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The New Reality: Future of shopping malls in jeopardy as COVID-19 pandemic pushes shoppers online

Coronavirus: A coming mall apocalypse
Coronavirus: A coming mall apocalypse

From air travel to restaurants and mom-and-pop shops, businesses relying heavily on the in-person customer connection have been hit hard by the novel coronavirus pandemic. Shopping malls are no exception.

Retail futurist Doug Stephens ends an interview trying to sound positive about the retail industry. But he acknowledges it’s not easy to be upbeat.

“We could be facing a retail refugee crisis,” said Stephens, who founded and runs the consulting firm Retail Prophet. He describes monumental changes ahead for Canada’s retailers and their employees, especially those located in large and medium-size shopping malls across the country.

Problems lie ahead for workers and the companies that own historically-profitable shopping properties occupied by retail brands that are struggling because of the COVID-19 pandemic.

“We are going to have a crisis in the commercial real estate market,” Stephens makes clear.

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“There’s no way to get around or candy-coat it.”

READ MORE: What shopping will look like as retail stores open across Canada

Retailers couldn’t open their stores for weeks as a result of the global pandemic. In many parts of Canada, including Ontario, shopping malls still are not permitted to reopen to the public.

Many stores and shopping malls that have reopened have found an unenthusiastic consumer base reluctant to come back.

“If they had no great reason to go four months ago, they are going to have much less reason to go in (the next) four months,” said Marina Strauss, who spent 40 years as a Canadian journalist, mostly with the Globe and Mail.

Strauss spent the last 20 years at the newspaper reporting on the retail industry until her retirement in 2019.

“To get people back at the malls they will need to really convince people they’re safe and they’re something to go for,” she told Global News in an interview.

It won’t be easy.

READ MORE: Can I try on clothes now that stores are reopening?

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“I don’t predict the death of the shopping centre, I think the question is: ‘what will it become?'” said Lisa Hutcheson, managing partner of J.C. Williams Group, a Toronto-based retail industry consultancy.

Hutcheson says mall owners and retailers are wrestling to figure out how to open and operate businesses safely, knowing they must limit the number of customers in stores to ensure physical distancing.

The COVID-19 crisis has driven consumers to shop differently out of necessity. Online shopping for everything from groceries to clothing to electronics has become mainstream.

“The internet is the biggest big box store in the world,” said Stephens.

“Anything I want is in that store 24 hours a day.”

The COVID-19 pandemic has accelerated change in retail, which was already in the midst of upheaval. For example, J.C. Penney, a 118-year-old retailer, filed for bankruptcy in May.

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“What COVID-19 is really doing is pushing the retail industry out of the industrial age of retail and into the digital age of retail. This is going to be really painful, not just for brands, it will be painful for consumers as well,” said Stephens.

Almost inevitably, the shift to digital will have an effect on traditional stores.

READ MORE: B.C. retail stores are reopening mid-May. Here’s what they need to do

“We are going to see stores close, we are going to see more dark spaces in malls, that’s not going to attract people either,” said Strauss.

Rather than occupying a huge footprint, retailers may favour smaller stores designed to give consumers a taste of what they’re about.

“It might be a showroom where people come in and the product is shipped to them at a separate time,” said Hutcheson.

How the COVID-19 pandemic could change the retail industry
How the COVID-19 pandemic could change the retail industry