According to Retail Traffic Magazine (by way of Planetizen), both foot traffic and sales are up at the largest mall in the United States. In these difficult times, the success of the Mall of America can offer some insights into the future of retail-based economic development.
The Mall of America shows the growing strength of the experience economy. A key to its success has been adding more rides to the large amusement park at the center of its complex. In the experience economy, consumers are willing to pay more for a good or service if they have a positive experience with the business. (That experience could be fun, pretty, stimulating, ego-boosting, etc.) Joseph Pine and James Gilmour, who coined the term in The Experience Economy, were writing about the importance of businesses spending time on enhancing consumer experiences, even if those actions didn’t immediately ring up sales. (For example: a salesperson acting like your personal shopper in a store.)
Today, you can buy almost anything (that’s legal to buy), except for an experience.
For our field, participating in the experience economy means making our built environments more interesting, exciting, safe, surprising, or whatever the communities we serve enjoy. The ‘experience’ starts when the consumer feels he or she is in the place. If that person gets lost, it is going to affect his or her willingness to spend time and money – or to come back. In the experience economy, streetscaping, public art and architectural design are not just decorative; they are critical parts of the economic development infrastructure. Events are not public relations gimmicks; they are important marketing tools.
Enhancing the public environment can especially help businesses that serve low and moderate-income communities. Because many of these businesses make their profits on volume, rather than per-capita sales, and they tend to be in older, smaller spaces, they tend to use more floor space for retailing or service activity. In other words, stores that cater to wealthier people, or that have higher profit margins, can afford to have more floor space available for experiences. (That’s why the places that sell coffee for $4 a cup have more chairs and nicer art than the places that sell it for $1 a cup.) While all retail districts can benefit from enhanced physical design, businesses in lower income communities tend to have less capacity to do it on their own.
Many traditional downtowns and some cities, like Las Vegas, are succeeding through experience economy strategies. Urban design in highway commercial areas tends to ignore attractive site design (A key exception are upscale lifestyle centers, which are essentially lifestyle-themed open-air malls.) The oversight might be a costly mistake. Fifty years ago, traditional downtowns began to be threatened by malls. Thirty years ago, malls began to be threatened by big box stores. Today, those stores, and many highway retail uses, are threatened by the Internet. Internet shopping is growing rapidly; two-thirds of all Internet users in the United States made an online purchase in 2009, said Internet Retailer.
Of course, enhancing the visual environment is not enough. Consumers want to go where they feel welcome and safe. Circulation planning and the management of retail districts are key. Also, in age when anyone can have a public voice through the Internet, a key part of any experience economy strategy is keeping up-to-date with the changing pulse of stakeholders. In business, they call in market research. We can think of it as needs assessment or public engagement.
In many cities and communities, there are still elected officials and public administrators, as well as members of the public, who think that decisions on where and how long to shop depend solely on price and convenience. Hopefully, this essay has given you some talking points.
For more resources:
Check out the Urban Land Institute or the American Planning Association for resources on urban design.
The Bloustein Online Continuing Education Program offers a number of courses on economic development, branding and other issues raised in this essay. Please visit http://www.policy.rutgers.edu/bocep to learn more.
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