RETAILERS SET TO LEAVE SHOPPING CENTERS
Will mega-malls become the ghost towns of the future?
Since the iPod made digital music fashionable, digital options have eroded the markets of music, movie and computer games retailers. Those in large malls, dependent on huge sales volumes, have been especially badly hit.
PC-based home entertainment systems are becoming the preferred viewing, gaming and listening destinations.
In the past five years more than 50% of sales volumes have disappeared from physical retail channels to on-line alternatives – with cell phones being the preferred target platform.
Australia’s Channel Nine launched their mobile TV on the back of the 2006 cricket season. “We never expected such a spectacular take-up,” says Nine’s marketing team. “Our new price-level of just five dollars a month for unlimited viewing created the ‘killer’ consumer model. Most of our programming is available to all mobile phone users.”
Jeff Chambers of the International Council of Shopping Centers confirms the trend: “Music, movie and games retailers, together with movie theaters, are set to disappear from malls world-wide. We see a similar trend with photo services and appliance retailers. With the new announcements from HP, I can print a new cell phone at home. I don’t have to go to the mall.
“New communication and printing technologies are changing the face of malls as we used to know them. Custom clothes are next and in the long-term future we will see nano-machines that can ‘grow’ food right in your kitchen – instantly.
“Everything will be made at the point of consumption – that will challenge shopping centers like never before.”
ANALYSIS >> SYNTHESIS: How this scenario came to be
Over the next two decades, traditional shopping center tenants will face increasing pressures from technology-based innovations that will put consumers directly in touch with product designers. Manufacturers, distributors and logistics processes are being threatened by a variety of new solutions:
- Digital music is linking musicians directly with consumers, dis-intermediating agents and publishers and retail stores that stock physical product. Consumer cost and convenience, plus artist access to global consumers and increased share of lower revenues are the drivers. Ditto for movies and computer games.
- Increasingly cheap (or free) broadband wireless communication is improving access and reducing costs for everyone. There will only be ‘the haves’ and ‘the want-nots’.
- Home and office-based ink-jet printers have massively cut the cost of photo-quality pictures, killing traditional photography and the associated products and services.
- The same basic technology, adapted to 3-D, and printing with new materials rather than ink, will enable home-printing of small devices (phones, chips, displays and memory), clothes for the evening, etc.
- In the longer term, nano-technology and bio-technology will enable the manufacturing of foods and supplies directly at home. Farmers and producers will become information providers rather than manufacturers. The logistics chain will be the internet, the factory a small ‘assembler’ in the kitchen.
- Massive step-changes in technological solutions will replace common white goods such as washing machines (ultra-sound technology and smart fibers), tumble-driers and steam-irons.
Each of these trends will increasingly affect the complete value-chain, turning it into a virtual value network and removing the need for retailers to sell in the physical world.
Shopping center owners would do well to understand development in virtual worlds – where new young companies are selling the equivalent of retail space in a completely virtual world.
The following MindBullets discuss many of these scenarios in greater detail.
Warning: Hazardous thinking at work
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