This blog was originally published on Towards Data Science publication.


Globally few billions of people visit malls and shopping centers every month. This reflects not just the integral place that malls hold in the retail landscape, but also the massive potential of data-driven insights waiting to be harnessed.

Malls can use big data, machine learning and AI to derive meaningful insights to minimize operational costs, build better customer engagement, explore new avenues for revenue, enable tenants to boost productivity, and more. Yet we see and read news heralding a new era when more malls will be closed for business (by 2022, analysts estimate that 1 out of every 4 malls in the U.S. could be out of business).

Recently, the head of asset management for a very large mall management services company in Europe told us this over an intimate discussion:

“We are slow in decision making yet fast in asking results and pointing elsewhere…we find it hard to make decisions laden with uncertainty and do less experiments than we should. We want to know which brands creates more traffic yet we don’t measure dwell time for brands. Malls and shopping centers across the world are changing rapidly — we respond only when we are hit hard and we are usually slow to take advantage of new technologies.”

Today, asset management and operational leaders of most large global mall operators are acutely aware of how technology-fueled disruptive innovations, changing preferences of an educated younger demographic, and online shopping is rapidly shrinking the lifecycle of traditional malls and creating new opportunities to transform malls into something different than the status quo. These leaders are forced to rethink technology investments that support business strategies to survive and thrive in this new world order. However, many such leaders and their organizations are also suffering from the fear of failure, lack of internal support, and practiced incumbency, especially when embarking on ambitious initiatives.


The Mall / Shopping Centers are in the middle of a perfect storm, caused by distinct internal and external forces which are cumulatively compelling executives to invest scarce resources in multiple, contradictory directions.

“The traditional concept of a mall as a grand hall for shopping is becoming “a historical anachronism” desperately in need of reinvention.”
- Rick Caruso, CEO of retail developer Caruso Affiliated

-The rapid rise of online/mobile shopping in the last decade or so led to a drop in foot traffic at big-brand retailers that acted as anchor shops for many malls. As some of these stores closed down due to financial reasons, the mall traffic dwindled.

Of all the things we do on our phones, the fastest-growing segment in 2017 was shopping, up 54% year-over-year. Source: Mary Meeker 2018 State of the Internet report

-The blow of the Great Recession decreased overall spending and most millennials are now into experiences than ownership. Travel is booming, hotels occupancy rates are off the charts, food services and drinking places are growing rapidly, while spending on clothing — the core shops at malls are down. As consumers became bargain-hunters, fast-fashion outlets, and club stores took some market share from department stores.

-Not all malls are created equal. Shopping center “gross leasable area” (GLA) — the U.S. has 40 percent more shopping space per capita than Canada, five times more than the U.K., and 10 times more than Germany. This is a problem of plenty and many analysts suggest a need for an essential market correction, particularly when the malls are outside the city premises or are not well maintained. While destination malls (like Mall of America) will be able to successfully create experiences that are worth getting out of the couch and drive to, the rest will struggle or die struggling to pay attention to details that shape human experiences in such vast spaces.

This report clearly highlights the excess GLA that many countries have Source: A study commissioned by the South African Council of Shopping Centres to understand the GLA relative to the world.

-Limited investment in tools for measurements by mall management has been one of the less spoken topics and yet is a key internal challenge. Most of the mall owners have been reluctant and/or slow to adopt new technologies and put in adequate measurements to understand what works and what doesn’t in this new world.

For example, while most mall asset managers are always on the lookout for the next breakout brand, the new age grocery chain, and events that continue to drive traffic to their main doors yet the same leaders have no / limited toolset in place to know the current baseline numbers resulting in mutual distrust with the retailers.

The operations and the marketing team for Tier 1 and 2 malls are fully aware that they strongly competing with online aggregators who provide personalization, convenience, and seamless experiences yet most are still busy looking at footfall numbers the way they have for the last 20 years or so.


