design:retail - June 2018 - 38

The Future of
Shopping Centers
Produced by
A.T. KEARNEY, GLOBAL MANAGEMENT
CONSULTING FIRM

his excerpt of exclusive analysis by
A.T. Kearney examines the future of
retail real estate and what the industry will look like in 2030. Our study
suggests the industry can have a robust future provided it evolves and successfully
harnesses three change drivers: the human element, technology and commercial
considerations. We see yesterday's shopping centers and malls morphing into
consumer engagement spaces (CESs)-
transformed mixed-use commercial
offerings designed to meet the needs of
new and future generations of shoppers.

RETHINKING SPACE AND THE CONSUMER
It's been said that there are only two kinds
of futures-the one you inherit and the one you
design. As it looks toward 2030, the retail real estate
industry finds itself at a crossroads. One fork leads
to business-as-usual-a predictable, problematic
Darwinian scenario in which the weakest shopping centers and malls continue to close due to lack
of customer interest, changing demographics or
JUNE 2018

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the inability to develop a sustainable alternative to
digital competitors that are growing more powerful every day. The other path-and the one we will
explore here-takes us to an industry future that
has never looked better, at least for those brave (and
wise) enough to pursue it.
The industry's future potential rests on the ability of operators and retailers to relearn the rules
of an ever-changing game. Where 20th-century
malls and shopping centers grew through "push"-
marketing brand-oriented offerings to a mass
market consumer interested in acquisition-
21st-century retail real estate (or what this report
refers to as CESs) will prosper by catering to a customer base proud of its diversity, less interested in
owning things than in having experiences, and who
demand the right to co-develop and design the
goods and services they buy.
The competitive environment is changing, forcing us to rethink all our assumptions about the
industry, from how many and what kind of tenants
CESs need to house and how large a CES must be
in order to be successful, to how, why and where
sites are selected, the role of anchor stores, and the

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necessity of incorporating nontraditional elements,
such as housing, entertainment and healthcare,
into CES design.
Finally, CES operators and tenants must find
ways to coexist with digital retailers, embracing
them as partners rather than insisting on viewing
them as enemies bent on disruption and unsustainable predatory price competition. To succeed
in the future, the industry needs to think like the
customers it serves. For example, customers never think in terms of channels. Instead, they are
task-oriented, always looking for the most economical and efficient way to complete their tasks.

WHERE WE CAME FROM AND WHERE WE ARE
Historically, malls, shopping centers and even
"collections" have been thought of as aggregations
of retail offerings arranged in a variety of formats
from strip and open-air to fully enclosed. But times
have changed. E-commerce is projected to account
for a third of retail sales by 2030, forcing center
operators to explore what should be done with
existing-and future-construction.
Critics argue consumers have outgrown malls

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Table of Contents for the Digital Edition of design:retail - June 2018