Shopping malls, once the cornerstone of American retail and social life, have faced increasing pressure in recent years as e-commerce continues to rise.
Yet, despite this, the majority of retail sales still occur in physical environments.
So, what is driving the evolution of shopping malls, and how can they adapt to modern consumer behavior?
Michael Zakkour, founder and chief strategist at retail consulting comapny 5 New Digital, shares his insights on the future of shopping malls and the trends shaping their transformation.
E-commerce isn’t the only challenge
Contrary to popular belief, Zakkour emphasises that the biggest challenge facing shopping malls isn't e-commerce itself.
Rather, it’s the changing social habits of consumers and where they choose to spend their time.
"The biggest challenge malls face isn’t so much about competing against the convenience of e-commerce, it’s more about how and where people choose to spend their time socialising," Zakkour explains.
The rise of e-commerce, which, according to Zakkour, now accounts for 21% of retail sales, certainly played a role in shifting consumer preferences, but even before this growth, malls were already struggling.
This is due to the interconnected decline of both malls and department stores.
As Zakkour notes: “The fate of malls and department stores are intertwined, both models have fallen out of favour, and because they were co-dependent that amplified the struggles of both.”
While e-commerce offers convenience, a wide range of products, and efficient delivery, Zakkour emphasises that it doesn’t replicate the immersive and social experience that shopping malls can provide.
Zakkour highlights that even as consumers embrace online shopping, they still crave interactive, engaging, and experiential environments that malls—when done right—can offer.
Reinventing the shopping experience
For shopping malls to thrive in the future, Zakkour believes they must reinvent themselves to provide a more dynamic and engaging experience.
"Consumers want interactive, immersive, 3D experiential shopping,” he says.
In fact, some malls, particularly A-level malls, are still thriving by offering much more than just stores.
A prime example, Zakkour notes, is the American Dream mall in East Rutherford, New Jersey (NJ).
"American Dream in East Rutherford NJ is a “Super-Mall” that offers great shopping, an amusement park, a water park, an aquarium, and interactive amusements," says Zakkour.
While not all malls can scale to the size of American Dream, the lessons in drawing foot traffic through entertainment and immersive experiences are applicable to shopping centres of all sizes.
"That’s not feasible for all malls but the lessons on how to attract foot traffic and give people a great day out are there," he says.
"Ironically he future of malls may depend on recreating dense urban environments that combine condos, shopping and entertainment in the same place."
Zakkour sees a trend towards shopping malls replicating dense, urban environments that combine retail with residential and entertainment spaces.
This blending of commerce, living, and leisure could be the key to their survival.
Leveraging technology for in-store engagement
Technology will play a critical role in shaping the future of malls.
As Zakkour points out, we are entering an era of in-store technology designed to enhance the shopping experience and make physical stores more convenient, engaging, and enjoyable.
"The idea is to make your store immersive, and your online presence immersive and then to connect the two. This is done by integrating online, offline, technology, entertainment, and supply chain as a foundation," explains Zakkour.
"We are seeing stores experience great success with digital shelves, Augmented Reality, AI-powered store and product navigations, virtual try-ons, interactive digital displays, robotics and better inventory management tech so that shoppers don’t meet empty shelves and out-of-stocks."
These technological advancements not only improve customer engagement but also streamline operations.
Fostering community and socialisation
Beyond just a place to shop, malls have the potential to serve as important centres for community building and social interaction.
"Malls became popular in the 70s because previously most shopping was done in city centres," says Zakkour.
"As more people left cities (and didn’t want to go back to shop) and as urban decay set in, Malls were the shiny new, dazzling, and completely different experience. Much as the advent of the department store was new in the late 19th and early 20th centuries."
Zakkour believes that malls, if reimagined correctly, can once again become the "centres of socialisation, dining destinations, and more."
The key to this transformation is understanding the behaviour and desires of 21st-century consumers.
Today's shoppers seek both physical and digital experiences, and malls that blend commerce with entertainment and technology have the potential to thrive.
“I believe most consumers want to have both digital and physical centers of community and the new mall model has the potential to fill the latter desire,” Zakkour adds.
Embracing omnichannel retailing
In addition to providing a rich physical experience, malls must also embrace omnichannel retailing, where online and offline shopping experiences are fully integrated.
This means offering conveniences like click-and-collect or buy-online-return-in-store options.
Zakkour sees the evolution of omnichannel retailing as part of a broader "Unified Commerce" model.
"It’s about connecting all of your consumer purchase points (physical store, website, live streaming) and your back-end technologies, data, and marketing," he says.
“This is the essence of consumer centricity: choice of engagement points, convenience, and entertainment, backed by personalisation."
By providing customers with the flexibility to move seamlessly between online and in-store shopping, malls can meet the evolving needs of the modern shopper.
The future of shopping malls
Looking ahead, Zakkour predicts a significant transformation in the shopping mall landscape.
“I think we will see the continued closings of old, boring, non-connected malls and the emergence of a new model that has the DNA of the original mall concept but evolved for the way people live, work, shop, and socialize in the mid-21st century,” he explains.
Rather than disappearing entirely, malls will evolve to meet the demands of modern life, blending shopping with entertainment, residential spaces, and technology-driven experiences.
As Zakkour aptly puts it: “The mall is dead, long live the mall.”
While shopping malls face significant challenges in an era dominated by e-commerce, they are far from obsolete.
With the right mix of technology, community-building, and immersive experiences, malls have the potential to reinvent themselves and thrive in the 21st century.