“Shopping alone or shopping primarily can’t be the reason why people will come to the mall anymore. With big increasingly empty spaces, ample parking, and access to major thoroughfares, malls are now asking ‘what else can these locations be used for’?”
- Peter Muoio, Chief Economist, Ten-X

Mall owners and shopping centers management have a traditional playbook — existing structures, age-old governance processes, centralized capital requirements & investment strategies, long-running technology innovation cycles, locally limited marketing — that is archaic and is not geared to drive growth in this new environment of change. The pressure to react is already forcing strategic detours for many Tier 1 and Tier 2 malls. The biggest trend we witness is repositioning of malls from being spaces for shopping transactions to Consumer Engagement Centers with customer experience innovations at the core.

This has been reflected in the

- changing patterns of tenant mix that has shifted from pure retail to a combination of F&B, entertainment, wellness, and a whole slew of diverse businesses including office spaces and sometimes even apartments. Such kind of micro-city like developments has become a magnet for millennials who are leaving downtown for the suburbs but still want to live in a dense, walkable community and be close to everything they want.

- There is also a perceptible shift from only long term leases to flexible short term rentals and popups and added marketing thrown in to get the right kind of tenant mix throughout the year. A big chunk of GenZ and Millennials live by the trends dictated by Insta and other Social Media and Westfield is capturing their interest by launching the first-ever AI-powered ‘Trending Store’ which displays top trending products across Social Media in real-time.

The Trending Store operated by Westfield London — a pop-up selling clothes which are trending online. Source:

- The growing convergence of online and offline models has resulted in the former opening up brick-and-mortar stores in popular malls and malls investing heavily in digital interfaces to enable hybrid shopping experiences. It’s not uncommon now to see a plethora of digital kiosks and displays in malls that go beyond normal “find your way inside the mall” — technology perhaps holds the key to the rebirthing of brick-and-mortar stores.

- Additionally, since malls cannot beat online players on price or other convenience options, many of the Tier 1 malls are providing differentiated offerings like VIP treatment of loyal customers, hosting product learning sessions, musical performances and more. Gate Mall in Kuwait launched a concierge service for carrying customers’ shopping bags to help them shop comfortably. This proved to be a highly sought after service by the customers, leading to increased shopping time and higher conversions.

Listing of special concierge services at the Gate Mall in Kuwait: Source:


“We’ll continue to work closely with brands to deliver innovative retail spaces that create the ideal environment for them and our visitors — including developing technologies that converge digital and physical shopping to enhance that Extra-perience in state-of-the-art surroundings.”
-Myf Ryan, Chief Marketing Officer, Westfield UK and Europe

There is an amazing amount of capital chasing commercial real estate, particularly malls, with the core belief that brick and mortar environment has a fundamental advantage of being physically closer to the customers and can deliver delightful services that are not possible online.

We see a gradual but sure evolution of customer-driven operating models for running commercial real estate services businesses across the globe. Based on the above-mentioned trends and our closed-door discussions with numerous leaders, we identified the following as the THREE bets for malls property developers to thrive.

#1 Create mutual value for tenants & mall developers

We foresee a strong wave of adoption of new flexible lease models that highlight the role of the physical stores in the broader omnichannel retail creating a win-win opportunity for both the retailer and the mall property managers. This will help in a relatively free flow of metrics and insights from mall owners to retailers and vice versa creating an environment of trust that is missing today.

Next-gen rental models are on the rise and forward-looking malls are going to adopt them. Source: ICSC Research Envision 2020

Emerging hybrid-shopping patterns, such as show-rooming and web-rooming, will be factored into rental formulas that respect the needs and interests of both developers and retailers and define business outcomes that are fair and equitable to both. Performance-related metrics will become key to such mutual value creation and depend on net shopping hours (dwell time), the volume of customers, and conversion rates and basket size. This will be further refined by identifying the net footfall contribution of any individual retailer, based on peel-off calculation rates between retailers.

#2 Reposition of malls as destinations rather than shopping centers

To remain relevant, large-scale shopping centers must be more than just “a distribution center for goods,” but evolve into community centers and culture hubs. Tier 1 and 2 players are taking a serious look into their portfolio to identify opportunities to incorporate apartments, hotels, cinemas, health clubs, restaurants, events area and other types of uses that add valuable density, foot traffic, and vibrancy. The steady influx of well-educated, young-adult millennials and Gen Zs to major cities has given rise to stronger retail, apartment, and office demand in certain downtown markets, creating opportunities to reposition existing urban centers and undertake a limited amount of development.

