Hudson Yards offers shoppers a look at the mall of the future

The Shops & Restaurants at Hudson Yards on Manhattan’s west side, which opened Friday at noon, is seven stories of curated shops and dining that represents what malls of the future will look like, according to retail experts.

Filling one million square feet, it’s comprised of more than 100 stores and restaurants from top names like department store anchor Neiman Marcus, David Chang’s Momofoku, Van Cleef & Arpels, and the Thomas Keller Restaurant Group.

In addition, there are brands that many shoppers will recognize from e-commerce, but aren’t known for having a bricks-and-mortar presence, like shoe seller M. Gemi.

“I call it vertical hospitality,” said Kenneth Himmel, chief executive of Related Urban, the real-estate firm behind the project. Oxford Properties Group worked alongside Related Urban. Himmel and fellow executives from Related Urban hosted a media tour before Friday’s opening, emphasizing how selective and specific the process was.

Stores were purposely placed in certain spots. Sight lines and escalator placement was deliberate. Restaurant differentiation through menus and interior design was intentional.

At one point, Himmel zeroed in on an unoccupied space, stating they were “holding out” for an Italian restaurant, which would add the necessary amount of variety.

“It’s a subtle, thoughtful layout with things you won’t find elsewhere,” Himmel said.

That same care was taken at Neiman Marcus, where fitting rooms, beauty services, event areas, and dining spaces were created with experience in mind. This is the first Neiman Marcus in New York City and the company’s fifth largest store.

Put simply, The Shops & Restaurants at Hudson Yards is a mall. In addition to the aforementioned luxury names, there’s also an Athleta and a Banana Republic (both Gap Inc. GPS, -2.16% brands), a Zara and an H&M HMB, -4.92% There’s also a Shake Shack SHAK, -1.38% and a Sephora MC, +0.95%

But the mix of stores and restaurants and the rare, fashion-forward brands that will be available speaks to its placement in New York City, a world city with a range of demographics to serve, including heavy tourist traffic.

Hudson Yards also has thousands of workers and residents who will be in the neighborhood daily. The Shops & Restaurants emphasizes change, with varying lease terms for occupants, so there’s a freshness built in for frequent visitors.

The mall of the future

All of the talk of the “retail apocalypse” and the death of the mall made plain that bored shoppers are looking for an experience beyond the traditional one. Many are turning to the convenience of e-commerce, especially Amazon.com Inc. AMZN, +1.61% and its Prime program.

The Shops & Restaurants at Hudson Yards is the blueprint for what’s next for malls.

“Rather than a rectangle that’s a shopping prison, it’s a new concept,” said Maya Mikhailov, co-founder of GPShopper, a Synchrony company. This concept includes living and working spaces, a hotel, and entertainment.

And the shift isn’t restricted to the mall. Brands have to rethink how they’re approaching their stores, Mikhailov said, moving more toward “concept stores or experience centers versus inventory lockers.”

A store should provide an opportunity for shoppers to “take a walk inside of a brand,” she said.

“It’s about creating a feeling within a shopper. For this trend in retail, this type of shopping center is perfect,” Mikhailov said.

Shoppers still like stores

About 80% of shopping is still done in stores.

A study from Axios and SurveyMonkey published in January found that 71% of people with household incomes below $50,000 prefer to buy things in a physical store. More than half (54%) of those with household incomes above $100,000 prefer shopping in stores.

Malls are adding businesses like gyms and medical offices in the place of vacated store space as they refresh to drive traffic.

According to Stephanie Cegielski, the vice president of public relations at the International Council of Shopping Centers, the national occupancy average at malls is just under 93%. There isn’t a lot of mall development, but that’s OK, Cegielski said.

“There are enough malls, but what we’re seeing is reinvestment in those properties,” she said. Adding mix-use space, such as outdoor areas, and new construction provide the necessary revamp without adding to an already saturated market.

Brand new malls are taking another route entirely.

“The internet has made an impact on retail, but not in the way people initially thought,” said Meredith Roy, president of Charterhouse Development, a commercial real estate and investment company. Rather than just being a place to shop, malls have to fit into shoppers’ lives.

“It’s part of your day-to-day experience rather than just an errand,” said Roy. “It used to be a commodity experience whereas now it’s a full-on entertainment experience.”

To accomplish that, developers like Charterhouse and Related must give thought to the local economy and population.

“The burden is on the developer and landlord with a plan in mind that’s more than just sticking stores in a space,” said Roy. “It needs to be planned before construction has begun and you start approaching retailers.”

Malls emphasize their strengths

Besides selectively choosing retailers, merchandise and experiences, Scott Webb, president of digital commerce and marketing solutions company Avionos, said malls and their occupants are also starting to play up their strengths: customers get products the same day, convenient returns and exchanges, and a local experience worth going out for.

It also gives brands the chance to control how shoppers come in contact with a brand.

“It’s about owning that relationship,” said Scott Webb, president of Avionos, a digital commerce and marketing solutions company. “This hits e-commerce in the soft spot. All innovation over the past couple of years has been about closing the last mile, free shipping and returns…. all the things that traditional retail does better.”

This mall transformation isn’t just happening in New York. Other examples include Lincoln Yards in Chicago and Brickell City Centre in Miami.

Still, Webb called the Hudson Yards shopping development “an important case study that other markets will look to follow.”

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