Has e-commerce killed the shopping mall?

Summary:Does the increase in online shopping spell doom for this brick-and-mortar institution?

Jason Perlow

Jason Perlow

Yes

or

No

Denise Amrich

Denise Amrich

Best Argument: No

58%
42%

Audience Favored: Yes (58%)

The moderator has delivered a final verdict.

Opening Statements

Death march

Last year, in a previous Great Debate , I proposed that online sales within 10 years would devastate the balance of brick and mortar retail, citing the huge increase in online sales during the 2011 holiday season as a catalyst for continuing growth.

The holiday shopping season of 2012 proved to be even more of a watershed event than 2011. A report released by ComScore at the end of December last year said that holiday shoppers spent nearly $38.7 billion online between November 1 and December 21 of 2012, a 16 percent increase over the same time period one year ago.

Not surprisingly, all of this is happening during a very fragile economy, because shoppers are much more easily able to find deals online than in brick and mortar, as well as take advantage of free shipping, thus eliminating the crowding and the hassle of dealing with large retail establishments.

And what is more of a hassle than going to a modern shopping mall, which are located in extremely dense urban and suburban areas of the country, where there are also increasingly stressed and overworked Americans who are overextended on hours trying to make ends meet and to care for their families?

Why should they take up their valuable time sitting in traffic to get to the malls and to shop, when they could simply be doing it from the comfort of their own homes, or during lunch breaks on their own smartphones and tablet devices?

An entire website has now been devoted to "Dead Malls", ones which started out losing major anchor department stores, and then primary retail spaces until even the secondary stores could not survive on their own.

Recent figures indicate that retail space in over 200 shopping malls across the United States are suffering 35 percent vacancy rates or higher. Not surprisingly, the largest retailers in the country are also the ones with the largest amount of mall exposure as well, and are seeing their sales decline significantly as a result of this overall slowdown in mall shopping.

What's killing the malls? It's a combination of a weak economy, the increasing consumer preference for shopping online, and the high cost to retailers of having to rent retail space in a large shopping mall with ever declining foot traffic.

This is a trend that I personally don't see reversing anytime soon.

If the mall is dead, its customers sure don't know it

When I was on my way to the strip mall I frequent, at close to store closing time on Black Friday, I passed the local mega mall. There was hardly an open parking space to be seen!

It may be true that sometimes, for certain types of things (electronics come to mind), shopping can be better online. Certain types of shops have been hit hard by new shopping trends. Business models may need to change. Different types of stores may have a better chance for success. But the mall will never die.

Where else can I meet friend for lunch and a movie, try on shoes at three different stores, drop off my best loved pair at the shoemaker for some TLC, hit the salon for a mani-pedi, and grab a smoothie on the way home -- all in one shot and without struggling with more than one door?

All you need is a decent anchor store or two, and smaller shops, specialty shops, even the proverbial mom and pop shop, have a chance to win customers they might otherwise have never seen.

The mall will never die.

The Rebuttal

  • Great Debate Moderator

    Mic Check

    Are my debaters standing by? We plan to start this debate promptly at 11am ET / 8am PT.

    Posted by Rachel King

    Almost ready...

    Just finishing up a bit of online shopping....

    Jason Perlow

    I am for Yes

    Yes

    And looking forward to it!

    Denise Amrich

    I am for No

  • Great Debate Moderator

    OK, first question: How do YOU shop primarily...

    ...online or in-person?

    Posted by Rachel King

    Changing...

    If we are talking about durable goods, my wife and I shop in-person about 20 percent of the time. Much of the types of things that we purchase online include consumer electronics, small appliances, specialty clothing as well as large items such as home furnishings and cooking supplies (spices & seasonings as well as kitchen items).

    In person, there is the obvious food shopping as well as buying very personalized items such as clothing and shoes, which I feel still for the most part requires an initial in-store experience.

    I would also add any other business that requires hands-on consultation, such as a hardware store (Home Depot, Lowes) where finding a particular part or item needs the assistance of an employee.

    However, this is changing more and more, as once a particular style or brand of product is tried on, a higher of level of confidence in the brand will allow for successive purchases of the product online.

