Why Malls Aren’t Dead in Japan: A Shopping Spree through Shibuya’s PARCO Mall
Digitalization and e-commerce have led to the dead mall phenomenon
With everything available at the click of the mouse, shopping centers have been dying a slow death. Unable to offer consumers the same limitless (and often cheaper) choices as the Internet, foot traffic and subsequent sales have dropped to abysmal levels. According to a report in 2017 by Credit Suisse, a quarter of U.S. malls will have closed their doors for good by 2022.
The fate of malls in Asia-Pacific
In Asia-Pacific, this effect is accelerated. Growth in population and average income serve as stimuli for technological transformation. Here, almost every aspect of daily life is shifting to the digital sphere. Internet-banking, transportation, social networking, education, businesses are all part of a thriving digital infrastructure. China, Japan, South Korea, and Singapore are some of the most digitally advanced societies in the world, with Asia making up half of the total internet users globally (McKinsey).
Asian Pacific consumers are a dominant influence in the global economy, and their wants and needs will shape the future of digital innovation.
Does this imply that shopping centers in Asia are a thing of the past?
Probably not, as we take a stroll through the PARCO Mall in Tokyo’s fashionable Shibuya district. Just a stone-throw away from the world-famous Scramble Crossing, this Japanese mall is far from dead and embodies the new ideal, providing a splendid example of how a shopping center’s business model can be redesigned for success.
Japan is redesigning the mall of the future
“Shopping is a culture in Japan and here, malls understand that they must offer an experience to compete with the online market. By incorporating social interaction and experience beyond grab and pay, Parco is a leading example of how Japan is redesigning the mall of the future.”
Here is a breakdown of what PARCO (and other malls) do better to escape the fate of becoming another dead mall in Japan:
1) Retail real estate that facilitates interaction
The true difficulty faced by developers of the modern-day shopping centers is figuring out what it is that brings people together, and how to leverage these emerging trends for profit. Retail real estate has evolved along with the ways in which people go about social interaction, which is at the root of the Experience Economy.
The PARCO mall facilitates this connection through shared experiences. As you stroll through the corridors, you might see couples enjoying a romantic movie and late-night bite, friends grabbing a coffee and bonding over the latest fashion or friendly e-sports competition, children dragging their parents along towards the new exclusive Nintendo store, or simply those flying solo to stroll the halls of the new art galleries.
2) Shopping Malls: Want or Need?
Another trend that will drive mall traffic is shifting the store selection process from want- to need-driven curation. If you cannot secure business from the younger generation, focusing on necessities for specific demographics/target groups might be the wiser option.
Shopping centers will increasingly host an array of mundane services to remain relevant and drive foot traffic.
While PARCO does not need to adhere to this rule thanks to location and reputation, the world-renowned Dubai Mall is a great example of combining need with want-driven motivators to make oneself indispensable in a place oversaturated with shopping alternatives: Chanel, Cartier, and Harry Winston exist right next to dry cleaners, banks, clinics, pharmacies, and children’s play areas. It’s a one-stop-shop for all things both essential and excessive.
3) (Sub)Cultural Hubs
The market of the future is not monolithic but represented by a diverse and fragmented consumer base. Consumers crave a personalized and customized experience that makes them feel you ‘get them.’ Building trust and connection with particular niche consumer segments are essential for the brick and mortar business to turn a purchase into a positive memory.
The redesigned PARCO is located in the heart of Shibuya and embodies the area’s youth culture with an entire videogame dedicated floor, plenty of Instagram photo opportunities and for the sartorially inclined, and plenty of shops ranging from cool skater style to cute lolita.
Aside from youth culture, there are many other niche trends that shopping centers are personifying.
Making healthy choices is increasingly important for millennials, so the Life Time Center in Boston reinvented their mall as a wellness hub a.k.a delicious juiceries, boutique gyms, spas, and athleisure shops. Or how about Dubai’s upcoming Sports Society mall? A shopping center solely centered on sports: you can watch sports, participate in sports, buy sports-related gear, equipment, and clothing.
Branding with singular focus will give malls in the future a better chance at remaining relevant by targeting a smaller group of inevitable customers over a larger group that may or may not be interested.
4) Blend in with your environment
Shopping Centers will increasingly come to mirror their surrounding communities. Parco does this by incorporating familiar luxury brands such as Gucci, Dior, and Kenzo that shoppers already expect to find in the Shibuya & Harajuku area, but elevates its unique character with niche Japanese fashion brands. In this manner, shopping centers can cater to an array of niche markets and communities.
5) Convenience through Digitalization
The offline world is beginning to merge with the real world. Online-only stores have started opening brick-and-mortar locations to provide customers with corporeal satisfaction. Shopping centers will have unmanned stores, pick-up locations, and self-pay registers.
PARCO’s Digital Information Wall helps mall-goers figure out exactly where they want to go, and furthermore, allows them to order out-of-stock items through an interactive and accessible touch-screen panel.
The Pocket PARCO app awards coins (later converted into price discounts) for the number of steps taken within the bounds of the mall, while a robot resembling a tablet on wheels roams the halls to directly videocall the information desk in case of remaining questions.
Why limit convenience to e-commerce? Redesigning convenience for the physical realm is another clue to bring malls back from the dead.
Capitalizing on social interaction revived Japan’s retail industry
The ancient Romans had forums, the medieval Turks had their Grand Bazaar. A few centuries later, the Parisian Bourgeoisie strolled the Passage du Caire, and later on, suburban families would drive over to their local mall, browse the aisles of Sears and grab a snack at the food court.
Shopping centers have always existed in one form or another. Born out of a demand for convenience, but inadvertently maturing into a stepping-stone for social interaction.
Avoiding dead malls in Japan & abroad
Convenience may now belong to the realm of e-commerce, but there is one aspect that technology can never fully replace: face-to-face human contact. We are social animals. As technology has redefined how people interact with their environment, this signifies a prime opportunity for innovation in the offline retail industry, not its ultimate downfall.
The next challenge for shopping center developers is not ‘what’ do consumers want, but how will they experience it, and how can we better facilitate this experience? It will require a comprehensive understanding of trends among specific demographics to allow developers to fully capitalize on consumers’ desire for social interaction.
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