Can driverless cars save struggling suburban shopping malls? Maybe … at least in part.
These cars of the future might be one way technology can give a boost to malls, said Vishu Ramanathan, chief executive officer of Chicago-based commercial real estate tech company Buildout.
And when driverless cars aren’t enough? Malls will need to create experiences to help bring people through their doors.
This combination of tech and experiential offerings is the combination that Ramanathan said offers the best hope to those shopping malls that are seeing a steady dwindling in their flow of customers
But it’s the potential impact of driverless cars that most has Ramanathan excited.
“This can’t be stressed enough: What is most important about real estate? Location, location, location,” Ramanathan said. “The calculus around transportation will change because of driverless cars. These cars might make the locations of some of these malls more attractive.”
Bringing city shoppers to suburban malls?
Ramanathan said that there is a reason why real estate agents so often use that “location, location, location” punchline when talking about what most sells a piece of property.
A building’s location impacts customers. A bar, for instance, might be packed each night largely because it sits in the middle of a busy downtown block. That same bar offering the same exact service, food and drink specials might sit nearly empty if it’s located in a quieter suburb.
The same holds true for malls. The large, sprawling shopping malls located in far-off suburbs simply aren’t attracting the customers because they are so far away from so many of them, Ramanathan said.
He points to himself. He lives in the city. Driving to a far-flung suburban shopping mall doesn’t appeal to him.
But if he could just hop into a diver-less car and not have to worry about following his phone’s instructions to find that suburban mall? He just might head over there.
“Location does impact us,” Ramanathan said. “If you have a piece of real estate in the suburbs, I will be more likely to go to it in the world of self-driving cars. For now, though, without those? Going outside the city seems like a million miles away to me.”
The right combination
Driverless cars, though, are not a savior for struggling malls. For one thing, who knows when these cars will be available to the public.
Secondly, city dwellers won’t take a driverless ride just to shop in a mall that offers the same retailers they can find anywhere else.
Ramanathan said that mall owners today have to find new ways to draw in customers. And the secret to doing that is to offer experiences.
This is already happening with some malls. A host of them are offering bowling and entertainment centers such as Round One and Pinstripes. Others have opened multi-screen movie theaters with sit-down eating options and gourmet food. Tour other malls and you might find panic rooms – where you and your friends get an hour to figure out how to escape a locked room – and 3D ride simulators.
These are all steps in the right direction, Ramanathan said.
“There is now a premium on human experiences,” Ramanathan said. “Big facilities like shopping malls have the ability to create these experiences. Then, once driverless cars become a reality, these same malls are going to be more accessible. Getting somewhere will become an afterthought. That is the right combination for these malls.”
What malls can’t do is offer the same shopping experience they’ve always offered and hope the customers keep coming. Today, there are simply too many other activities competing for the time and dollars of shoppers, Ramanathan said.
“Do you remember in the middle of February when there was a 70-degree day in Chicago?” Ramanathan asked. “What did you do? You probably rode your bike or went on a long walk. You didn’t go to the mall. Malls used to represent what people did in their free time. That is not the case today. Mall owners today have to create a reason for people to go to malls.”