Have shopping malls become irrelevant?

A top real estate developer says such centers were useful in the past but now deliver the wrong experience.

By MSN Money Partner Jan 13, 2014 3:03PM
Shoppers walk around the Mall of America in Bloomington, Minnesota on Feb. 25, 2012 (© Ariana Lindquist/Bloomberg via Getty Images)By Krystina Gustafson, CNBC

American malls are facing a rebirth, and without a complete reinvention, they will be extinct within 10 to 15 years, the head of one of the nation's largest privately held real estate companies says.

"At one point (the indoor mall) may have met the developer's needs -- and even for awhile the consumer's needs -- but it has outlived its usefulness," Rick Caruso, the founder and CEO of Caruso Affiliated, said in a keynote address Sunday at the National Retail Federation's annual convention in New York. 

In order to compete with the growing presence of online retail -- which, according to ComScore, saw desktop sales increase by 10 percent this holiday -- physical stores need to focus on delivering an experience that customers cannot find on the Web, Caruso said. What's more, physical stores cannot only consider themselves to be in the retail industry but need to embrace the hospitality industry as well.

"It's easy to get distracted by the relentless conversation of the Internet versus brick and mortar, but now more than ever what we need to do is focus on what has always been and what will always be essential to our customer: creating an experience that is magical, creating an experience that is memorable," he said.

For Candace Nelson, the founder of Sprinkles Cupcakes and a speaker on the panel, this has meant the invention of a cupcake ATM machine, where consumers can swipe their credit card at a machine and get a freshly baked cupcake at 2 a.m.

At Caruso's properties, which include the Grove in Los Angeles, it's meant features such as a trolley, which makes children want to visit the shopping center, or offering dining options so husbands don't rush their wives while they browse.

"Embrace your advantage, which itself is disruptive to the technology that thinks it's so disruptive to you," Caruso said.

Traffic at physical stores has been on a steady decline in recent years, as the adoption of online shopping has taken off. In the recent holiday season, ShopperTrak data showed that foot traffic at brick-and-mortar stores fell nearly 15 percent, causing many to wonder what role the physical store will play in the future of retail.

Blake Nordstrom, the president of upscale department store Nordstrom (JWN), said that while it's obvious that customers are beginning to expect more from stores, the challenge lies in finding the capital and wherewithal to properly execute on these principles. 

It's also riskier for retailers to pour investments into physical properties because they don't have the ability to be as nimble as they are when making changes to their online presence.

Nordstrom said that in a world where shoppers have everything at their fingertips, physical retailers need to make consumers' experience across mobile, desktop and in-store as seamless as possible, or risk losing their business.

"We're all striving to stay as close as we can to the customer and make sure that we're in lockstep with her expectations," Nordstrom said. "Because if not, they're moving on to the other great alternative."

More from CNBC

Tags: JWN
Jan 13, 2014 3:27PM



I'm not sure about Mall in other towns/cities, but the one in mine is nothing but a gangster wanna-be hangout.  High school drop outs and middle school age children running wild. 


But this must be the clientel the mall management wants because most a majority of the stores in the mall cater to that demographic.





Jan 13, 2014 5:58PM
How about this.

Americans have become so narcissistic, rude, insensitive, and down right ugly that no matter where you go you are overwhelmed with the behavior. Common manners such as please, thank you, and excuse me are so rare that I almost never hear them anymore.
Jan 13, 2014 5:33PM
Get rid of those annoying $100 Israeli hand-cream people in the kiosks, in fact, ALL kiosks and maybe I'll go back.

Seriously though, the mall isn't what it used to be. The major anchor stores such as Sears, Penny's etc. are disappearing and teenie-bopper clothing stores and overpriced boutiques just don't do it for me.

Not much of a reason to go there anymore.

