If you were a teenager growing up in suburban America in the '90s, chances are your social life revolved around the mall. It's no secret that the relevancy of this American tradition has plummeted with the rise of e-commerce, but the question still remains: What will happen to the vacant shells that previously housed America's most beloved stores?
Of the 7 billion square feet of real estate dedicated to American shopping centers, a significant percentage -- particularly stores carrying food and household products -- will continue to operate without much change, at least in the next 10 years. Another percentage will likely be repurposed into office space and apartments, as has been done during previous economic downturns. To me, the most interesting part of this question is how space will be transformed to serve customers even better by complementing, not competing with, the online shopping experience.
Here are four of the most promising possibilities that have emerged in the past year:
1. "Inventory light" stores
Korea's Tesco has reinvented grocery shopping by leveraging Korea's 91 percent mobile broadband penetration, the highest in the world. Tesco has set up "virtual grocery stores" in metro stations by plastering walls with posters of supermarket shelves, stocked with "virtual goods." Rather than physically purchasing a box of cereal, for example, a customer just needs to scan the QR code next to the image of the cereal to add it to her shopping list. Once she has finished shopping, she pays through her phone, and the groceries are delivered to her house the next day.
Now, let's apply this idea to the department store. In the past, department stores have bought and allocated products on a store-by-store basis. This process caused all types of inefficiencies, since demand for specific items and sizes is difficult to forecast on a store level. In the future, however, imagine this: Each store carries just 1 size of each item. Customers can try on pieces and, if they wish to make a purchase, can scan the item with their phone (or text the item's code to a dedicated number). The customer pays online, and the item is delivered to the customer's house the next day. This "inventory light" retail model reduces the need for storage space in the department store, which allows the store to allocate more space to displaying goods. Inventory management also improves, as the buying function is centralized and all items are stored in a central warehouse, available to fulfill demand from anywhere in the country.
2. Pop-ups
The idea of pop-up stores -- temporary stores that literally "pop up" and close down within a short period of time -- have been growing in popularity since 2009. Pop-ups are useful for a number of reasons: to introduce a new product, to try out a particular location before committing to building a permanent store, to temporarily expand to meet increased demand during the holidays. What we saw in 2011, however, was that brands are increasingly looking at pop-up stores more as a discovery tool to drive brand awareness, rather than as an actual sales channel. For example, eBay launched physical shops this past holiday season in London, San Francisco, and New York, where customers could browse physical products and purchase those products on their phones. The goal? To remind shoppers that eBay also sells new products; the pop-ups were in line with eBay's "Buy It New" marketing campaign.
3. Delivery hubs
Amazon recently launched "Amazon Lockers," self-service locations where you can have your Amazon goods delivered for pick-up at your convenience. The program is being marketed as a convenient alternative for customers who can't receive packages at their homes; my guess, however, is that Amazon is testing this bulk-shipping method that could potentially be much more cost effective than shipping individual orders to customers' homes. Currently, Amazon Lockers are primarily located in convenience stores; but, if and when the program expands (or when other retailers decide to follow suit), vacant mall space may be the perfect location for these delivery hubs.
For clothing retailers, in particular, this idea of a "delivery hub" could potentially be expanded to serve as fitting rooms and exchange/return hubs. A customer, for example, could visit a hub to pick up her online order and try on the items. If she needed to return or exchange an item, she could do so at that location by placing the item in a bin, which would aggregate returned items and be shipped back to the warehouse once per week.
4. Retail experiences
Brands are quickly realizing that amazing in-store experiences, particularly those that can't be replicated online, are a recipe for success. The best example is probably Apple, whose 326 stores attract more visitors in a single quarter than Walt Disney's four biggest theme parks attract in a full year. From the Genius Bar, which offers on-hand technical help, to the complimentary iPhone training sessions, Apple stores have become a destination for customers to fully experience the Apple brand. Similarly, yoga lifestyle brand Lululemon offers free in-store yoga classes, which allow customers to test out yoga mats, mingle with other yogis, and truly understand what the Lululemon lifestyle is all about. Even uber-luxury players are paying attention: Louis Vuitton has rolled out a number of luxury emporiums, complete with art collections, one-of-a-kind vintage pieces, and "handbag bars," where shoppers can customize their bags from the comfort of a bar stool.
Vivian Weng is the co-founder of FashionStake, a venture-backed online marketplace for independent fashion. She is a recent graduate of Harvard Business School.