ve worked with mall owner the Centennial Group to implement this system in malls in Vancouver, Washington, and Aurora, Illinois. Colleen Heydon is Centennial Group’s senior vice president of marketing, and she says the tools Placewise helped her company roll out “allow our shopping centers to deepen the relationship with their most loyal customers.” Their app-based loyalty program, MyPerks, delivers personalized content based on customer preferences, from targeted sales to details about specific retail offerings.

Tonstad says that Placewise has been able to give clients like these a more fruitful relationship with their customers, converting physical visits into digital connections that the malls can use for marketing purposes or even direct sales. Some clients have seen more than 30% of their physical customers also become digital customers after three years. Tonstad says the best-performing clients were able to get 70% of their physical visitors to use the digital platform.

The company is also building the ability for malls to have a more traditional online shopping presence, with a unified checkout system for any of the retailers, and the option to have bundled delivery or centralized on-site pickup of purchases made at multiple stores. They’re even helping some of these malls become their own mini-fulfillment centers, acting as more local versions of the giant warehouses that ship Amazon orders, for example. This can make the process of returning or exchanging an online purchase faster and less environmentally damaging, Tonstad says. For smaller communities outside major metropolitan areas, where fast e-commerce delivery is rare, being able to do all this in one stop at the mall can be a boon.

One client, the Norway-based shopping center operator Scala, has seen this e-commerce move pay off in the smaller communities where it has some of its two dozen locations. “They might have local towns . . . of 100,000 people, and they’ll typically have more than half now in their database,” Tonstad says.

Getting first-party user data as customers opt-in to the system in exchange for offers and loyalty programs will be essential for malls to transition to this hybrid in-mall and online shopping future, says Tonstad. Customers are already primed for this type of shopping. Adding a digital layer on top of the physical mall just combines two familiar ways people shop. “The shopping center then just becomes another sales channel,” Tonstad says.