    For example, I may try on a certain style and brand of shirt on at a Big & Tall store in person, but if I want to buy more colors of that same item, we'll go through that company's online portal instead. The same could be said for shoes.

    I also see a future where confidence in online retail return policies are so strong and have such good customer service overall that in-store initial visits to have that warm and fuzzy feeling with a product purchase will not be necessary for the majority of durable good purchases. Certainly, Amazon has been able to build up their business this way.

    Jason Perlow

    I am for Yes

    I use both, for different reasons

    Different types of shopping serve different purposes in my life. I do most of the shopping for my family, and I find it’s divided between online shopping and shopping in physical locations. I usually find myself visiting the grocery store, the pharmacy, and the strip mall that has the craft store while I’m out running errands, with bimonthly visits to big box stores and warehouse stores. Electronics purchases are mostly done online because the selection is better and less expensive much of the time. I’m an Amazon Prime member, so I really use that service for all it’s worth.

    When I need to see the item, try something on, or get a real physical feel for what’s out there before purchasing, I usually visit a brick and mortar store (or stores). That’s where malls come in. Since I live in an area that doesn’t have reliable, good quality grocery delivery, I have to do that in person.

    Denise Amrich

    I am for No

  • Great Debate Moderator

    Has e-commerce played a role in the decline of the American shopping mall?

    Who even goes to shopping malls anymore?

    Posted by Rachel King

    There is no question that it has.

    Twenty years ago, the only way you could find certain types of stores were at malls. Malls had the necessary foot traffic for store specialization and it was the only way that most department stores could continue to thrive, when many of them moved away from a free-standing store model in the 1970s and became "anchors" in malls instead.

    Additionally, consolidation of the department store industry during that time period substantially reduced the real estate footprint of these companies.

    e-Commerce has hurt the shopping mall because you no longer need to go to a mall to get specialized goods.

    The challenges of suburban sprawl, worsening automotive traffic, rising fuel prices and the increased difficulty of time management in modern families (many of which now need to be dual-income to make ends meet, let alone the single parent families that have to struggle with the same problems) have made going to the mall a planned activity which nobody has as much time for anymore.

    It is much easier from the comfort of your own desk or even from your smartphone or tablet to type out a search phrase and click "buy" than have to undergo a mall excursion.

    There are still people who go to the mall, however. In many cases, this is not so much as a shopping trip with a planned purchase objective but an entertainment activity, which could include going to a movie (another industry which is in extreme danger from online activity) and a meal and to "Window Shop" for goods that may end up being purchased online.

    Malls also have been traditionally popular areas for socialization and gathering for the younger generation, but the status of the mall as primary social outlet outside the school is changing given the downturn in the economy.

    Jason Perlow

    I am for Yes

    Lots of people love malls

    It’s true, e-commerce has changed everything, including the American shopping mall. Sometimes these changes are for the better. While some types of stores have failed, others may have an even better chance to flourish. For example, Apple stores are among the most successful retailers on the planet.

    Young people go to malls. They work there, and they play there. People who like to socialize in person, with lots of different entertainment options, frequent malls. People interested in fashion go to malls, because it’s the best place to see what’s trending, or see and try on items in person that have been featured in magazines they read. Folks with an interest in getting a lot of different types of shopping done in a single stretch enjoy a good trip to the mall. People living in unpleasant climates enjoy the mall environment.

    Denise Amrich

    I am for No

  • Great Debate Moderator

    For larger retailers, are brick-and-mortar stores even necessary (or viable)?

    Can’t an online presence suffice?

    Posted by Rachel King

    Re-evaluating their real estate footprint

    If we're talking about big box retailers like Macy's, Sears, Wal-Mart, Target and Best Buy, I think that there will always be a need in certain geographical areas depending on actual population density for physical retail presence.

    However, that being said, I am sure all of these companies are strategically re-evaluating their real estate footprint and determining whether or not it makes sense to service an area with multiple stores or just simply one or two, and what sort of inventory makes sense to keep in a store versus sell in their online stores for home delivery or in-store pickup.

