University at Buffalo School of Management

Mall rats In early 2017, retailers J.C. Penney, Macy's, Sears and K-Mart announced they would close more than 350 stores combined. In September, Toys R Us filed for Chapter 11 bankruptcy protection. In all, there were more than 3,500 retail closings throughout the year in a market that sees many American shoppers no longer going to the mall. According to Time, about 1,500 malls were built in the U.S. between 1956 and 2005. Of the approxi- mately 1,000 that remain, one out of every four could be out of business by 2022. Charles Lindsey, associ- ate professor of marketing, says that whether or not a mall can survive depends on what type of mall it is. "A mall is not a mall, is not a mall," says Lindsey. "The 150-200 flagship malls in the U.S. are doing just fine and have no trouble attracting anchor stores and foot traffic. The other 700-800 regional malls are hurting." The growth of online shopping, changing shop- ping preferences of millennials, and the high square footage of mall space per capita in the U.S. compared to other industrial nations are all forcing these re- gional malls to adjust what they offer to survive. Some malls are getting repurposed altogether. The Arcade Providence in Rhode Island, America's first indoor mall, has been transformed into micro apartments. Others have been retrofitted into life- style centers featuring green spaces, residential areas, activities like go-kart racing or escape rooms, and restaurants, as well as retail shops. "In contrast with a traditional mall, lifestyle cen- ters appeal to more affluent people and millennials," says Lindsey. "They also generate more revenue per square foot." In other parts of the world, malls are on the rise. The Inorbit brand operates five malls in India, with plans to expand. The country is one of the hottest des- tinations for retailers, beating out China for new in- vestors entering the market. Akriti Khare, MS '13, works in digital marketing and content strategy at Inorbit, supporting all five malls on social media, the web and mobile apps. Inorbit is experimenting with beacon technol- ogy, Wi-Fi tracking and mobile apps so they know when a person enters the mall and can offer custom- ized offers and services based on their preferences. In stores, it's adding "magic mirrors" to help shop- pers choose designs and using AI to offer customiza- tion in colors and sizes. Globally, malls have combated the online threat from Amazon and others by offering experiences be- yond mere shopping to draw in more customers. By adding new entertainment options, malls have used their brick-and-mortar presence to bring people to- gether in the smartphone era. Prime directive At Nordstrom, the fashion retailer that began as a shoe store more than a century ago, an entrepre- neurial spirit drives innovation and experimenta- tion. The retailer has added restaurants, cafés, bars and spas to its stores as a way to enhance the custom- er experience. Spring 2018 Buffalo Business 13 The Arcade Providence Mall in Rhode Island, which has been trans- formed into a mix of retail space and micro apartments. Photos: Arcade Providence

• Cover