Jan 13, 2014 3:52PM
In the mall closest to me its a bunch of teenage mall rats.
Jan 13, 2014 3:25PM
No, malls haven't become irrelevant - they have been irrelevant for quite some time.
Jan 13, 2014 3:44PM
Malls are too cluttered with odd kiosks and other obstructions that make it impossible to move around quickly.  People stroll around 3 and 4 across at a loafing pace and you can't get by them.  Stores organize themselves to slow consumers down also with a maze of narrow aisles cluttered with displays.  Its much more convenient to shop on the internet or in a big box store.  Shopping at the mall is a horrible experience.  Stay away.  Its an anachronism.
Jan 13, 2014 3:27PM
last time I went to the mall, all there was to choose from was clothes, jewerly, candles, books and food. 100 clothing stores. 20 jewerly shops. 5 candle stores. 10 book stores, and 25 food places. That's it. Not one store to buy something for the house, car, or yard.
Jan 13, 2014 4:08PM
We have 2 malls nearby. One is now full of trashy no-name stores with cheap foreign merchandise and the other is full of thugs looking to rob customers walking to their cars or rob the stores. So neither one is appealing in the slightest.
Jan 13, 2014 4:03PM
I live within a few miles of that behemoth Mall of America. I guess its OK, but I rarely go there..it is so huge it is nearly impossible to find what you are looking for. A few years ago they banned everyone under 17 from the mall after 8pm without being accompanied by an adult. That did cut down on the teen gang problems they were having. A step in the right direction, I suppose...
Jan 13, 2014 3:45PM
Our family still shops at physical stores for clothing-online shopping doesn't work for me, sizes are still too inconsistent for women. My teenager daughter and friends still like the mall and since they are still on the young end, I or another parent go with them.
Jan 13, 2014 4:25PM

Mall retailers need to do what Best Buy did; offer an in store item for the same online, competitor's price.  The advantage for the brick and mortar then becomes the buyer being able to experience instant gratification.

Jan 13, 2014 5:01PM
If I'm in a mall 3 times a year, that's alot.  I avoid going to them at all costs but then again, they are geared for the young, female spender anyway.
Jan 13, 2014 5:10PM
Retail will never die. You can't try on clothes with a computer.
Jan 13, 2014 5:12PM

Creating an experience that is magical and memorable? What do they mean, like blasting music and laser light shows? Luxury dining in the food court? Four wheel drive scooters for the overweight? If I go to the auto parts store to but some wiper blades I don't need it to be magical and memorable. The mall should be the same. It is what it is and no amount of magic will change it's basic concept.

Jan 13, 2014 3:46PM
The malls where we live are still clean and well kept.
Jan 13, 2014 3:58PM
I only shop at one mall store, a Sears, and I always enter it directly from the parking lot. Nothing else in the mall interests me.
Jan 13, 2014 5:04PM

Lake Forrest Mall G-Berg Md...... MS-13

Landover Mall ....Landover Md......Closed

P.G. Plaza ......Md.......Man Killed in parking lot



Jan 13, 2014 5:32PM

The malls in my area are horrible. A bunch of no name stores with cheap merchandise. The big name stores have limited selection and nothing interesting to buy. How many button down shirts or T shirts can one person have? The last time I went to the local mall it was overrun my teenagers. I shop at the local outlets. They offer more selection. I still think we need some stores where I can buy items for my home. I used to buy many household goods from JC Penney, but they now are focused on clothes and makeup. I am tired of having to drive 30 minutes to find a Home Goods, Pottery Barn outlet, Kirklands, etc. I am now buying most things for my home online.

Jan 13, 2014 4:29PM

Malls hit our fancy in the late Sixties.  They were shinny bright, easy park, indoors (no traffic,

no bad weather) and appealed to our Gatsby self-images of the time.  Within a few decades,

Neman was 'EVERYWHERE'. The malls' prestige began a slow death dance even for the

entry-level office or retail clerk. Though we could purchase fantastic Chinese manufactured

imported quality for a few dollars (when its comparable American sibling sold in the tens or

twenties) and the range of products was nothing short of vast (awesome is their word now),

even malls couldn't outlast America's challenge of trend.


Now, the malls often beget too much violence and many shun such public venues due to

cautious fear. As the INTERNET sill doesn't massacre us - YET, we're turning there for

our entertainment in shopping, light exercise and casual society encounters. The INTERNET

too will be passe prior to 2030 probably. 

Jan 13, 2014 4:05PM
I like malls because they cut down on driving time between stores. if you're lucky enough to need two stores in the same mall.
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