“Mall developers and operators that fearlessly place it [customer experience] as a priority to forge closer interaction with the customer; these are the ones that will emerge winners.”

Beyond Multifunctional Spaces: Customer Experience – The Future of Malls

Reading Time: 6:15 minutes

By Weng Heng Ng — Head of Business Development, Strategic Customer Program, SAP APJ at SAP Asia

Malls in Asia under siege

Shopping malls as we knew it played a big role in shaping our landscapes and lives. Whether they are closely integrated with the neighborhood, or actively differentiated through bold themes, many had been deeply woven into the fabric of communities with daily activities such as dining and shopping for daily needs wrapped around them. They also acted as major engines of the retail economy.

This comfortable status quo was challenged several years ago with the rise of the digital economy. An explosion of trends coming together forced malls to change the way they think about their roles. From customer demand shifts, to digitization, changing competition, and shifting relationship dynamics between operators and tenants – the mall’s role as a key part of people’s lives came under siege.

In Southeast Asia, the impact is felt differently in different regions. But one thing’s the same: No longer can mall developers and operators merely think in terms of mall construction or tenancy. The rise of ecommerce, for example in Singapore, has meant shopping malls are no longer primarily about shopping. Well-conditioned to the convenience of online shopping and doorstep deliveries, consumers now visit malls for reasons well beyond traditional shopping – with experiences being the most defining reason.

Shaking up the shaken mall model

Feeling the squeeze of falling rents and rising vacancies, leading operators embarked on shaking up this shaken shopping mall model.

Repositioning, growing numbers have turned to experience-based tenants such as yoga studios, mega gyms, skating rinks and pop-up stores. There’s even a revival of sorts with arcade gaming centers – after having gone out of trend a while back. Traditional pullers like food and beverage options have been increased. Features such as climbing walls and children’s playgrounds have also been introduced. All these have been adopted in varying degrees to bring consumers through their doors for dining, keeping fit and entertainment – plus hopefully some shopping.

Cambodia’s AEON Mall Sen Sok City is one such example – offering a water park, an aquarium, a concert hall and offices for passport issuance and driver’s license renewal. By making itself a multi-experiential destination and providing a higher level of service, the mall witnessed higher footfall.

But is changing the tenant mix or putting in a few more activity-based features enough to help Southeast Asian malls thrive?

Is adding experience-based tenants enough?

Across Southeast Asia, mall developers often have savvy tenant chains that operate multiple stores within the same shopping mall or even across cities. These key tenants expect developers/operators to deliver the unique customer experience to bring in the footfall. Without significant resources, smaller retailers are looking to their landlords for the same thing.

For mall operators adapting to new realities, adding more experience-based tenants or providing more experiential activities are a good start.

But that’s exactly what it is in today’s digital world. A start.

Against this backdrop of rapid digital transformation, consumers are getting increasingly exposed to the conveniences and value offered by digitization. We use our smartphones everyday for transportation (e.g. Maps, Uber), entertainment (e.g. YouTube, Netflix, Candy Crush), socialization (e.g. Instagram, Facebook), or banking, dining and shopping (e.g. Lazada, Amazon Prime). We are also shown how easy it is to enhance other areas of our lives such as fitness (e.g. Nike+ Training Club, Fitbit) and sleep (e.g. Pzzizz, Relax Melodies). Many of these areas integrate with one another to offer personalized recommendations: For example, based on where you’ve traveled to and what you’ve searched recently in search engines, Maps propose restaurants based on your preferences.

This ‘normalization’ of digital experiences knows little boundaries across industries.

If it hasn’t already happened, consumers will expect digital conveniences if they put in the effort to visit malls – which changes the imperative for mall developers and operators. What this means is it’s not just about becoming ‘more experiential’. Instead, malls need to provide unified, interactive and differentiated experiences to customers – including millennials, who in Asia are armed with more spending power than any previous generation (an estimated US$6 trillion in disposable income by 2020).

Customer experience is the X-factor

Fortunately, there are already myriad possibilities to offer superior customer experience that savvy developers/operators can harness to capture customers’ mindshare.

The retail industry has given us many examples to consider. For malls, here are just some areas to think about:

  • Experiential devices. More immersive experiences can be created in malls with devices that interacts with the customer outside of stores. Perhaps, Jane, a 38-year-old millennial has been researching organic food products recently. As she passes an in-mall beacon, her phone picks up an identifier recognizing it as the same one that clicked on several organic food products found in several retailers in the mall. Real-time notifications on where she can find those items pop up on Jane’s smartphone. It also shows her recommended recipes she can whip up with those products.
  • Smart robotics. The idea of robotics interacting with shoppers is not new. An example: Singapore’s honestbee offers a retail space where robots pack customers’ groceries. It can be more than that in malls. For instance, robotics can align with heatmaps, moving to areas with concentrated numbers of customers and engaging them. Based on smartphone signatures, they may enthrall children with preprogramed kid’s entertainment. For the busy, high-spending executive, robotics may be in the form of what’s almost like a VIP, mobile clienteling experience – helping to streamline the executive’s shopping experience and showing him where the stores he wants to get to are.
  • In-mall analytics. Many retailers today are unwilling to share customer data with mall operators. Rather than depending on that, mall owners can create their own data points. Having promotions such as free gifts is one way to get data about higher-spending customers. But malls can also monitor data points such as how many customers enter a mall, when they come, where they go first, and how long they stay in an area to gain valuable actionable insights. Analyzed data can allow mall owners to improve space utilization to drive enhanced experiences. These useful insights can in turn improve collaboration with retailers interested in shopper behavior within the mall.
  • Combining experience data (X-data) and operational data (O-data). What malls are falling short of today is the experience gap – the difference between what consumers expect and what they encounter. To deliver an experience, many businesses have rich sources of O-data (such as mall foot traffic, in-mall proximity, store capture rate), but not the X-data. When customers walk out of a mall, malls do not know if each of them has a good experience. This disconnect between how the company performs and how the customer perceives it can be closed by combining X- and O-Data – for actionable insights at every step of the customer journey. Malls can then, for instance, assess the strength of their customer relationships and gain insights to build more effective marketing campaigns and more loyal customers.

The blueprint of winning

In the years to come, curation will no doubt remain an important responsibility of mall developers/operators. Careful selection of popular eateries or interesting experience-based tenants, and meticulous rotation of pop-ups to showcase new and attractive ecommerce or emerging brands will continue to be essential. So will setting up relevant experiential spaces – and doing away with those that fall out of favor.

But the real differentiator? It’s customer experience. Mall developers and operators that fearlessly place it as a priority to forge closer interaction with the customer; these are the ones that will emerge winners.

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