THE STRIP MALL IS DEAD: LONG LIVE THE SERVICE MALL
October 29, 2020
6 min read, 5 min video
In 2011, a National Post article called strip malls “maddeningly random”. Today, across North America, these once-vibrant retail formats are still struggling to retain their relevance. Could they be restored to the community anchors they were intended to be?
When strip malls were first built in the 1950s, they were neighbourhood hubs—convenient sources of food and services, where residents could shop closer to home and connect with their communities.
In recent years, they have teetered on the edge of viability. In many cases, they have failed to keep pace with the changing needs of consumers or those of the community they serve. Their position is even more uncertain in the wake of COVID-19. The Retail Council of Canada estimates that one in five stores is now vacant across all types of malls, plazas, and big box centres. According to the Real Property Association of Canada, 30 percent of community strip malls missed their payments in April 2020. The same month, commercial realtor JLL Canada noted: “It’s the mid-tier smaller-scale landlord that cannot make their mortgage payments to their lender that are going to be in trouble.”
With the sector’s survival now more tenuous than ever, the floundering strip mall needs new strategies to secure its future.
An evolving workforce and the onset of Covid have now created conditions that are ripe for the strip mall’s rebirth. More people are working from home. More are shopping locally. More are looking for novel experiences at the neighbourhood level. And many have a desire to connect, as demonstrated by the success of Nike’s weekly Living Room Cup and Lululemon’s Community Carries On—two Covid-inspired online communities that have helped people fulfill a need while feeling part of something bigger. At the same time, fewer commuters downtown every day mean urban stores can no longer rely on density alone as a traffic driver.
THE FUTURE DEPENDS ON NEW STRATEGIES
Converting strip malls to mixed-use developments seems to be a common solution for repurposing these tired retail centres, but it cannot be the only solution. Developers must go beyond common functional benefits like convenience and selection to gain a deeper understanding of neighbourhood needs and service gaps. They must treat the strip mall not as a retail catchall, but a destination where local residents want to shop, eat, catch up, and convene.
That means truly being part of the community, not just a landowner within it. It means giving that community a voice. It means identifying opportunities to connect with consumers on an emotional level, with experiences that genuinely capture people’s hearts and minds and keep them coming back. If developers can provide this relevance, and shift consumers’ mindsets so they see these centres in this refreshed light, visits (and sales) at strip malls will increase. The key is thinking of them not as a strip mall, but a service mall.
With that in mind, each community will have different needs based on distinct socioeconomic and demographic profiles. Recognizing that these differences create opportunities for different retailers, here are some ways property developers can bring the service mall to life:
- Create an app, like Nextdoor or Front Porch Forum, to crowdsource input from local consumers and glean greater insights into their wants, needs, and values. This kind of two-way link not only provides developers with an opportunity to engage with the community and inform future planning and tenancy, but also gives residents ownership of—and pride in—their local businesses.
- Develop a retail design strategy that allows for a flexible experience: Enable tenants to bring an element of seasonality to the mall in order to keep the experience fresh and attractive all year round. Retail brands with broad assortments across a range of categories change out the offering, curating it to neighbourhood needs. A large retailer like Sport Chek uses the smaller format to feature outdoor living and camping equipment in the summer, then focus on hockey in the winter. In the same vein, the developer also offers shorter-term leases to two retailers—a cycling specialty store in the spring and summer, and a skiing and snow-sports retailer in the winter. In both cases, the locations include a curbside pick-up depot around back, providing yet more value-add for customers and benefits for businesses.
- Replace the strip mall’s typical grocery or pharma anchor with a new food service offering that focuses on family meal solutions for busy parents. Freshly prepared meals and meal kits are created by different food providers, providing them with opportunities for promotion while enticing residents to regularly check out the rotating meal line-up. In some locations, it’s an express format of a dine-in family restaurant like Jack Astors, where residents pick up takeaway versions of their favourite meals. Either way, meal purveyors are able to enter the physical retail space at a lower cost-entry point.
- Apply the learnings of themed strip malls like medical and wellness centres to another niche consumer segment: small businesses and workers-from-home. Think tech support services. Online pickup lockers. Or co-working and meeting spaces that offer a welcome break from cabin fever while giving surrounding retailers new ways to boost traffic and connect with local consumers.
- Be relevant to the surrounding neighbourhood. In areas with large populations of university students or twentysomethings, provide financial literacy centres that offer much-needed financial guidance not attached to a banking product or service. Where residents express strong attitudes regarding environmental protection, make it incumbent upon retailers to drive positive local impact by donating a portion of sales to an organization that supports a local sustainable or environmental initiative.
- Consider other ways to bring a local element to the mall based on resident feedback and interests. Imagine a rooftop garden that supplies produce for a feature menu item for a restaurant below, or provides healthy food options in food deserts. Imagine a pop-up stage that offers informal music and performance events, giving residents new and surprising reasons to visit and spend time there.
- Support small businesses by allowing smaller tenants to take shorter, more flexible leases—a win-win that enables tenants to test a new offering, and developers to keep the mix fresh by encouraging variety and rotation.
With today’s changing consumer needs and behaviours, strip malls are in an ideal position to reassert themselves as retail leaders with local appeal. The time is right for the emergence of the “service mall”.
But its success hinges on the willingness of retailers and restaurants to consider business models that capitalize on these changing consumer mindsets. It depends on whether these businesses are willing to invest in the community—not just the land—to create more productive space, achieve higher occupancy rates, drive more revenue, and benefit from a greater social return on investment (SROI). In short, it depends on property developers with the vision to take these outdated holdovers of a time gone by, and turn them into spaces that truly serve their communities.