Commentary

For Teens, 'It's A Mall World' No Longer

by Aaron Paquette , Columnist, January 12, 2017

The recently concluded holiday season was a brutal one for brick-and-mortar retailers. Consumer spending didn’t materialize the way department-store chains were hoping, and the repercussions have been swift and harsh. Macy’s announced it was closing 68 stores and cutting 6,200 jobs, sending its stock down 14% the next day. Kohl’s reported disappointing holiday sales and lowered its 2017 outlook, causing its stock to plunge 19%. Sears, meanwhile, announced the closure of 41 Sears stores and 109 Kmarts.

Clearly, the migration away from stores and toward online shopping seems only to be hastening. While major retailers typically report increasing online sales, for most of them, it’s not enough to offset declines in their bread-and-butter, brick-and-mortar business. Even the best-established brands like Walmart and Target are merely treading water, while others like Sears are rapidly facing an existential crisis. What does this mean for teens and the brands that sell to them?

The mall as we know it is gone. For the last three generations, teen life was centered on malls. As Myles Udland recently explored in Yahoo Finance, mall life was depicted in movies (“Mean Girls,” “Mallrats”) as a place where teens could taste that first bit of freedom in an environment that was still fairly structured and safe. Now that anchor tenants such as Macy’s and Sears are going away, so is that mall experience. Already the classic indoor malls of the 1970s and 1980s are being converted to outdoor “entertainment and lifestyle centers.” And with other demographic changes afoot, some of these projects are aimed more at tourists, upper-income adults and families than at teens. With the rise of social media, teens have “virtual” meeting places that didn’t exist a decade or two ago, but these still don’t replace physical meeting spots for face time, hanging together, first dates, first purchase decisions, etc. Besides Snapchat and Instagram, what will replace malls as these meeting spots?

Entertainment and experiential destinations rule. Now that teens (and Americans of all ages) are buying less “stuff” in-person, the burden of anchoring malls and providing “safe space” to teens falls to restaurants, movie theaters, gaming establishments, and other venues that provide an experience that can’t be replicated online. This is perhaps part of the reason the “escape room” has become such a hot trend … it just isn’t the same escaping an online venue, and it forces people to meet up in person, work together and communicate to accomplish a task. Look for more such businesses to anchor malls and draw teens, especially with the rise of virtual reality. Mall-based businesses can offer spa-like pampering; style and fashion consulting and makeovers; trials of new products and services; athletic endeavors like rock-climbing; and even visiting, exploring and competing in awesome new worlds with virtual and augmented reality.

The first “teen Amazon” wins. Remarkably, consumers are buying an increasing amount of “stuff” online; teens are at the vanguard of online/mobile usage; they tend to like branded environments that speak uniquely to them; and yet nobody has offered one in a big way. My prediction is that either (a) Amazon will develop a sub-brand aimed at teens (similar to how the Zappos brand is targeted at shoe buyers), or (b) another deep-pocketed retail or tech company (Walmart? Google? Apple?) will launch a Millennial-focused, online-only service that will revolutionize retail for those under 35.

Imagine a fun, easy-to-use, fully mobile-enabled service with great content, recommendations, tips from YouTube personalities, ways to be social with your friends, ways to become friends with tastemakers and those who share your taste, tools to post content and co-create new looks, and a marketplace where young fashionistas can easily create and sell their new lines. The first service to fully capitalize on this opportunity has the potential to own its category just as much as Facebook, Uber and Airbnb own theirs.

Despite the impending demise of the department store (and the malls anchored by them), opportunities abound for teen-focused retail, and the brands innovative enough to explore them.

2 comments about "For Teens, 'It's A Mall World' No Longer".

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Charles Harvey from Charles Harvey Creative, January 12, 2017 at 3:55 p.m.
While I can see that a mall typically has two big stores, say Macy's at one end and another department store at the other, so the mall depends to some degree on those doing well, I would not expect teens to be shopping much at Sears, Kohls or Macy's. I usually see parents with kids or older age groups there. What I had seen was teens frequenting smaller stores in between, especially certain clothing stores more aimed at their age group. I wonder if a new model of mall could emerge, in spite of the growing online shopping experience and shrinking brick and mortar trend. Any insights on that?
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Aaron Paquette from MARU replied, January 16, 2017 at 3:03 p.m.

Funny you should mention that! In my first draft, I also included teen-focused retailers, but had to cut that due to length. Sadly, most teen-focused retailers are also struggling, including A&F and Aeropostale. I do think the department stores still get a fair share of teen traffic and dollars, driven by back-to-school and holiday sales, gift cards and trips with parents. But I don't see the teen-focused brands (or even the major department stores) having the budget to come up with a true omnichannel shopping experience, and see this being the province of a deep-pocketed Amazon, Apple or Walmart. I do see the potential for small stores to retool to draw teens, but more with dining, entertainment and experiential offerings, vs. retail purchases that they can make online. Perhaps they'll be hybrids...come in for a snack, get a makeover, leave with some new makeup, accessories and clothing!