    Jason Perlow

    I am for Yes

    Online-only would be disastrous

    We could be looking at a really unpleasant class division if we went online only. However, we probably won’t, because large retailers are smart enough to want to mine all economic strata for as much cash as possible.

    It’s important to remember that not everyone has a person at home to receive packages from e-commerce sites, a boss who is cool about deliveries at work, or way to get packages home if they’re delivered to work. Many people live in cities or other areas where they can’t trust that packages delivered to their homes will still be sitting on their doorsteps when they arrive. People relying on public transportation may have better access to malls than to other forms of shopping.

    Denise Amrich

    I am for No

  • Great Debate Moderator

    Where could small businesses fit into all of this?

    Could they have more of a shot at competing on a more even playing field online considering they’re usually excluded from malls?

    Posted by Rachel King

    Small businesses are already taking advantage of this...

    ...because they have the personalization and the specialization to compete with the larger companies in areas in which those larger firms are weaker or cannot stock specialized items that aren't volume sellers.

    However, many of these smaller businesses are able to do this by having both a physical retail presence and also a strong online presence, and in many cases can situate themselves in less desirable and less expensive retail store space because of their area of specialization and can bolster their sales with online orders.

    Jason Perlow

    I am for Yes

    Small businesses will help malls

    It’s going to be absolutely necessary for small businesses to fit into all of this. If they’re still being excluded from malls, the time for that should soon be at an end. Most of the service businesses like salons, shoemakers, and dry cleaners in my local malls are very small businesses that may or may not rely on big name anchor stores as a draw. Small businesses often serve the niche markets that are important to local areas.

    Small businesses often actually have a harder time online because they don’t have the huge warehouse storage space or deal-making clout that allows larger etailers to offer rock-bottom prices, one-stop shopping, and perks like free two-day shipping.

    The small businesses that do well online also often serve niche markets, and have excellent customer service. Based on past experience, I am much more likely to trust major players online, with good systems in place, than I am to trust small or lesser known etailers (even for niche items).

    I had a really bad experience last year with a small clothing store that had an online presence. I had to get my credit card company involved when things got ugly. But I’ll do business in person with a small shop anytime I like the people, the products, or the prices.

    Denise Amrich

    I am for No

  • Great Debate Moderator

    Could an e-commerce only approach hurt a brand in any way...

    ...perhaps by losing that in-person, customer service relationship?

    Posted by Rachel King

    It depends

    Certainly if you look at certain brands from a historical perspective like Sears Roebuck & Co, the company started out doing business and did so successfully for decades as primarily mail-order.

    It would not surprise me to see a company like Sears return to its roots within the next several years. I think the key is to have very good telephone and email support and have a quick response time, and for the customer to know that they can reach a human being to answer their questions or resolve their issues.

    Jason Perlow

    I am for Yes

    It’s a double-edged sword

    I definitely think an e-commerce only approach can hurt a brand in a big way, but that’s a double edged sword. There’s nothing like a bad in-person experience with one surly employee to affect the perception of a major brand.

    It’s really all over the map, though. Again, I like brick and mortar for some things, online for others.

    I bought a Nexus 7 at Office Depot the other day because I needed a small tablet in a hurry. When I arrived, I was told by the sales guy that the item wasn’t in stock (although I was pretty sure it was, because I’d checked online before going over). I had to convince him to check stock, and then wound up having an unpleasant power struggle with him about not wanting to spend an extra $50 on their protection plan. I hate that hard sell when they don’t want to take no for an answer. How many times do I have to say it? I will think twice about shopping there again. Apple is fairly notorious for being non-existent for tech-support unless you buy their protection packages, although some people have had pretty good results in Apple stores. Really, most of the time when I buy online, I don’t expect customer service to be great, if it even exists at all.

    I make a lot of decisions based on return policy. I’m not one of these people who “rents” items from stores (sometimes people use things for a short while and return them, never intending to keep them), but if an item is not up to my quality standards, or it doesn’t work for me, I do not hesitate to return it.

    Online stores like Amazon, with great return policies and easy-to-follow return processes get my vote. Walmart is great for returns, too, with 90-day return policies and very few questions asked. You can buy online and return items to a local store if they’re unsatisfactory.

