I'm hanging out right now on a bench in a local mall, sipping on a Starbucks (NASDAQ:SBUX) Cold Brew while my fiance shops for a few things that she had been waiting to buy. As she shops, I sit and watch the people strolling through, many with children, all holding bags from stores that I never remember shopping at when I was a youngster. The scene is changing and with it so are the malls.
Now I know that retail has been under attack and many stores that were once staples to our malls such as Sears (SHLD) and J.C. Penney (NYSE:JCP) are being pushed to the wayside by the almighty and ever powerful Amazon (NASDAQ:AMZN). But what I am seeing in this mall projects differently than the narrative that is being laid out by the media. This mall is different, packed to the gills, bustling with activity and shoppers walking by with lattes and designer handbags. Why though? Why is this mall different?
Well first off there has to be some background information about the neighborhood. I live on the Gulf Coast of Florida, in a town that is on the up and up in terms of real estate development and the money flowing into it. Now I lucked out, buying a home recently that needed some repairs in a little development right on the front of it all. I guess that I am a value investor no matter what the purchase.
The town is a bit odd, half of the year filled with working folk, not quite blue collar, but the 9-5 nonetheless, paying mortgages, going to weekend dinners, and inhabiting the bars for the after work happy hour specials that bring along with it socialization about the proverbial "man and how he or she is holding them down. But oh the other six months of the year how the atmosphere changes."
In south Florida the weather begins to turn from hot and muggy to pleasant around mid-October, right after the hurricane season inevitably wrecks some summer vacation plans for northern families. After the real hurricanes comes the storm of senior citizens marching into the area, swamping the roads and businesses at an almost unbearable rate.
But as I sit in this mall, I notice that the crowd isn't at all what I thought it would be. Instead of a large number of people in their golden years, it consists mainly of young couples with toddlers, high school kids with clothing styles I don't quite understand, and single business men and women. While they may seem very different, they all have one thing in common; they are spending money at the mall.
Again though, I must ask what makes this mall so much different than the others that I hear are struggling? Is it just the Christmas season that brings out the shoppers in droves or is it something else?
I begin walking down the pathways with my fiance, past the long line of children waiting for pictures with Santa, and notice something about this place. The stores are so small! There is no large places like I remember in the malls of my childhood, but instead the stores are small boutiques, little places that look more like art than stores. Some of these have hardly any goods in them but instead look like an intriguing gallery of consumer products.
The stores are all high-end, places that I do not see myself ever setting foot in, and all are bustling. What isn't full though, the large department stores at the ends of the mall. These places remind me of a different time when I go inside. These remind me of a younger self, strolling to the counter looking for a cheap cologne to spray on before roaming through the rest of the mall. Christmas time was a great time to come to these places, a gift for mom and dad, brother and my grandparents could all be found at one place and usually at a discount!
But now it is a very different story. Total emptiness, like a deserted ghost town as I roam the aisles. Bedding set up in displays that resemble hotel room, pots and pans adjacent to them. There are no young kids in these stores, no wide-eyed youngsters looking for the perfect Christmas gifts. Instead they are filled with only myself and a few senior citizens that still remember when these stores were the powerhouses of the industry.
Truly it is sad to see...
As Bob Dylan's famous song stated, the times they are a changin' and oh he couldn't be more right. Maybe it's not the malls that are going defunct like the media portrays but instead they are evolving into something that looks much different... something abstract. The experience is now what pushes the shopping not the demand. This shouldn't surprise me though because why would demand matter if I can order from my couch or even while lying in my bed.
The experience rules now. It has taken over as the driving factor to push people to shop at the brick and mortar businesses. The Apple (NASDAQ:AAPL) store and its elegant, simplistic design was revolutionary when it began. It creates an experience unlike any other that drove people to the store. Now where is the revolutionary experience? The Microsoft (NASDAQ:MSFT) store has a VR playable display in an aisle and Xboxs all over the place. But that isn't new...
I finish my drink and toss it in a recycling bin next to me as I walk towards a store with weird shaped soaps, weird lights that flicker, and oddly dressed employees. I step inside the fragrance-filled box.
"Would you like to try our hand scrub?" A woman asks as she wheels up a sink that appears to be some type of mix of steam-punk engineering and displays soaps shaped like snowmen.
Maybe this is the new retail. Maybe this is how Amazon gets beat, one hand scrub at a time...