Retail & Ecommerce

An All-American Story: In Praise of Malls and Online Marketplaces

Austrian architect Victor Gruen came to America during World War Two with an inspired vision. So inspired, in fact, that he went on to design and build something that would define American culture for the next century. Something beautiful and grand, but which the analysts tell us is now dying: The Great American Mall.

Mall shopping nowadays may seem like a mad dash from store to store, but Gruen had a very different vision. He wanted to recreate the feel of a Parisian boulevard in every American town. He saw his “shopping centers” (the word mall wasn’t popularized until the late sixties) as places where people could buy everything they ever needed. However, he felt it was just as important that friends could meet up and eat together, and that the mall was a place where the whole neighborhood could gather. People were encouraged to leave their cars and stroll.

In 1945, there were just 8 shopping centers in America, but the rise of suburbia led to a boom; by 1956, Business Week was running articles entitled “Too Many Shopping Centers”. By 1980, America had 20,000 malls, accounting for 60% of all retail trade. They employed 8% of the total workforce and generated sales of 586B USD. By 1992, the number doubled again.*

4th September 1995 was perhaps one of the most all-American days in American history. American Wrestling’s “Monday Night Wars” kicked off with the premiere of WCW’s Monday Nitro. The first match involved a tag team named the American Males, and the headliner was the “Real American” himself, Hulk Hogan. Where else could this celebration of Americana take place than in a shopping mall? It was filmed live in the aptly named “Mall of America” in Minneapolis. This is the zenith of the American mall — its peak of cultural relevance.

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Meanwhile, in July of that same year, an online bookstore named Amazon (with the original domain relentless.com) sold its first book online and went public just two months after. What happened next was the steady decline of the Great American Mall and the relentless rise of the Great American Marketplace.

While the mall culture boom in the 1950s changed the urban landscape of the US, the growth of online marketplaces was largely invisible—that is, of course, until the last few years when the distribution centers needed to keep these behemoths running efficiently started to become the dominant architectural feature of many small American towns.

In 2001, e-commerce experienced its second-largest growth by a single quarter, with the number of online purchases more than 40% higher than the preceding three-month period. Interestingly, that number has only been rivaled once, in Q1 2021, when quarter-by-quarter e-commerce sales in the US grew by an astonishing 39%. And the main channels for those sales were online marketplaces, which accounted for 62% of all web sales in 2020.

Today’s online sales—and marketplaces, in particular—are still skyrocketing. US e-commerce grew by 44% in 2020 and can probably count on another couple of decades of dynamic growth before things level off. The current state of business for online marketplaces is, therefore, not comparable to the peak of malls from the late 1980s to the turn of the millennium. The current growth rate is more like the rapid acceleration in offline sales that took place in the sixties.

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Meanwhile, the decline of malls has been swift and they are closing at a staggering rate. Commercial real estate services firm Green Street Advisors estimates that there are only around 1,000 still operating in the US. That number is twenty times less than thirty years ago. Additionally, the pandemic has led to an acceleration of the trend, according to retail industry consultant Jan Kniffen. Around 1 in 3 existing malls are expected to close their doors by 2030, though some experts are now predicting that we will reach that number within a year as what some are dubbing the “retail apocalypse” takes hold.

However, what we are seeing play out here is not the end of days for offline shopping; it is more of a societal shift. The online marketplace is becoming the cultural successor to the American mall, and the numbers tell the story. In 1992, Americans spent an average of 12 hours a week in malls; in December 2020, heavy e-commerce users spent almost the same amount of time shopping online, clocking up to 11 hours per week. But why the shift, and what are we losing or gaining culturally from the changes?

An online marketplace is a digital destination that sells everything one could ever need. In Gruen’s original vision for the mall, the shopping was really secondary to the social experience of shared shopping. Today’s buyers are less attracted to the social aspects of the mall—meeting, eating, and coming together as a neighborhood—meaning that they are starting to prefer the convenience of online shopping over a time-consuming trip to the stores.

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The mall is no longer the hub for social interaction, as many people catch up with a wider group of peers, more frequently than ever before, often through digital channels. There has also been a shift in the kind of ways people spend time together. Nowadays, Americans are more likely to engage in pre-planned activities with a specific purpose (think play dates, dance classes, aerobics, or even litter picking) than they are to pass time window-shopping with friends.

Victor Gruen’s third element of the mall was eating good food. In trying to make up for the loss of retail revenues and to increase footfall, malls in 2019 dedicated 25% more space to food outlets than malls in 2006, with healthier food options and trendier fare being offered. There are more independent restaurants in malls and fewer traditional fast-food chains. However, given the sheer size of most mall spaces, it seems unlikely that turning malls into giant food halls will stave off the inevitable. This is especially true given millennials’ penchant for online ordering and delivery; 59% of orders from restaurants by this group are takeout or delivery. They are not hanging out and eating at the mall like teenagers in CluelessMallrats, or Mean Girls; they are the driving force behind the growth in digital ordering and delivery, which has been 300% times faster than dine-in eating’s growth since 2014.

So what of the future? It’s clear that most malls will not survive, and that we are coming to the end of a chapter in the story of American culture. The malls that do survive and thrive will likely have a greater mix of food and entertainment. They will perhaps have fewer products in stores, offering more “showrooms” where people can interact with customer service representatives but will make more purchases online.

As for the Great American Online Marketplace, the story is still being written. If they are to replace malls in the hearts of American consumers, marketplaces need to move forward from offering convenience alone and think about how they can bring true social interaction into online shopping. Sites like Poshmark are bringing elements from social media into marketplaces, allowing people to like, share, and comment on listings. Facebook also launched its own marketplace in 2019 and is already making huge gains.

However, the end goal has to be creating a place where a group of friends can sit in their separate bedrooms and browse clothes together. They should be able to see the same products at the same time, give opinions in a closed chat group, and have a fun, shared experience. Online marketplaces that can bring this part of Gruen’s original vision for malls to life will be well-served.

When that happens, it will be time for a significant change. Malls were called “shopping centers” for the first quarter-century of their existence, until their influence on culture became so great that they demanded a new name. We’re now 25 years into the era of online marketplaces, and on the brink of bringing those social interactions into customer experiences. When that happens, perhaps we’ll stop talking about “online marketplaces” and will move into the age of “e-malls.”

* Stats and information from the opening of this article taken from Bill Bryson’s Made In America.

This article is part of the ‘US Marketplaces Advertising and Impact Guide’ which was released in August 2021. You can download the full report here. It contains insight into the past, present, and future of multi-vendor sites, and focuses on the power of Programmatic Ad Campaigns to increase sales and promote brand loyalty.

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