    Best Buy really annoys me by asking for ID every time I return something (even if I have a receipt). Small businesses are also generally harder to return something to, whether online or off.

    Denise Amrich

    I am for No

  • Great Debate Moderator

    What could shopping malls do to bring more customers back through their doors?

    Posted by Rachel King

    This is a very hard question to answer...

    ...because I think that the mall as it exists today will have to transform into something else completely in order to survive.

    The "stores" will have to become more like showrooms for their online presences and less oriented towards keeping inventory and obviously they will need to be price competitive with the purely online stores.

    There will need to be more specialization in the retail outlets and also more entertainment venues, and the parking and logistics of moving about the malls themselves needs to be dealt with better so that a mall visit doesn't immediately become a multi-hour time sink.

    Additionally, as more people start to work flexible hours instead of the traditional 9 to 5 eight hour day, staffing and hours of operation may need to be adjusted.

    Jason Perlow

    I am for Yes

    Be creative and think local

    Offering businesses and services that are relevant and exciting to the local community is essential to bringing customers in. This probably involves doing some research into the interests, hobbies, and events that the local citizens care about and creating areas in the mall centered on these passions. If done right, the mall can be a great community center. Special events, free events, and entertainment are great ways to get people in the doors.

    A nice hotel on premises works well for some malls. Hotel guests are great customers. Having a section for non-retail office use is helpful to business in many ways. Services like day care for the employees of those businesses, and different types of restaurants to take clients to can be useful to everyone.

    Nontraditional use of larger spaces might be a great way to bring in customers. For example, a dancing school with classes for all ages might be served by multiple businesses selling everything from shoes to fitness wear to costumes and accessories. One of the malls near where I live just opened a Salon Professional Academy. All those students are going to be at the mall regularly, using services, buying products, meeting friends there.

    Classes that serve the community would be great. Even community colleges could get into the act by starting satellite campuses at the malls, especially if a large space previously inhabited by a tenant that moved out is now vacant. Mall management might have to offer good deals to strategically valuable tenants to make this happen.

    Finally, stores can work together to bring customers to each other.

    Denise Amrich

    I am for No

  • Great Debate Moderator

    Is there any way that shopping malls could take better advantage of e-commerce trends and technologies?

    Posted by Rachel King

    Possibly.

    Just as Amazon has its own app for searching for desired goods, the local shopping mall may need an app that can federate the data from all of the retail stores and present a list of goods that can be bought at the mall that fit the search criterion.

    But at the same time, if the prices of these goods are not competitive with what exists online, there will be be few takers. So malls will have to offer things that cannot be purchased online, such as exclusive items in the stores as well as magnet entertainment and dining venues.

    Jason Perlow

    I am for Yes

    Let customers know about your online offerings

    A few of my favorite stores have apps that I’ve downloaded to my iPhone. Now I always know what’s on sale this week, and what coupons are available. Whenever I find out one of my favorite stores has an app, I get it on my phone right away. The key is letting customers know that the app is there, because they might not think to look. Have cashiers mention it to customers. Print it on receipts. Have a QR code at eye height on strategically placed posters throughout the store. Use your email list right. Use Google AdWords and Facebook ads to let people know what you’re doing.

    Denise Amrich

    I am for No

  • Great Debate Moderator

    What role will mobile commerce, in particular, play in this, if any?

    Posted by Rachel King

    I think it is clear that mobile technologies are a rapidly emerging way of doing business online.

    Amazon recently reported that roughly eight percent of their total sales are being generated by mobile devices, and I expect this trend to continue upwards.

    You can also expect that shoppers will be increasingly using search and barcode scanning applications on their smartphones when they shop in brick and mortar and at the mall to do spot price checks on items and determine whether or not the product can be better purchased elsewhere.

    I myself am guilty of doing this every time I go to a brick and mortar store and are considering a purchase.

    Jason Perlow

    I am for Yes

    Make sure it’s useful

    More and better integration with real-time information about what’s available in the local brick-and-mortar store’s current inventory would be helpful. The ability to request that an item be held (without having to prepay) or make an appointment for a service are great uses of an app.