#3 Invest in AI technologies

The rapid evolution of digital tracking technologies like computer vision (AI) enables accurate calculation (and not error-prone wifi-based estimation or traditional people counting) and creates opportunities for biometric driven marketing, operational efficiencies, and potential new revenue channels.

Here are a few critical areas where this technology can move the needle and we expect leaders to implement them quickly.

Computer Vision is used to securely analyze the visitor flow and related demographics and mood index of areas inside and outside the malls without compromising on individual privacy.


- Secure premises and assets: Facial recognition can provide a robust form of security and surveillance mechanism for malls, by preventing potential threats and managing situations quickly.

- Enhance operational efficiency: Manage queue times at lifts, toilets, parking or overcrowding at escalators and entrances by accurate estimation of visitor traffic and management of relevant resources and assets. This allows us to predict traffic patterns and plan ahead for staffing requirements accordingly. This can be very effective in minimizing the costs spent on overstaffing and avoiding understaffed situations during crowded times.

- Optimize layouts and signages: Elaborate heat maps with gender, age and mood analysis can help track consumer journeys, identify hotspots, and bottlenecks. This can be used to design layout changes that deliver optimal customer shopping paths, measure the impact of digital signage boards and proximity marketing.

New Revenue

- Advertising Revenue: Identify optimal location and time to create new advertising spaces targeted for specific audiences based on the heat-map analysis. Monetize existing digital content like store opening videos, events, product launch, etc. by tying them with product/brand discovery KPIs.

- Make more from interactive kiosks: Kiosks remain largely underutilized, merely serving as direction providers. Intelligent kiosks can quickly analyze customer demographics to provide tailor-made product recommendations, personalized promotions, enable discovery of stores, features, facilities and much more. This can further engagement by enhancing the relevance of content through gesture and emotion analysis.

- Make pop-ups more profitable: Do more than just renting out your space for pop-ups. Provide insights from visitor analytics that could add significant value to participating brands, at a premium. Facilitate payments using face recognition.

Marketing & Branding

- Help tenants nail their Visual Merchandising: Window displays have the biggest impact on brand perception and play a crucial role in converting passers-by to in-store visitors. By studying customer’s reactions to retail displays, generate insights that will help tenants identify the most effective forms of the window display, product mix, and price points to drive customers in-store.

Simple dwell time, attention time analysis can help boost advertisement revenues inside and outside the malls.

- Take the guesswork out of marketing campaigns: Identify optimal conditions to implement campaigns, and measure their effectiveness with real data. Analyzing foot-traffic patterns, the Kamppi Shopping Centre in Helsinki, Finland, learned that shoppers congregate at lunchtime, not after work, as was previously assumed — they were able to create marketing campaigns that were more effective by adjusting the timings.

- Create promotions that convert: Generate targeted messaging with content that actually speaks to the customer. Today’s customer is far more discerning and cannot be swayed or lured by discounts, but can only be influenced by value.

In the end…

“If we have the data, you can have intelligent conversations. And that’s really important. Think about partnerships, and that’s true in all of the relationships because the data will give you the ability to analyze the relationship really well and it will also give you the ability to really understand how to improve.”
— Ronny Max, Founder of Behavior Analytics Academy, speaking about the importance of data in improving the mutual trust between retailers and mall developers

Courage, ambition, and perseverance are the prerequisites for all the three recommendations to work: the courage to pressure the current business model, the ambition to break out of inertia and the perseverance to follow the change through using technology.

While multiple visits to Silicon Valley and viewings of TED-like videos have enlightened the leaders, the time is now to put quickly these strategies into action and embrace the uncertainties involved in this digital transformation journey. The promise is better alignment between retailers and property managers, transparency and convenience to end consumers and the ability to respond to market shifts rapidly.

Malls and shopping centers have proven to be good businesses where there is a confluence of interests of real estate developers, retailers and other providers, and of course consumers like you and us. We are witnessing a slow but sure evolution of this industry to adapt to the societal and technological changes.

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