Retail spaces: reinvention to intention

by Sanet Yelland. There is far too much retail space in the world. According to Savills Research, the USA has twice as much square footage in shopping centres per capita as the rest of the world and six times as much as countries in Europe. More than a third of malls in the USA are expected to have to close, and the research shows that the UK may be ‘over spaced’ for retail by as much as 40%.

The impact on South African retail space following the COVID-19 pandemic will likely result in an acceleration in global trends that many markets have been witnessing since the global financial crisis, including:

• Shift in how consumers and shoppers want to shop, consume, and experience products and services.
• Surge in convenience-based retail, driven by ecommerce growth.
• Shopping needs accommodated by safety, security and seamless delivery (speed, access, on-demand needs).
• Change in the purpose of malls and shops (leisure versus shopping).

These will have a knock-on effect on the way we shop and the amount of retail space we need in the future. There are many ways we can redress the balance through relooking how we repurpose spaces for new use and do good.

1. Workplace spaces’ declining shifts: Before the impact of the Covid pandemic, office buildings worldwide were largely under-utilised. Hybrid workstations were growing in both practicalities of part-time work contracts and spaces that would ignite cross-functional working teams and inspirational spaces to co-create. Rotating employees between home and the office can also improve the value currency of ‘blended living’ and offer more convenience for employees’ work-life balance and outputs. Employees will have more autonomy on selecting where they want to work in the future. Key business enterprises that already had a surplus of square metres, and those with the highest work-from-home ratios, will be the first to decommission space they no longer need.

2. Consumers become accustomed to new ways of consuming and shopping: Accelerated omnichannel efforts made online shopping more commonplace. Retailers will need to determine how to make online shopping more similar to in-person shopping to encourage impulse purchases. “The ‘fall of the mall’ and ‘retail apocalypse’ have been buzz phrases littering businesses and consumer news sites for years now, but the pandemic seems to be the final nail in the coffin for the traditional mall,” said Brett Rose, founder and CEO of United National Consumer Suppliers.

From commercial to cultural value

The ability to shift commercial to cultural can have gains beyond immediate financial returns in new spaces for intent. They become places where people can provide for each other. “When people gather, they have adventures, form relationships, innovate and build resilience. Even when used temporarily as “meanwhile spaces” until a commercial use becomes viable, reactivated spaces build community, encouraging “behaviours or actions that break from everyday routine, promote a sense of social belonging, a cultural rather than commercial kind of use,” says Jim Morrow, an environmental sociologist.

City culture and sprawl – 15-minute municipalities

Beyond social cohesion, reactivating new spaces can help reduce one of the most inefficient by-products of development-urban sprawl. Paris designed a 15-minute inner city based on the insight of “dead time”. Why should it take a day to run errands when you could do it within 15 minutes from your front door, and have time to talk to a neighbour? Long-term plans aim to transform the entire city into smaller 15-minute municipalities eventually.

Mixed-use generations

Re-mixed purpose spaces and new uses is not a new concept. Redundant parking lots converted to storage spaces, vehicle service centres showcasing exhibition space for pop-up events, parking lots as efficient ‘click and collect zones’, have all been about demand versus scarcity. However, the acceleration of declining consumer footfall to centres has increased the level of repurposing, with more intent for future growth:

1. Covid vaccinations and testing sites: Increasing social responsibility and footprint acceleration for vaccination sites have seen the surge of pharmacy and retail spaces merge on offerings to increase accessibility, making it easier and more convenient for people to be tested and vaccinated.
2. Fulfilment Click and Collect zones: More non-traditional retail is being incorporated into malls. This is growing internationally, with brands like Tesla opting for a large footprint in high visibility malls globally. Amazon is snapping up disused malls and using them as distribution and fulfilment centres.
3. Entertainment centres/exhibitions/gaming: New headquarters for your company? Why not buy an entire mall? That’s what happened when Epic Games, operator of the blockbuster game Fortnite,bought Cary Towne Center to convert the mall property to its campus by 2024. Before the pandemic, large shopping centres were already allocating more space to entertainment and experience-based offerings, and we expect this trend to continue.
4. Re-invigorations (business and leisure centres): The decline in traditional mall spaces provide opportunities to reinvent customer experiences with new retail fusions. The new space at Rosebank Mall Soko District aims to create a platform that “enables purpose-driven brands to create meaningful connections with their customers” through a flexible digital leasing platform, without the significant financial commitments in the traditional retail environment.

So, how should we evaluate the short-term win versus a longer-term repurpose vision approach?

• What does a new change-up potential hold?
• Can we create new streams of revenue that add value?
• Can it inject new economic value beyond immediate usage?
• Does it create a sustainable narrative for the city of individuals?
• Will the reinvention solution create a knock-on purpose?
• Can new financial models enable entrepreneurial growth?

While retailers must think of the immediate, short-term needs to survive in this market, it is equally important to anticipate the landscape for retailers after the pandemic. By rethinking future intents with more creative uses (and reuses), a repurposed space can accelerate a culture of rich experience, innovation and inclusive growth.

The challenge weight comes down to opportunity cost and investment for future growth. Cash flow in many shopping malls is steadily declining, and ultimately, the decision needs to be what level of investment turnaround strategy is the best fit for purpose?

Main image credit: Streamline Advertising.

Sanet Yelland is the CEO and founder of Streamline Advertising, a full service agency. She has worked across the industry for 30 years, on clients within financial services, wholesale, retail, FMCG and government sectors on notable brands, including Massmart, Dis-chem, SAA, City of Johannesburg, Nedbank, Absa Bank, and Pick ‘n Pay (Score Supermarkets and RiteValue brands). Yelland started the Young Community Shapers initiative in 2000. This project acknowledges and celebrates the achievements of young people from disadvantaged backgrounds by providing funding, bursaries, and mentorship.

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