How the shopping mall can defeat its online competitors

New generation malls
In the past two decades, some malls have seen footfall reduce. One of the main reasons is that the traditional “trip to the shops” is being replaced by online ordering, particularly for the digital natives of the millennial and Gen Z age groups.

Why brave long queues in the mall when you can have groceries, clothes and even entertainment – think Netflix – delivered to your home?

The good news is that online competition can be defeated when malls find new ways of persuading people to visit rather than stay at home. This rapid evolution is flipping the very definition of a shopping mall on its head.

Buying online has grown steadily over two decades

Leisure as the anchor

 Visitors no longer come to shopping malls primarily to buy next season’s fashions; they go to socialize, to engage and be entertained.

We are witnessing a clear trend for malls to assign greater floorspace to leisure venues. In fact, around a quarter of mall floor space is now taken up by food and entertainment and we expect this to rise to up to half, especially in newly built malls.

According to a report by commercial estate agents Jones Lang LaSalle (JLL), US retail spending on food and drink has already outstripped what people spend on grocery shopping.

Globally, 40% of consumers today choose a mall primarily because of its restaurants and these restaurant patrons will spend 35 more minutes at retail stores than their non-eating peers.

If restaurants are the new driver of footfall, it’s not fast-food and national chains that capture visitors’ imaginations. As JLL’s research underlines, customers are looking for authentic experiences such as immersive dining, concept restaurants or food courts designed by celebrity chefs.

Chart shows how much retail space per 1,000 people there is in various countries

The US has the biggest retail spaces

Making experiences count

As we curate and evolve our offerings, we recognize that core entertainment products can be further enhanced to make them unique.

VIP cinemas are a good example of this trend. They build on the simple and much-loved experience of watching a movie but take it several notches higher by creating an environment that sets it apart from both the classic cinema and video streaming – a private venue for just you, your family and friends, with comfortable seating, fine dining, quality beverages and bespoke service.

Personalization also enhances existing offerings. VOX Cinemas allows you to book your preferred cinema concept and seat online and guests can even pre-order their preferred snacks. The whole transaction can be completed online, via phone or at a kiosk.

While trends often emerge through surveys and studies, customers play an incredibly active role in designing their own experiences. For our VIP cinemas, we recently invited a group of customers to try the menu we had developed with Michelin-starred chef Gary Rhodes. Based on their feedback, we asked Chef Gary to adjust the menu, before holding another tasting session to ensure we’d got it right. The result: happy customers who felt their opinion really mattered.

The feedback loop
It goes without saying that, when it comes to personalized services, consumer tastes are in constant flux. That’s why we at Majid Al Futtaim receive daily feedback from our guests through our Net Promoter Score (NPS) programme.

This not only ensures we meet expectations but that we are also agile and responsive enough to react to the suggestions of our guests. Since launching NPS across VOX Cinemas, we have received more than 350,000 pieces of feedback. This is a massive and valuable opportunity to learn and evolve our experiences.

But, asking for feedback from guests is pointless if a business isn’t brave enough to act on the gift they’ve been given. Both malls and their tenants should continually explore the needs of potential visitors and spot broader trends.

There is, for example, growing demand for Arabic-language films in the Middle East, and internationally. Having identified the gap, and lacking a short-term solution, we decided to create the content in partnership with producers MBC and Image Nation. Investing in local Arabic content production and distribution to meet growing demand therefore became a logical priority and opportunity for Majid Al Futtaim.

A shared experience

Another trend we have identified is that people tend to seek out attractions they can enjoy with their friends rather than on their own.

In a survey we conducted with YouGov, nine out of 10 UAE residents said “sharing moments with loved ones” provides them with great personal satisfaction and fulfilment. The study also asked if respondents would rather pay full price for an experience they’re sharing with a friend or half price to do it on their own. Two thirds of those surveyed opted for the more expensive but shared experience.

Ideally a destination should provide something akin to a family visit to Disneyland – with all the excitement but without the long-haul flight. Technologies such as virtual and augmented reality can already deliver immersive experiences, but we need to make them less about one person with a VR headset and more about a shared enjoyment.

Love not like

Retailers can’t just pay lip-service to an experience-led approach; the ambition has to be for customers to love – not just like – coming to a mall, cinema, retail outlet and entertainment destination. The businesses that invest in the right experiences, listen and react to what their guests are telling them and put customers at the centre of everything they do will be the ones that succeed.

This article was first published on WEF's Agenda Blog: weforum.org