The End Of Shopping Malls?

Retail is in the throes of change as Italians turn to online shopping.

Shopping Mall, Milan
Galleria Vittorio Emanuele II, Milan, Italy. Photo by redcharlie on Unsplash.

Due to the COVID-19 outbreak, Italian retailers have had to rethink their strategy to approaching consumers. As a result, shopping trends and locations have changed to address new arising needs. On the one hand, malls have alternately opened and closed, following the evolving state of emergency. On the other, official closures have led to a surge in online sales. What will be the consequences of these new habits for Italy’s commercial centers?

Since the beginning of the pandemic, shopping malls have followed state-defined guidelines to contain the emergency, just like many other commercial activities. The arising demands of controls when entering buildings were satisfied with numbered check-ins, temperature measurements, forced in-store paths and hand washes at every corner. Nonetheless, the worsening of circumstances determined the closure of retailers from March until May 2020.

You can see just how exceptional the situation has been when you compare turnout percentages in shopping malls between 2019 and 2021. From January 2020 the trend of variation diminished by -19.7% with respect to December 2019. Then, the analysis of the following month also showed a decline by -16.3% for January 2020. Again, if the comparison is between 2019 and 2020, January 2020 recorded an increasing turnout of +0.5%, but in February the same value declined by -1.6%.

These fluctuations hardly appear relevant at all when compared with the data from March, April and May. As well remember, these months correspond to the period of the hardest lockdown in Italy, as the first wave of COVID-19 spread across the country. During this period, Italians adopted new shopping habits, severely impacting the activities and commercial strategies of retailers. Considering turnout percentages in shopping centers in 2020, in these months consumer intention for out-of-home purchases really did reduce: in April 2020, the lowest result, saw a drop of -83.4%.

The limitations on shopping in physical stores and movement restrictions determined a forced shift toward the digital dimension. The long-lasting effects of the pandemic strongly affected people’s shopping behaviors. It abolished the weekly trip to the store and, eventually, resulted in what some commentators have called a retail apocalypse.

Designing new shopping trends

Pre-COVID, online shopping had its niche of the market, but the majority of the population still preferred going to local shops. In Italy, at least: according to Euromonitor, in 2019, Italy still registered one of the lowest levels of e-commerce penetration in Europe. For example, China and UK attributed respectively 24% and 17% of their total retail revenues to the online world. In Italy, that number was 5%.

Italy’s obstacles to increasing online retail numbers are a variety of social factors that cannot be underestimated. For instance, less people use credit cards compared to other countries and broadband penetration is lower in Italy too. Meanwhile, in an aging population, general concerns about internet security are still rife. However, since the pandemic, a forced change occurred, fostering a surge of electronic shopping at a triple digit rate.

McKinsey also discussed the new trend in consumer demand moving online. In particular, the consultancy estimates how after the containment of the pandemic, online purchases in Italy will grow by 10% – 30% for a variety of goods. As a result, COVID-19 in Italy has prompted a reevaluation of the internet as a way to purchase what is needed, surpassing the common habit of shopping at the local brick-and-mortar store.

The new normal has had a transformational power on the retail sector and on customer relationships. Preserving business has meant a rapid adaptation to additional services such as the ‘click & collect’ option, shopping video experiences, food pickup and drive-through delivery. As Italians usually consider shopping as a social experience, the crisis welcomed a new way to shop that just requires a working internet connection.

Shop till you drop

Social distancing restrictions have kept Italians at home and away from physical stores. But notwithstanding the precautions taken by shopping malls, trends show that the population is still not ready to engage in ‘normal’ out-of-home activities. This means, for retail, the safety factor remains a priority for the majority. As a result, this new lifestyle will also require a rethinking of shopping stores providing innovative design ideas to allow consumers to safely enjoy closed spaces.

In parallel, the outbreak of the pandemic has triggered a life-changing journey for consumers, redefining new behaviors and preferences. For this reason, homes are the new hubs of social life and customers are more attentive about what they buy and from which shops. An awareness for the environment, meanwhile, often resulting in favoring local commercial activities, farmers’ markets and organic products over larger markets, has been another consequence.

Finally, the acceleration of the digital transformation has surely benefitted e-commerce, with increasing forecasted revenues in the next years. Despite positive feedback, Italian consumers still desire the peculiarity of the shopping experience as such, meaning a redesign of the latter is essential for businesses to stay afloat. With customers indicating a willingness to adapt to both new purchasing channels and new shopping styles, keeping up with the evolving situation and monitoring potential new risks will be fundamental for shopping malls in the future.

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