USA TODAY International Edition
Retailers try out new ways to engage
American Dream leads experiential mall trend
The day has finally arrived after 15 sometimes grueling years.
American Dream, the giant entertainment and retail mega- center in East Rutherford, opened its doors last month for North Jersey and the rest of the world to see. Now comes the hard part: Will the sprawling mini city, which the developer expects to attract 40 million visitors annually, be a hit or miss for retail?
The mega- center, developed by Canada’s Triple Five, will be nearly impossible to replicate. But, some retail experts say, it could serve as a North Star for the retail industry. Once fully operational, it will be a test case for experiential retail, and whether the concept can be successful in one of the country’s most competitive markets.
“People are going to be watching this project and its success,” said Chuck Lanyard, president of The Goldstein Group, a retail brokerage firm in Paramus, New Jersey. “You’re going to see other malls across the country finding ways to be that creative in order to be lucrative and successful.”
Triple Five is known for being a leader in experiential retail. The developer runs Mall of America in Bloomington, Minnesota – often looked to as the first destination mall in the United States – and West Edmonton Mall in Canada. The company is also building American Dream Miami, which could be the country’s largest mall once complete.
Experiential retail is a concept where retailers or shopping centers create experiences that will lure shoppers to their properties, where they later shop. It also describes a mode of retail where shoppers are engaged with a product.
A traditional shopping center may invest in on- site experiences by opening a luxury movie theater, upping its dining options or even investing in virtual reality tenants or escape rooms. American Dream’s experiences are much more extreme: a theme park, water park, indoor ski slope and aquarium. The list goes on. Tenants, experts predict, will likely also have experiential components inside their stores as part of their leases.
Experiential retail was conceived out of necessity by the retail industry.
With the rise of the internet, online shopping drastically changed consumers’ spending habits. People were no longer flocking to brick- and- mortar stores because they could do their shopping from home. That ate into the profits of some of the country’s biggest retailers – namely, the department stores that were mainstays inside traditional malls. When those retailers went dark, malls struggled. Mall owners had to get creative with their offerings to attract shoppers, or else they,
too, would fail.
Despite the grim state of retail nationwide, American Dream will be entering an already- crowded – and profitable – regional retail market. In North Jersey, the retail sector is thriving. That, Lanyard said, is largely a testament to the wise decisions that mall developers have made to keep area malls bustling. In Paramus, often seen as North Jersey’s retail capital, the borough’s malls are constantly reinventing themselves.
Westfield’s Garden State Plaza in January unveiled an ambitious plan to bring mixed- used residential development to the property. That project will eventually create a miniature downtown at the mall, with an outdoor ice rink and sprawling green space for its residents. The mall already ranks among the top 10 most profitable malls in the country, according to CNBC, and was not struggling when it announced the sweeping proposal.
Garden State Plaza has also been partnering with first- to- market retailers, like a virtual reality provider who will be opening its first New Jersey store there later this year. Toys R Us is also expected to open a store at the mall next month, in the popular retailer’s much- talked- about rebirth this holiday season.
Paramus Park Mall, once struggling, recently welcomed New Jersey’s first Stew Leonard’s supermarket to its roster. The new tenant filled a vacancy left behind by Sears, a longtime tenant, and has helped increase traffic to the property. Over the past several years, The Outlets at Bergen Town Center has also reinvented itself as a destination for off- price shopping.
“New Jersey has some of the strongest demographics in the country,” Lanyard said, “but even here these mall operators very wisely retooled and re- positioned their malls so each one of them draws new, different kinds of clients.”
The retail world has been changing for decades.
In the 1950s, shoppers ditched downtown businesses for malls in the suburbs – then just a shiny, new concept for families. Because those malls across the country are now either dying or changing, retailers have started to see the writing on the wall.
“I think the future of retail is pretty clear,” said Jan Rogers Kniffen, a national retail consultant. “Sometime between now and 2030, 50% of all retail is going to be sold online.”
That means retailers are investing in smaller footprints and more showrooms, and focusing more on delivering their products to customers quickly, Kniffen said. Retailers are also putting emphasis on in- store services. The kind of retail that is succeeding, he added, are off- price, resale and rental. Simply put, he doesn’t see the future of retail looking like American Dream. He sees traditional malls continuing to evolve in ways already seen in communities like Paramus.
Traditional malls are “going to have less apparel in them, they’re going to have more restaurants, they’re going to have more entertainment venues,” Kniffen said. “They’re going to be more like a traditional mall and less like an amusement park. American Dream is just an amusement park with some retail in it.”