Street Retail Vs. Malls: Considering Ideal Environments for Independent Retailers

Both new retailers planning to open their first store as well as well-established chains expanding their business are faced with the key choice between street retail and malls. Making the right choice will help avoid the need to overcome a multitude of smaller challenges later on, and also helps to form the business philosophy.

Obviously, there is no general solution for all companies in all cities. A retailer must choose which format brings the biggest flow of customers, who will in turn provide the highest amount of sales and revenue.

You can assess for yourself the situation in your town: if the signs on main street change often, some of the spaces have not been occupied for six months already and leasing ads hang in windows, while in malls the numerous visitors are smiling and making purchases, it would be easy to determine how to proceed. And this situation occurs more and more often.

Born to sell

Malls are built with one purpose in mind: to create the most optimal conditions for bringing together consumers and retailers. Management at malls offer retailers special trading spaces with sufficiently high ceilings and bright lighting, as well as helping with advertising and promotional activities. For consumers this is a place where they can spend the weekend with their families, shopping, eating at restaurant or going to a movie.

People come to a mall to buy. They can visit one or a multitude of stores, but nevertheless they will pass your store front, which could easily attract their attention and trigger spontaneous demand for your products. Having an anchor tenant at malls is an excellent factor that could boost your sales. Meanwhile, those passing on the street may not give a thought to buying anything or pay attention to your store front: they are simply returning home from work or university.

On a rainy or frosty Sunday customer traffic at street stores falls dramatically, as no one wants to walk around in such weather. Furthermore, there are always problems finding parking in the city. While in a mall the weather is the same in the summer or winter, with powerful air conditioners maintaining comfortable levels of temperature, humidity and lighting day and night, while rain and other unpleasant weather are left at the door. Furthermore, problems with parking are not as bad as in the city.

All these factors raise the normal flow of customers, and your task is to attract them to your store. If you release a new brand, its recognition will start to gradually grow from the moment you open your new store, as those visiting a mall will constantly have their eyes drawn to your advertisements. If you are expanding your retail business, you could turn to a chain of malls and agree with their management to open outlets in each of their malls.

With street retail you need to look for companies that will provide security, cleaning and communications services, while in malls this headache is handled by those leasing out the property. Technologies for commerce and marketing are constantly being developed in malls, with the motto “convenience for the consumer” taking precedence above all.

Small and big challenges

But malls are not 100% heaven for retailers. Rent here is generally higher than what you would pay for a street store. Nevertheless, this should be sufficiently compensated by the high flow of customers.

Be ready for intense competition in malls. This is a relatively limited space where stores offering similar products could be close by, potentially drawing away customers. But this competition forces retailers to struggle for the lead, perfecting their products and business principles.

Additionally, leasing space in a mall limits your ability stand out from others. You won’t be able to take on a different cleaning service than the one provided by the mall’s management. And don’t forget that you will need to moderate your creative ideas when filling out your shop windows, as the mall’s management may not agree with a radical design.

What’s to be done?

There is no need to exhaust your strategy for the location of your business. Experiment: research the effectiveness of malls in your town, visit nearby malls and assess their convenience for customers, the quantity and types of consumers, and the competitive environment. Study consumer habits in neighboring towns where people for example could reject an outdated mall and prefer buying clothes and shoes in small stores downtown. Expand your chain of stores in malls, and open flagship stores on attractive main streets. Form a strategy for developing your business, apply the maximum effort and creative potential and don’t lose out to competitors on new opportunities.

Contributed by Anton Titov, founder and CEO of Obuv Rossii (“Shoes of Russia”), a top-five footwear retailer in Russia and No. 1 in the mid-price segment. Mr Titov has written for leading Russian publications including Forbes Russia, Slon.ru and Retailer.ru.