Malls need major rethink to survive pandemic, retail consultants say

Tina Kerger of Winnipeg describes herself as a "tactile" shopper who resisted online shopping before the COVID-19 pandemic.

"When I buy a shirt, I want to touch it, I want to try it on. I want to see how it looks. I have a really hard time shopping online because I can't feel it, so that has been why I have held off for so long," said Kerger, 51.

Now, she describes herself as an internet shopping convert. She says the number of online purchases she makes have doubled during the COVID-19 pandemic, including flowers for Mother's Day, food from restaurants, and even a take-home sugaring kit from a local shop.

Kerger joins shoppers across Canada who are testing those online waters to see if they can be satisfied — and who are probably permanently changing the way retail works in this country.

The pandemic is hastening the deaths of some prominent retail players while feeding the online commerce that has long challenged traditional brick-and-mortar stores, some retail consultants say.

Consumers are exploring their online options in virtually every category of goods, and many are doing it for the first time, said Doug Stephens, founder of Retail Prophet, a consulting agency in Ontario.

"What is happening online is astonishing. When Amazon finds itself in a position where it can't manage capacity, we know that volumes are significant," said Stephens, who is currently writing a book called Resurrecting Retail: The Future of Business in a Post-Pandemic World.

Some retailers, such as American chain J. Crew, are struggling to shift their business during government-mandated shutdowns to slow the spread of COVID-19. J. Crew filed for bankruptcy protection earlier this month.

"It's going to be an extremely difficult time for many of them. There is no way to candy-coat it," Stephens said. 

"Just in the same sense medically this is a virus that seeks out pre-existing conditions in human beings, and really exploits those pre-existing or underlying conditions, exactly the same thing is true for businesses."

The big retail businesses that had fundamental weaknesses already at play — low brand equity, significant debt or too much reliance on physical stores for distribution — are the ones most in danger of being closed forever, he said.

And until there is a vaccine, they won't be able to return to normal because of the need to prevent crowding and the possibility of re-openings followed by pandemic flare ups and more shutdowns, so they've got to change quickly, Stephens said.

Change in buying pattern

The longer the situation lasts, the harder it will be to draw people back.

Take Kerger, for example, whose days of browsing at the mall are now spent online.

"It is more convenient," she said. "I can look when I have time and I am not restricted by the hours of a mall store."

Sally Seston, founder of Retail Category Consultants in Toronto, said it doesn't take long for people to adapt to change.

"It takes about three weeks for something you try as a new idea to start [to] become a habit," she said. 

"We have been forced to do much, if not all, of our shopping online for more than three weeks, so consumers are getting used to that convenience, or being able to shop whenever they want with a broad range of comparison across different merchants."

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Malls — with their captive crowds of shoppers lingering over items, trying on everything in the store — are an example of what just doesn't work in a pandemic, when people are told to limit contact with one another and with items others may have touched.

"The malls are going to have to rethink their business model, and the merchants within the mall have to think about, 'What am I going to do to draw you into my store?'" Seston said. 

Peter Havens, manager of Cadillac Fairview's Polo Park mall, one of Winnipeg's oldest and most popular malls, said staff are working on ways to connect with customers.

"You may go to Sport Chek's website and order something, and you can come to pick it up at our mall curbside — that will be our job, to make sure that part is seamless," he said.

Polo Park re-opened on May 4, after the Manitoba government allowed retail stores to operate with limited capacity and strict sanitization. Alberta's malls re-opened on Thursday. Malls in Ontario, on the other hand, are still closed.

Foot traffic at Polo Park has declined dramatically, and not all the stores are open yet. But Havens believes shoppers will return.

"We as a human species like to be around other people. We have to build those experiences so shoppers want to visit our space. There will always be a place for a social hub," he said.

More entertainment, less retail

That, said Seston, is what malls and other stores have to work with in order to survive.

She works with retailers in New York and New Jersey, where a mall called the American Dream was being built just before the pandemic struck.

The plan was to build a destination that was 55 per cent entertainment — an indoor ski area was one feature — and 45 per cent retail.

"With COVID-19, they are now re-looking at that mall and saying, 'We think in order to make a go out of it, it has to be 70 per cent entertainment and 30 per cent retail,'" she said.

The entertainment supplies the experience that draws people in, she said.

"We know if we bring you in, it is likely to give us an opportunity to sell you something."

Kerger, who grew up near Polo Park at a time when teens walked to the mall to hang out, said she'll get back to the mall one day — but her visits will be more deliberate and conscious.

She will also continue to buy online now that she has gotten her feet wet, but that also will be deliberate and more focused.

"While I am shopping more online, I try to shop local, supporting local businesses. I am trying to keep my money in the province."