In the Age of Amazon, WHERE retail stores are located, and HOW authentic an experience a retailer offers, is of increasing importance to the creation of effective growth strategies.

Mall traffic in the U.S. is down an astounding 10% year over year, against an already dismal comp, while traffic in specific categories like electronics are down as much as 19%. 3,200 store closures have been announced so far this year and closures could reach more than 5,000 by year end.

At the recent Retail Summit in Columbus, retailers, consultants and real estate developers alike attempted to explain away the dramatic downturn in traffic as a result of an “over malled” real estate market, implying that failure of a sufficient number of malls would help return the industry to its glory days. But make no mistake, malls are dying and it isn’t simply because there are too many. Given consumer’s increasing desire for intangible experiences rather than for more stuff, and increases in online shopping, the future of the suburban mall appears questionable at best, and the success of their retail tenants is even more tenuous. If fact, there appear to be more significant challenges facing these once ubiquitous centers and the retailers who inhabit them.

Traditional, enclosed malls have been dying for over a decade, but consumers also appear to be tiring of the inauthentic, faux worlds created at even the most popular super-regional, outdoor lifestyle centers. Many of these malls feature what some architectural critics have referred to as “artificial” and  “nostalgic Americana” style architecture, rather than authentic styles indigenous to the region in which they were erected.

Even when the architectural design nods to the history of the place in which it is located, as is the case with The Grove in Los Angeles, with its art deco flourishes that celebrate old Hollywood, the result is superficial, not unlike an attraction at Disneyland. Moreover, many centers lack the combined living/shopping/working/dining experience that true mixed-use environments create and which contribute to long-term viability and relevance. Today’s consumers crave the type of real, unique experiences that can’t be found at many of these manufactured environments.

While a few leading centers including Easton Town Center in Columbus continue to attract consumers in droves, they are doing so through an increasing mix of dining options rather than retailers. In fact, many of the most successful lifestyle centers are undergoing what can only be described as a radical transformation from clothing emporiums to restaurant emporiums. While this is a potentially viable strategy for the landlords, it is a questionable one for many of the retail tenants who rely on density and variety of retail offer to drive repeat destination visits.

It is no surprise that the U.S. is growing increasingly urban. Demographers have been predicting this shift for some time, but only recently have populations begun to shift in numbers sufficient to be reflected at the cash register. But in a country which is still largely suburban and rural, and which will remain so for years to come, this new urbanism is as much a sensibility as it is a demographic reality. When today’s consumers are still interested in shopping in physical environments, they appear more than willing to commute to the urban core of the city rather than to the mall, which is often closer in proximity, if it means they will enjoy a more unique and authentic experience.

“Today’s consumers crave the type of real, unique experiences that can’t be found in manufactured environments.”

So how have most mall-based retailers responded to this shift? With the notable exception of the Urban Outfitter Brands most apparel retailers have failed to experiment with smaller, urban formats. Even retailers like Pink whose target customer falls squarely between the ages of 18-25 has yet to open a permanent college location. Express which sells career wear perfect for internships and post college interviews also lacks college locations. Abercrombie & Fitch, which claims to be shifting its target customer to an older, college and post–college young professional population, is also conspicuously absent amongst the ivy covered walls of academia. While American Eagle’s boutique brands Todd Snyder and Tailgate are opening college locations, many others are not. Instead, most youth brands have avoided urban locations other than tourist–oriented flagships on streets like Michigan Avenue and Madison Avenue. Retailers have even avoided placing stores even in cities like Austin or Madison whose concentration of young consumers could warrant such a move based solely on population.

There are a plethora of urban retail hotspots like Los Feliz in Los Angeles, South Congress in Austin, The Short North in Columbus and Nashville’s the Gulch that established retailers seem only too happy to cede to upstart brands like Shinola, or Reese Witherspoon’s brand – Draper James or even to Target who began rolling out City Target stores five years ago. In VENN’s back yard it is Minneapolis-based Target who has announced plans to open a store on the soon-to-be gentrified urban corridor of The Ohio State University rather than any of a dozen specialty apparel retailers which cater to college-aged shoppers and which call Columbus home.

If these retailers are to remain viable in the Age of Amazon they need to provide more authentic urban experiences that are an integrated part of these consumers daily life. Stores located where they live, work and play  rather than separately located stores at a mall in the suburbs. Experiences that Amazon cannot (as of yet) provide. To accomplish this VENN recommends retailers:

1.     Resist the urge to deploy tried and true real estate strategies  yes, the color mapping shows the majority of shoppers are still clustered around the sub-urban malls, but their brick and mortar shopping habits have moved out of the malls. Follow them or don’t be surprised if you lose them. Long-term leases are a reality, as are higher cost urban real estate prices, but this is where the action is moving so it’s not an option to continue to deploy a one format strategy.

2.     Experiment with alternative formats – urban locations with smaller footprints are the key to offsetting higher costs and supplying consumers with the edited selections and the curated offers that they demand.

3.     Explore the potential of “hyper-focused” demographic and psychographic based locations – college campuses, office parks and gentrified downtowns of inlying suburbs and the corresponding “micro targets” who live, work and play in each.

4.     Create genuinely unique experiences – reflective of the geographic surroundings, the history of the location and which are resonate with the lifestyles of the consumers to whom they are targeted.

5.     Make “Omni” a reality – consumers are over retailers operational limitations, especially if they prohibit or diminish the more pragmatic rationale for visiting your physical locations. If your  don’t offer unique, intangible experiences that cannot be had elsewhere, if product can’t be returned there, picked up there, or get shipped directly, consumers won’t utilize these locations and will move on to a brand that can.

Next up: WHAT: We will always want cool stuff, so why is most apparel product so similar and boring?