Yahoo Finance Mall owners bet they can save bricks-and-mortar retail by being more like Amazon
The internet didn’t kill the mall like many thought it would during the pandemic, but the owners of some of Canada’s biggest retail spaces aren’t taking any chances.
Oxford Properties Group Inc. and Primaris Real Estate Investment Trust both have created their own online shopping platforms that mirror some of their physical properties. The bet is that having a digital marketplace that resembles Amazon will entice shoppers back to the mall, especially those jaded by the crowded gallerias and long checkout queues.
Part of the thinking is that online shopping is now the norm, not a fallback, said Lucia Connor, vice-president of marketing at Oxford Properties, the real estate arm of Ontario Municipal Employees’ Retirement System pension fund. The government’s stay-at-home orders during the pandemic meant retail tenants and landlords had to adjust, offering curbside pickup at the mall for example, to keep revenues flowing.
As a result, most retailers have embraced e-commerce, and that’s forcing the commercial real estate companies that host their bricks-and-mortar outlets to keep pace.
“We lease space. We typically do not sell products — that’s what our retailers do,” Connor said. “But we can influence where people buy, so we can enhance the experience.”
At the end of November, Oxford launched StyList, a digital service the company is piloting at its two biggest malls, Yorkdale Shopping Centre in Toronto and Square One Shopping Centre in Mississauga, Ont. The properties rank as two of Canada’s biggest malls, featuring luxury retailers such as Holt Renfrew and Burberry, as well as mid-range retailers like H&M.
StyList links to the search function on Yorkdale and Square One’s respective websites, allowing shoppers to search products across the mall’s retail tenants. Shoppers can then add a variety of products from different stores to a single virtual basket and pay for it all at a single checkout on the shopping centre’s website.
We can influence where people buy, so we can enhance the experience
Lucia Connor
There’s a caveat, though: there’s no option for delivery on StyList, just curbside or in-mall pickup.
Shoppers can use StyList to check live inventory for items they’re after and plan their trip accordingly, or they can purchase what they want online and pick it up at the guest services desk or in the parking lot. Oxford is betting customers will be tempted to go inside and use the time they’ve saved crossing off their shopping lists to look around.
“By saving all that time where (customers) would be wandering, they might actually reinvest some of their time that they were going to commit to the mall and maybe go to a restaurant or go to a movie or take on the other experiences that are in the shopping centre,” Connor said.
“This was a unique way for our centres to be able to insert themselves in the customer journey where we normally wouldn’t have the ability to do that.”
The emergence of e-commerce was a real challenge for retailers
Alex Avery
StyList and similar platforms came out of a turbulent time for the retail sector, which was already getting antsy about the influence of Amazon.com Inc. and Shopify Inc. before the pandemic forced most commerce online. Between 2012 and 2021, e-commerce sales nearly quadrupled, and from 2019 to last year, online sales grew roughly 30 per cent, according to Statistics Canada.
“The emergence of e-commerce was a real challenge for retailers,” said Alex Avery, chief executive of Primaris REIT.
“The early days of that experience were pretty disappointing. People who don’t know what they’re doing often make mistakes. It’s not a criticism, it’s that it was a new skill set and a new environment and things were evolving and changing rapidly.”
Simply having a well-designed website didn’t guarantee a company’s success in the race to the web, Avery said. Before COVID-19, companies venturing online were just beginning to smooth out the kinks of the virtual shopping experience, such as finessing the logistics from factories to the front door in order to offer same-day delivery.
But now, retail landlords are in the midst of recovering losses from the last two years, nearing pre-pandemic levels on some metrics. RioCan REIT, one of the biggest residential and retail property owners, said committed occupancy improved for the sixth consecutive quarter, returning to 97.2 per cent of pre-pandemic levels, in its latest quarterly earnings.
The early days of that experience were pretty disappointing
Alex Avery
Those who are committed to brick-and-mortar retail have to place particular focus on bridging the digital divide to stay viable, said Tony Hernandez, director at Toronto Metropolitan University’s Centre for the Study of Commercial Activity.
Property companies testing different versions of virtual malls is one of the ways landlords are trying to strike the optimal balance between online and offline shopping.
“It is not about online versus offline per se, but instead about how can online support bricks-and-mortar and how bricks-and-mortar serves online presence,” Hernandez said by email.
Primaris launched its online platform in November 2021. Primarché is a digital marketplace with its own website that features products from retailers in Primaris’ 12 malls across Canada, including Dufferin Mall in Toronto, Sunridge Mall in Calgary and Kildonan Place in Winnipeg.
Primarché offers pickup options and free delivery. That lets an online shopper in Calgary order items from a seller at Dufferin Mall that they can’t find at Sunridge Mall, for example.
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It’s a way to “liberate” inventory as malls transform into “perfect distribution centres”, said Karin Cabili, chief executive of DropIt Shopping Ltd., the British software company that helped Primaris create its e-commerce marketplace. “It’s not only available to whoever popped into the mall.”
However, the best way malls can survive this tricky environment is having a “strong” tenant mix, Hernandez said. “For major shopping malls, this means ensuring that your tenant mix has trending fashion retailers from around the world to the best in-class food concepts.”
And with the threat of recession looming, it’s even more imperative that landlords curate a shopping experience that will resonate with customers and that involves finding the right balance between offline and online.
“Integrating more experiential elements and programming, such as pop-up stores, arts, media, cultural exhibits and other community-focused events will enhance the mall as a destination,” Hernandez said.
• Email: bbharti@postmedia.com | Twitter: biancabharti