    If you’re going to have an app, make sure it’s actually useful. Make it easy for customers to quickly access when standing in line for the cashier. The more obstacles you place in the customers’ way, the less likely it is to be worth their (or your) effort. One craft store I frequent has a number of coupons available on their app, with a minimal amount of navigation to the coupons. The other craft store has an annoying splash screen, a one coupon per customer per day policy, and requires you to sign into the app to get to the coupons. Guess which one I prefer?

    Mobile commerce shouldn’t be just a buzzword. It’s something that requires the use of critical thinking and good marketing to do things that are actually helpful for customers, not just annoyances that help retailers feel like they’ve checked off their mobile commerce to do list item.

    Denise Amrich

    I am for No

  • Great Debate Moderator

    Could shopping malls take more advantage of social media too...

    ...or is that domain better suited for e-commerce only?

    Posted by Rachel King

    It's possible

    Malls, and stores that have mall retail locations, may be able to use the same outreach techniques that e-commerce based stores use to retain customer loyalty, but that will have to be combined with the same kind of loyalty and rewards programs as well, something that they may not be equipped to do as individual stores. As alliances of stores within malls or perhaps as affiliated mall management companies, possibly, although this may be difficult to engineer.

    Jason Perlow

    I am for Yes

    Use it appropriately and make it good

    Shopping malls absolutely can and should take advantage of social media. In my local mall, there’s a salon called Brow Art. It specializes in eyebrow threading, an eyebrow shaping method that provides an alternative to waxing and tweezing. They have a great Twitter feed with information pertinent to their business model. They’re making good use of Pinterest in their tweets on whatever might be of interest to people wanting to cultivate attractive eye looks of all kinds.

    Facebook, Twitter, Pinterest, and other social media are here to stay. They’re easy and inexpensive to use, and shouldn’t be thought of as another to do list item for an already busy merchant, but a vital way to communicate with an interested customer base. Just make sure the communications are appropriate and pertinent to the interest so loyalties aren’t abused.

    Denise Amrich

    I am for No

  • Great Debate Moderator

    Last question:

    What stores might be considered safe from a growing shift among consumers toward e-commerce?

    Posted by Rachel King

    Highly specialized products

    Automobile dealerships, while requiring less locations than before due to heavy online presence of the car manufacturers, will still need showroom space.

    Dining and Food stores will still be needed even if retail shifts most of its activity to online purchases. Furniture and large appliance stores are probably also safe, as are home improvement stores such as Home Depot and Lowes.

    And as I mentioned before, any business that offers highly specialized products will continue to thrive provided that they maintain a balance between retail and e-commerce operations.

    Jason Perlow

    I am for Yes

    Places where you have to see and touch the goods

    The craft and hobby store is the main store type that comes to mind here. It’s really hard to order certain things online for reasonable prices, without paying through the nose for shipping. Not everything in a given niche area is available for a reasonable price on Amazon, and sometimes it’s impossible to tell quality from pictures online. Sometimes you have to see and touch a thing to know if it’s going to work for you.

    Stores serving an interested niche are viable. There’s a local running store called The Running Zone that facilitates community fitness events and provides a calendar of 5K walks and runs. They have a well-organized Web site that is regularly updated to provide information about local goings-on, and they also have the info available in the store. Their service is personable and great. Sometimes you really need help getting a decent fit on a pair of running shoes. I’m willing to pay a little more for the personalized attention and service.

    Food related shops, pet stores, stores that sell large items that would be prohibitively expensive to have shipped to the home, stores that sell things you need to try on, service businesses, and places that sell stuff you need right now are all pretty safe. Drugstores are safe. Gas station mini-marts are probably safe. I don’t think the big box store is going anywhere anytime soon (although heating and cooling large spaces can be expensive). In my area they are open 24 hours, which is convenient and allows for the smooth restocking and running of the operation.

    I am wondering, though, if Best Buy will wind up going the way of Circuit City and CompUSA. After all, it’s pretty pathetic when the only Bluetooth dongle they have in stock at the store is one from 2008.

