Repurposed retail market

category - covid-19
category - society
category - sustainability
sector - retail
type - market focus
Market Focus
When Covid-19 hit real estate, leaving little within retail untouched, vacant department stores, shopping malls and their car parks were given a new lease of life

For department stores and shopping malls, the situation is no different. In an age of Storefront Salvation and facing mounting pressure from coronavirus, businesses are exploring ways they can repurpose their square footage to offer something more suited to the current climate.

As Neil Saunders, managing director of consultancy GlobalData Retail, puts it, ‘The whole business model of a mall, which is about pulling in as many people as you can and getting them to stay for as long as you can, has just unravelled.’

New community hubs

It’s no secret that malls and department stores have, for a number of years, been on the brink. As far back as 2017, Credit Suisse predicted a quarter of US malls would be closed by 2022. With online shopping on the rise and health concerns rising among consumers, real estate companies such as Simon Property Group – the biggest mall owner in the US – are feeling the heat. In its Q2 report, the brand said it had lost 10,500 shopping days across all properties, because of Covid-19.

In an attempt to turn the situation around, a number of malls are looking at how they can repurpose their space to become community hubs that align with new desires and needs of local people. In Taiwan, architecture studio MVRDC transformed a disused shopping centre into Tainan Spring, a sunken park and public pool. Described as a ‘lush lagoon’, it’s a place where people can relax and will develop into a green public space over time.

Similarly in Australia, Savills reports that mall owners including Vicinity and Scentre are in the process of converting their shopping centres into offices, hotels, apartments, childcare facilities and transport hubs. In Vancouver the Oakridge Centre, which recently closed most stores until 2024, is undergoing development to re-emerge as a hub that will include residential and office space, a public park and community centre.


Published by:

22 April 2021

Author: Josh Walker, Alex Hawkins and Livvy Houghton

Image: Samyan Co-op by Onion


Tainan Spring by MVRDV, Taiwan

Network stores

Another way that businesses are looking to recover from the ‘unravel’ is by exploring the potential of vacant storefronts and mall space as fulfilment centres. Macy’s, for example, has announced it will test this new model in two stores in Delaware and Colorado. As well as acting as online fulfilment centres, the sites will offer in-store and curbside pick-up, returns and bill pay.

Macy’s digital sales grew by more than 50% in Q2 2020 compared to the year before, with CEO Jeff Gennette stating: ‘30% of our digital transactions are being fulfilled out of stores. I see that increasing. And what we’re building out in terms of our omni-network and our fulfilment strategies, our opportunity to be able to satisfy customers however they want to shop. So, stores are going to remain important.’

Whole Foods Market has opened a new online fulfilment facility at the Industry City campus, New York. The site is unavailable to walk-in consumers but will fulfil grocery delivery orders in the Brooklyn area. It’s also been reported that Simon Property Group, mentioned above, has been in discussion with Amazon about how to turn its department stores into distribution hubs for the online giant.

This comes at a time when online sales are on the rise throughout the sector. According to IBM’S US Retail Index, e-commerce is projected to grow by nearly 20% this year, and brands including Walmart and Target have seen e-commerce sales jump a huge 97% and 273% respectively in the last quarter.

Retail residences

In the UK, John Lewis has voiced plans to become a digital-first brand, and will transform its empty stores into privately rented housing. ‘Retail profit margins are under pressure,’ Dame Sharon White, chairman of the John Lewis Partnership, shared in a letter to workers. ‘For the partnership to be sustainable over the long-term, we need to expand beyond retail.’ The brand also emphasises the affordability of the properties, so the unused retail space can be put ‘to good social use’.

US retailers are taking a similar approach, with developers turning a large portion of Alderwood Mall in Seattle into 300 apartments, complete with underground parking. There will still be retail opportunities within the complex, but the residential component will be the main draw.

‘30% of our digital transactions are being fulfilled out of stores’
Jeff Gennette, CEO, Macy's

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