Defending legacy retailers amid the boom in e-commerce

By David Pendered

Cyber Monday is expected to launch a record-high e-commerce penetration this holiday season, even as the retail industry tries to protect its legacy malls with new concepts such as one being tested by the owner of Phipps Plaza and Lenox Square.

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Artisan-made homegoods from Africa are being sold in pop-up boutiques in a major New York mall this holiday season in an apparent effort to attract entice shoppers into the mall and away from their computers, where they buy online. Credit: allacrossafrica.org

Mall-owner Simon Property Group is partnering with another market manager to open a pop-up boutique area inside Simons’ Roosevelt Field Mall, in Garden City, N.Y. Twelve independent merchants opened Nov. 25 and are to close Dec. 24, according to a statement from Simon.

Simon touts the Holiday Market by Urbanspace as a way to introduce shoppers to boutiques that sell artisan-made goods – from jewelry handmade in New York City to homegoods made by All Across Africa, a woman’s co-op in Uganda, Kenya, Burundi and Rwanda.

One way to think of it is relocating Ten Thousand Villages from a sidestreet in Virginia-Highlands to the center of Phipps Plaza or Lenox Square. As Simons said of the New York site:

  • “The festive marketplace … will showcase beautiful, handmade gifts from local artisans. The holiday market will offer an eclectic and personalized shopping experience and serve as the perfect complement to the broad offering available at Long Island’s largest mall,” Simon said.

CBRE, the real estate firm, characterizes the marketplace a little differently.

Online sales have more than doubled during the holiday season in the years from 2008 to 2016 (estimated). Credit: CBRE

Online sales have more than doubled during the holiday season in the years from 2008 to 2016 (estimated). Credit: CBRE

CBRE’s latest report on the retail industry didn’t mention Simon by name. It did note the concept Simon is testing as an effort to attract shoppers to brick-and-mortar shops:

  • “Growing consumer demand for independent and craft concepts, coupled with retailer efforts to step outside the traditional box, means this season will be marked by a proliferation of new brick-and-mortar concepts – and new leasing structures.”

CBRE predicted record high e-commerce activity expected this season in the fall edition of its retail trends guide: Traditional Retails Use Online Holiday Sales to Their Advantage.

The good news for traditional retailers, and the governments that rely heavily on the tax revenues that a shopping mall represents, is that legacy retailers appear to be adapting to e-commerce, according to the report:

  • “Retailers’ use of mobile platforms has accelerated this year. For example, Sephora has integrated facial recognition technology into its mobile app, and partnerships are growing between retailers and social media platforms like Facebook, Instagram and Snapchat that facilitate users’ access to ads and products viewed on retailers’ respective platforms. As a result of this growing attention to mobile shopping platforms, m-commerce is forecast to grow 43.2 percent year-over-year in 2016, comprising just under 30 percent of total e-commerce sales.”
The promotions offered on Black Friday once made it the major shopping day of the holiday season. The season has extended now that promotions are offered on dedicated days from Thanksgiving to Dec. 24. Credit: CBRE

The promotions offered on Black Friday once made it the major shopping day of the holiday season. The season has extended now that promotions are offered on dedicated days from Thanksgiving to Dec. 24. Credit: CBRE

During the Great Recession, the future of the retail industry was far from clear. The adaptation to e-commerce suggests retailers will be able to maintain at least some of their physical locations.

Not that long ago, iconic brands such as JCPenny and Sears shuttered stores as revenues lagged the cost of keeping their large stores open, staffed and stocked.

Amazon.com stormed into the bookselling industry and was cited as a factor in the demise of Waldenbooks, Borders and B. Dalton, according to a report by usatoday.com. Barnes & Noble nearly succumbed.

This season, CBRE predicts that the combination of e-commerce and increased rivalry between traditional retailers will prompt holiday promotions to extend well beyond their historic start, on Black Friday, and conclusion on Cyber Monday,

CBRE sizes the situation as, “remaking the traditional holiday shopping calendar.”

 

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow. David was born in Pennsylvania, grew up in North Carolina and is married to a fifth-generation Atlantan.

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