Every era has its symbol of commerce. The 1980s were Pewex and Baltona, the 1990s were field beds and street trading. The first decade of the 21st century is certainly symbolised by shopping malls.
However, trade is constantly evolving, and with it also the ways and forms of selling. Will the pandemic that began in 2020 initiate their slow demise?
For years, shopping malls have been the height of marketers’ dreams. The level of control over visitors’ emotions (with the use of lights, subliminal messages, non-verbal messages, or even scents) allowed the visitors (shopping malls became tourist attractions) to become shopping-hungry customers in no time.
Who among us has not entered a shopping mall “for a while”, and left after a few hours with bags full of shopping?
On the real estate market, entities building and managing shopping mall chains have emerged very quickly. The classification and targeting of shopping centres began (both in terms of subject and object). Shopping centres became even more elitist, as their owners were entities whose size commanded respect and esteem.
The real estate market went crazy for shopping malls and, together with the fashion for them, rental rates and the general terms of contracts, seemingly only negotiable, skyrocketed. Entities emerged which decided to dominate the retail market without considering others.
It turned out that it was the mall manager who dictated the terms of the lease, who freely chose the tenants and who was responsible for the image of the mall – a place that turned shopping into a form of leisure.
Managers of shopping malls fell into the trap of their own greatness. They believed that nothing bad could happen to them and that the billion-dollar capital at their disposal made their business immortal.
The mall management companies started investing in more malls, hoping that each new one would strengthen their brand and increase the profitability of the chain. Shopping malls were becoming more and more shopping hypermarkets. Meanwhile, a silent coalition of those dissatisfied with the dictates of shopping malls had been forming for years. Trade unionists, tenants (in particular former tenants eliminated from shopping malls for, among other things, ‘their negative impact on the image of the mall’), companies cooperating with shopping malls (cleaners, maintenance staff).
The effect of the shopping malls’ peculiar selfishness was the introduction of a minimum hourly rate for labour (which significantly increased security and cleaning costs) and the adoption of a project prohibiting Sunday trading (gradual, but consistently implemented over the following years).
Thus, already from 2016, shopping malls should see their glory years weighing down.
Another, ultimately much bigger blow was the introduction of the so-called trade tax in July 2016. For the first time, the legislature explicitly imposed an additional tax burden on large shopping malls and made it clear that the purpose of the law was to weaken the position of shopping malls in the retail market against smaller retailers. In response, representatives of large chain shopping malls lobbied European institutions and led the European Commission to suspend the collection of the trade tax. It seemed that the shopping malls had won over the legislators and successfully stood up.
When the pandemic broke out in March 2020, shopping malls thought that the problem did not concern them. After all, they have long-standing, solidly secured leases. The problem is with the tenants, not the shopping centre. The tenants, on the other hand, were terrified – with calculators in hand, they started to count the potential losses – the main item was the high rent for premises in the shopping mall, which became empty. Losses were counted by both the lessor of the so-called island and large, well-known clothing chains, often renting several hundred square metres of space.
What came as a surprise to shopping mall managers was the arbitrary, administrative closure in March 2020 on the basis of the first pandemic ordinances. Representatives of the shopping malls quickly started lobbying for compensation for the closure of the malls – officially for the tenants, of course, not for themselves. The provisions in the so-called anti-crisis shield were only seemingly attractive to tenants. Of course, they were exempted from rents, but the condition for exemption was the appropriate extension of existing contracts. Here, shopping malls smuggled in their desire to freeze the terms of AD 2019 leases for another, post-pandemic period.
Meanwhile, the trade market has received, in the form of the pandemic, a revolutionary impetus for change that will ensure that when the pandemic finally ends, the market will no longer be what it was before 2020.
The period of pandemic closure has brought about at least two changes: technological and social.
The technological change is the breaking down of the ‘this is not done over the internet’ barrier. We have started to buy groceries, clothes, cars, electronic equipment, furniture online at a massive rate. All these purchases were made without a previous visit to a shopping centre (due to their closure). What is more, Poles have realised that online shopping has an additional advantage – the fourteen-day return period for goods bought online. This put an end to spontaneous, ill-considered purchases in the heat of sales. What is more, the feeling of slight embarrassment disappeared when, for whatever reason, the product we bought turned out not to be as attractive as it was in the shop and we had to return it. There is no need to go to the mall (free return option via parcel machine), or to forcefully buy something else in that particular shop (because we received a refund on a discount card, not in cash). The usual feeling of a failed purchase as a failure disappeared. Instead of forcefully giving an ugly jumper to extended family members, we simply return it anonymously.
The second change is a social change – we have seen that the world without the hustle and bustle of shopping malls is much more friendly. Internet shopping at any time of the day (and on forbidden Sundays), in any place, began to take less and less time (no need to commute, forcefully combine shopping with a meal or a visit to the cinema or bowling alley). Shopping can always be interrupted and returned to in a free moment. The desire to participate in the hustle and bustle has disappeared. (We began to appreciate a quieter, more family-oriented lifestyle. Once again, the book won out over the hustle and bustle of the city). The idea of slow food has displaced the fast food of the past.
These two fundamental changes will mean that post-pandemic shopping malls will no longer be as attractive as they were by 2020. All available market research confirms this. The prospect of several hundred people eating together on the food floor, the obligatory paid cloakroom, the crowding, buying “on promotion” hundreds of unnecessary things, the pressure on time and speed, will no longer attract the public as before.
Managers of shopping malls should as soon as possible understand the time in which they have to function in the market. Choking reality and trying to freeze the market will end in disaster for them. Every lease, even the longest one, if it is not renegotiated right now, will end one day. Perhaps even sooner than stated in the contract.