    Denise Amrich

    I am for No

  • Great Debate Moderator

    Thanks to Jason and Denise for a spirited debate

    And thanks to our readers for joining us. Please check back here tomorrow for our debaters' closing arguments, and again on Thursday when I issue my final verdict.

    Posted by Rachel King

    Thanks, Rachel and Denise

    Jason Perlow

    I am for Yes

    I enjoyed it!

    (Not as much as I enjoy shopping.)

    Denise Amrich

    I am for No

Closing Statements

Less time to shop

Jason Perlow

There is a sickness in brick and mortar retail, and we need to understand what is driving it. The economy as a whole and scarcity of disposable income is a contributor, but the economy also has side effects, such as causing people to work more hours and seek additional avenues of income.

It is also breaking up families that now have to face single parenting scenarios which make a planned mall excursion during normal business hours as well as on the nights and weekends that much more difficult. Fuel prices are also making people think twice about getting in the car and going to the Mall. All of these will increase retail vacancies and make e-commerce that much more attractive an alternative to traditional brick and mortar shopping.

Despite my largely telecommuter lifestyle, I still love to get out of the house. But my time has value, as it does to many people. Shopping is a necessity, but it is not necessarily an enjoyable activity at all times. That we all have less time to spend on tasks outside our revenue generation responsibilities and spend whatever we have left with our families (and our diversions) has no doubt impacted the bottom line of the shopping mall.

Let the marketplace decide...literally!

Denise Amrich

Jason, as always, makes some good arguments. But the fact is, while techie-type stores like Best Buy may well go the way of the Dodo and Circuit City, stores for regular people will still be in demand. From an economic draw to an instant gratification draw, to an interpersonal experience draw, to a peak experience draw, stores in their physicality provide real value to consumers that can't be replicated online.

But that doesn't mean all stores will win. The malls will morph. Store owners and operators need to adjust to a world where online commerce is a reality, and they'll need to be creative and modify their business models to coexist in a world filled with digital natives.

One thing to consider when thinking about this issue is that half the stuff we now shop for online didn't even exist back in the day when we did pretty much all our shopping in person. So maybe people will shop for their digital stuff in the e-commerce world, and their real stuff in the real world. The Internet will just keep making it easier and easier to spend more money, whether enticing folks to a physical store or an online marketplace.

Some retailers, like Apple, will win big. Others won't. Such has always been the way of retail. In the meantime, enjoy shopping for what you need, in the way that works best for you. Be sure to support the stores you love, and then relax and let the marketplace decide.

Evolution, not extinction

Rachel King

This is a difficult one for me to call considering I’m a big fan of online shopping, and I detest having to shop in person most of the time -- even for groceries.

Nevertheless, I’m giving the win to Denise on this one.

Jason certainly had plenty of excellent points (not to mention numbers) defending why shopping malls just aren’t what they used to be in the face of e-commerce trends over the last few years.

But to argue that shopping malls are going totally extinct across the entire country is too extreme. In this sense, I agree with Denise that shopping malls will need to change their business models (not to mention size down) in response to current commerce trends.

Denise also had a few great suggestions of how malls could go about this, pointing out the small businesses that could thrive in shopping centers as well as linking malls to hotels for business travelers looking for last-minute items and services all in one spot.

Overall, shopping malls still serve a purpose for those consumers looking to get their shopping and errands done all in one place immediately. There are plenty of retailers that also require a brick-and-mortar presence that fit in well with the American shopping mall culture, such as big box hardware stores like Lowe’s and Home Depot.

However, as many other products (i.e. clothing, toys, anything entertainment related) can be bought online easily (and usually for a lower price), definitely expect to see a lot of stores and brands disappear from malls -- in effect causing them to get smaller than we might be used to seeing.

Topics: Great Debate

About

Rachel King is a staff writer for CBS Interactive based in San Francisco, covering business and enterprise technology for ZDNet, CNET and SmartPlanet. She has previously worked for The Business Insider, FastCompany.com, CNN's San Francisco bureau and the U.S. Department of State. Rachel has also written for MainStreet.com, Irish Americ... Full Bio

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