• by Jack Loechner , Staff Writer @mp_research, February 2, 2017

According to McKinsey Research, and the author Sangeeth Ram, a partner in McKinsey’s Dubai office, digital technology is transforming global lifestyles and changing the way we live, work, shop, eat, play, and learn. Real-estate developers therefore must provide new ways to meet these needs, and McKinsey suggests that one example is the shopping mall.

The report explores five consumer trends that will shape the future of the shopping mall:

1. Entertainment

“Many millennials, adults born from the early 1980s on, prioritize spending on multisensory experiences and events over product ownership. They prefer instant gratification from entertainment and are attracted to media, gaming, and experiences that are shared socially, says the report. Half of millennials regularly go online for video games (versus 30 percent for Generation X); four in ten use social media to record their experience after using a product. Meanwhile, Gen X from a different angle. For example, this segment increasingly views digital consumers—those born from the mid-1960s to early 1980s—are embracing digital entertainment as an education tool, underpinned by smart technology and an expanding, globally connected Internet.

Meeting the needs of these groups while responding to rapidly developing technologies, such as virtual reality and participative experiences, will be the key to providing successful entertainment, says the report.

This disruption in traditional entertainment offerings has serious implications for the real-estate industry. Here are some ways that they may react:

• Reimagining public spaces as a canvas for entertainment such as integrating the community experience into the public realm via live social-media feeds and new display formats that share user-generated content
• Working with educators to create new learning opportunities via “edutainment.” Likely venues include museums and theaters, which could be redesigned to combine learning, discovery, and entertainment
• Redesigning entertainment hubs, such as movie theaters, theme parks, and gaming parlors as interactive experiences with virtual-reality content and immersive experiences where the customer becomes part of the story”

2. Food and Drink

“Food is the new fashion” is the mantra that increasingly guides development. The expression reflects the idea that food has usurped fashion as a force in retail and travel. One example is the fast-growing trend toward healthy eating, driven by millennials’ preferences and government policies to curb obesity. Food-focused digital platforms that see consumers routinely reading online reviews before choosing restaurants or ordering through food-delivery platforms are on the rise

Among the possible strategies, suggests the report, are the following:

• Using technology, such as self-ordering, and providing healthier eating options to redefine traditional fast-food outlets and casual dining.
• Creating new “experiential dining” options that offer more entertainment for consumers. Examples include farm-to-table courtyards, gourmet food halls, and “cook your own food” facilities
• Seeing food as theater, using reconfigurable spaces and rotational chef concepts in restaurants to offer customer encounters with, for example, celebrity chefs”

3. Retail

“Millennial consumers want to shop for experiences as well as products. Rising demand for cooking classes, health-and-wellness sessions, and makeup tutorials means that retailers, athletic-apparel makers, and electronics companies are changing what they offer and how.

To meet this changing environment, says the report, real-estate developers should consider the following:

• Creating retail centers that are also learning zones to bring together consumers, retailers, and entertainment. One example is a sporting-goods store that includes a fitness studio
• Experimenting with niche retail concepts such as revolving storefronts, pop-up stores, dedicated space for “glocal” brands, and offline showrooms of online players
• Converting anchor retail spaces into co-working areas that are flexible and reconfigurable for other retailers and more appealing to start-ups and to millennial customers
• Allocating reconfigurable spaces in mall corridors and piazzas to host pop-up stores for product launches and seasonal offerings”

4. Transportation

“Getting into and out of the mall is an important part of the shopping experience—and often a frustrating one, when it comes to parking, safety, and convenience. Some approaches that real-estate developers might consider to improve this part of the experience, says the report:

• Technology-enabled parking, including use of robot parking valets to perform the last-mile parking service and maximize the available parking space. Integrating parking apps and sensors can help shoppers spot spaces and then get to them
• Redesigning car parking to include dedicated e-hailing pick up zones, shared economy parking, and fast-charging stations for electric vehicles
• Preparing underground parking space for possible future conversion to retail or commercial space as autonomous vehicles gradually reduce the need for private-car parking”

5. Technology

“By 2017, the millennial generation will comprise the largest online audience, and they will have more buying power than any generation ever. Almost seven in ten say they are influenced by friends’ social-media posts; 83% say they trust recommendations by friends and family. They rely on peer recommendations, and increasingly discover products online before going out to shop. But they still want to touch, feel, and explore products before purchasing them. The need, then, is to create a seamless chain between online and on-site shopping. There are several technology-enabled innovations to consider, suggests the report:

• Creating “virtu-real” formats to provide consumers with a more interactive retail experience through the use of touchscreen navigation panels, virtual fitting rooms, magic mirrors, and augmented-reality zones, says the report
• Merging online and offline retail using “social shopping” technology with digital screens in transport-arrival zones, piazzas, shop windows, and major junctions of the shopping district
• Using smartphones for e-checkouts and click-and-collect services, to help blend the offline and online shopping experience
• Digital technologies and changing shopping habits are a clear threat to traditional retail business models. But there are positive ways to respond to these trends. To embrace these opportunities, real-estate developers must get closer to consumers and figure out how to meet their evolving wants and needs. That means rethinking the role of the shopping mall, and adapting its strengths to those of the virtual world”

For additional material from McKinsey Research please visit here.