Malls Look to Future With Experiential Retail as They Navigate Macy’s Changes

As U.S. malls grapple with shifting consumer preferences and the digital revolution, they are undergoing a transformation.

In an interview with PYMNTS, Rachel Williamson, chief strategic retail adviser, Running Great Stores, highlights the trend of experiential retail, where malls are focusing on activity-based businesses and entertainment options to attract consumers.

This shift includes innovative mall layouts that group similar retailers together, breathing new life into aging shopping centers. Williamson emphasizes that malls must embrace these changes to remain relevant, noting that mixed-use developments and the integration of residential and retail spaces are crucial for revitalizing traditional mall formats.

As major retailers like Macy’s adjust their strategies and close stores, malls face both challenges and opportunities, with the future of retail hinging on adaptability and forward-thinking strategies.

Relevance in the Connected Economy

Williamson has witnessed the evolution of U.S. malls as they strive to stay relevant in an era of digital transformation and shifting consumer preferences.

Traveling extensively across the country, Williamson noted a transformation in mall dynamics. “There is definitely more activity and experience-based businesses going into malls,” she explained. “It used to be just to fill large open spaces, but now it’s to attract experience-driven consumers.”

While many malls still resemble their 20-year-old selves, some are innovating to better cater to contemporary tastes, Williamson said. For example, malls like Easton Town Center in Columbus, Ohio, and King of Prussia Mall in Philadelphia, are revamping their layouts to group similar retailers together.

“Examples like Chico’s, White House Black Market, and Soma all next to each other, or all home stores in the same wing, create a more focused destination,” Williamson said. “This costs money and takes careful planning, but it makes the mall feel refreshed when stores move to make room for new ones.”

Experiential retail — encompassing entertainment and dining options — is increasingly becoming a requirement for malls aiming to remain viable, according to Williamson.

“Offering entertainment and dining options will be required for malls who want to make it into the future,” she stated.

Another trend is the repurposing of mall spaces for mixed-use developments. Williamson points out that this trend modernizes traditional malls, stating, “It is about finding the right mix of stores that support potential residential choices. Whole Foods or Trader Joe’s, for example, are appealing to renters who want to walk everywhere.” Mixed-use developments can breathe new life into malls, integrating residential, retail, and leisure spaces to create vibrant community hubs.

Macy’s Plans

However, the retail landscape is also facing major shifts, particularly with department stores like Macy’s, which plans to close 150 of its stores by the end of 2025, along with tripling the number of its small-format locations in the same time frame.

“Macy’s is closing due to multiple factors,” Williamson explained. “Stores are not performing financially; Target, Walmart and Amazon are offering similar items at lower prices; Macy’s blames the decline of shopping malls; and they are looking to update their business model by reinvesting in luxury retail and opening more of its higher-end brands like Bloomingdale’s and Bluemercury.”

Macy’s plans to close 150 locations by the end of 2025 will impact malls significantly, she adds. “The malls will need to get ahead of the potential exits and determine what to do with the giant spaces left,” Williamson said. “The departure of an anchor store typically leads to a decline in mall traffic.”

Undoubtedly, Williamson explained, “many will lose their jobs with these closures and there may not be open jobs to slide right into. Macy’s has tenured salespeople who have been with them for many years. The top-notch sellers will get snatched up by Nordstrom and other experience-driven retailers.”

Macy’s store closures are also likely to influence its online and digital sales strategy.

“My experience has been ‘out of sight, out of mind,’’’ she said. “When a retailer closes, the community finds another brand to shop at. This happened with Ann Taylor when they were closing stores six or seven years ago. Online sales declined as a result. If Macy’s tries to grow their online business without brick and mortar, they will be competing with Amazon and Walmart in a big way, which is a tough proposition.”

Consumer behavior is shifting as well, influencing how retailers like Macy’s are rethinking their store footprints. “Macy’s cannot afford to staff these huge stores where they are running discounts and softer margins compared to Saks Fifth Avenue or Neiman Marcus, which are primarily full-price department stores,” she explained.

“Today, Macy’s only has cashiers, making their stores messy and unappealing. Customers migrated to specialty retailers two decades ago as department store offerings and service declined. Reducing the size of stores, offering better service, more staff and higher standards in cleanliness and order is crucial.”

Looking ahead, Williamson envisions a bifurcated future for malls in the next five to 10 years.

“The malls with capital funds who refresh and stay ahead of customer demands have a future,” she said. “The old, tired malls that don’t get updated will end up shuttering their doors. Malls are organized into A, B, and C malls, and the B and C malls are the ones at risk.”

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