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As Retail Struggles, Some Malls Are Trying to Give Shoppers a Luxury ‘Experience'

Although malls may struggle to compete against the convenience and variety available on the internet, drawing on the strengths of their physical space could provide a solution for some

This is one of a two-part series on how malls in America are changing as the retail industry evolves. Read the other part, on online retail's effect on mall workers, here.

Malls have long been a staple of American consumer culture. But as sales for traditional retailers continue to decline, malls of the past are undergoing serious changes to make sure they're still attracting consumers in the age of the internet.

Developers are experimenting with a range of experience-based offerings, from luxury movie theaters to upscale food courts, to give shoppers a reason to make their way to the mall rather than browse for goods online. 

They are exploring their options in an effort to avoid the fate predicted by some financial experts, who are seeing department stores begin to shut their doors around the country. Analysts at the financial services company Credit Suisse project that 25 percent of malls will close by 2022. The retail industry has lost 87,000 jobs since a peak in January, according to the latest U.S. jobs report.

"There's an enormous shift that's causing these malls to collapse," said Mark A. Cohen, director of retail studies at Columbia Business School.

That decline can be chalked up to overarching trends in the retail industry caused by changing technology, Cohen said. "Just as it was irrevocable that most downtowns would disappear, it's irrevocable that the majority of these malls do the same."

The disappearance of malls has grabbed the attention of people across the country, who fear that the shopping centers they grew up with may be the next to go. Filmmaker Dan Bell has created a Youtube series to try and capture the phenomenon of "Dead Malls," plagued by empty storefronts and sparse foot traffic. 

Competing with tech behemoth Amazon — which has unlimited reach, product diversity and strong customer loyalty — may require malls to search for creative solutions as they combat bleak forecasts for the future. Some malls are already reaching for their wallets.

For years, shoppers were drawn to malls for the convenience of visiting a variety of stores in one trip. Now, thanks to the emergence of e-commerce, customers can purchase goods from nearly any store imaginable without having to leave home.

"Amazon's spectacle is derived from an unlimited virtual space, the seemingly endless array of products that can be offered and purchased there, its ease of use (one need not physically travel to the site) and the speed with which an order can be placed and received by express delivery," wrote George Ritzer, a University of Maryland professor of anthropology who specializes in American consumerism, in a 2012 post on his blog.

Although they may no longer be able to compete in terms of accessibility or variety, malls can work to appeal to shoppers' senses and use the face-to-face aspect of in-store shopping to boost foot traffic, said Jason Brewer, vice president of communication and state affairs at the Retail Industry Leaders Association.

"Stores have advantages — see, feel, taste, touch," Brewer said. "To compete, you're going to have to enhance the in-store experience."

Some mall owners are taking this advice to heart, spending top dollar to make contemporary shopping centers a reality.

Half an hour north of New York City, Simon Property Group recently completed a multimillion-dollar renovation on The Westchester Mall in White Plains, described as "the ultimate shopping experience."

New features include an indoor children's play area incorporating principles of the educational approach STEAM (science, technology, engineering, art and math), an outdoor dining terrace complete with a fireplace and a media lounge with flat-screen TVs, charging stations and iPads.

At Savor Westchester, the mall's new food court, shoppers can indulge in upscale eateries like Bluestone Lane, Hai Street Kitchen, Whitmans and Mighty Quinn's.

"It's all about amenities," Robert Guerra, regional vice president for Simon Property Group, told The Journal News in September. "We've tried to make coming here more of an experience."

Michal Barnea, a mall-goer from White Plains who has been coming to the Westchester Mall since it opened in 1995, said she feels the update was necessary; the mall was beginning to look outdated.  

"I've started coming here more now that they've renovated," she said.

Although Barnea said she thinks the atmosphere has improved, she added, "it does make it more expensive to grab a bite to eat." 

The Westchester Mall isn't alone. In San Diego, the Westfield UTC mall is finishing up a $600 million renovation likely to appeal to wealthier clientele. New additions include Swarovski and Larsen's Steakhouse. 

Updates like these could potentially lead to a demographic shift among mall-goers.

"I think these new malls will attract probably a more affluent audience who are willing to pay several dollars more to do things like see a movie, and pay the prices in these pricier chain restaurants that tend to populate these malls," said Ritzer, the anthropology professor.

These changes are all part of an industry-wide effort to reduce malls' dependence on department stores, which have struggled to attract customers as the pool of competitors has increased.

Anchor stores, such as Sears, Macy's and J.C. Penney, have experienced widespread closures in recent years. Sears Holdings, which owns Sears and Kmart, reported roughly 10 percent decreases in sales at the stores in the first two quarters of this year, which has seen 180 store closings. Nearly 180 more are in store, while in March, J.C. Penney announced the closure of 138 stores.

w"The old-style mall … was really built on the premise that their anchor tenant department stores were going to be the bedrock of their business. That's not happening anymore," said Amanda Nicholson, professor of retail at the Whitman School of Management at Syracuse University. "Relying on them is really a danger, even though department stores were the anchors of all malls."

In their place, entertainment venues, residential spaces and offices are being used to drum up business.

At the Valley View Mall in Dallas, the closures of J.C. Penney, Macy's and Sears led developers to abandon their old strategy and demolish the mall, opting for a mixed-use outdoor venue instead.

The first phase of a $4 billion redevelopment project is underway, with plans to combine retail spaces with an apartment complex, a luxury movie theater, a fitness and wellness facility and more.

Although this may be a time of uncertainty for retailers and mall owners, ultimately, Nicholson said that consumers are likely to benefit from the changes.

"I think this is the transition period, and like all transition periods it's uncomfortable and it's awkward because you don't know where it's going, and it's really bad if you're in it," the professor of retail said. "But they leave transition periods with new and creative ideas."

Read the other part in this series on how malls in America are changing as the retail industry evolves here.

An earlier version of this story misstated the changes at Westfield UTC mall.

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