From the consumer’s perspective, shopping malls are simply places where various stores are concentrated. However, the business operations of shopping malls can generate profits in ways that no one might expect.
The ideal location for a shopping mall is in a bustling urban area with convenient transportation, attracting visitors from inner-city neighbourhoods, suburban areas, and even foreign tourists. With numerous contributing factors, this business model is far more effective than standalone stores.
First, shopping malls typically avoid having too many stores that directly compete with each other. If there are too many competing stores, fewer businesses will want to lease space, and the revenue generated will decrease. Notice that you’ll rarely find a mall hosting Zara, Mango, H&M, and Forever 21 all at once. Usually, only one or two brands targeting the same customer base are present. Instead, malls focus on combining stores whose products complement one another rather than compete.
The second factor is that malls often feature luxury goods or entertainment-oriented items—things that you, with an average income, might rarely pay attention to. However, when these products are placed near the store you intend to visit, you’ll likely notice them by chance.
The stores that attract the most customers are typically positioned at the farthest ends of a shopping mall, forcing you to walk past numerous other shops before reaching your intended destination. Their goal is to expose you to as many stores as possible, making it hard to resist the temptation to stop by somewhere along the way.
However, this strategy is encountering a challenge: more and more people no longer want to spend excessive time shopping or simply don’t have the time for it. Brick-and-mortar stores are weakening, while e-commerce is on the rise. Will they disappear entirely?
The best way to predict the future is to observe the behaviour of the largest corporations. Amazon purchased Whole Foods for $14 billion, and Apple continues to open new stores. If traditional retail were destined to fade into obscurity, why would Amazon or Apple invest so heavily in it?
Unless you urgently need something and can’t wait for delivery, almost everything can be purchased online—often at a lower price due to discounts. Yet, people still visit Apple stores even though they can buy all Apple products and accessories online. Why is that?
The key lies in the experience. It’s challenging to spend a large amount of money on something without trying it first. People are willing to invest time and even money for this, a concept known in economics as evaluation cost.
Therefore, in my opinion, we can conclude that e-commerce is unlikely to completely eliminate traditional shopping malls. The fact that Amazon and Apple are still investing in brick-and-mortar retail—and will likely continue to do so for some time—suggests that the retail industry is far from dead. There’s no need to worry; everything is still fine.