A Dallas mall operator is gaining ground on an interesting side hustle: e-commerce and fulfillment for its tenants.
Centennial’s hardly reinventing the wheel on commerce or logistics, but its application of the two is a bit of an anomaly. The real estate company’s erected its ShopNow platform directly on many of its malls’ websites so consumers can check to see if, say, that pair of Vans Classic Slip Ons in a women’s size eight is in stock or the black long-sleeve wrap top from Abercrombie & Fitch is still on sale, from the real-time inventories of participating tenants. Shoppers can then make purchases and have orders delivered same day.
Call it an added amenity for retail tenants or an obvious choice for a traditional mall to compete with the likes of Amazon in a post-pandemic world.
“Consumers are shopping differently as we emerge out of the pandemic,” said Colleen Heydon, senior vice president of marketing for Centennial. “They’re definitely shopping. Sales are up, but dwell time is down. They’re coming to the mall with a purpose, so this ShopNow platform is really critical.”
Malls are unevenly bouncing back from the pandemic.
A retail recovery report from real estate firm JLL, published in December, said shopping habits are normalizing at Class A malls. However, the return for B and C properties has been sluggish at best. Malls ended the first quarter of last year with a 4.8 percent vacancy at Class A malls, the report said. B and C properties had vacancies of 7.1 percent and 12.4 percent, respectively.
“Class A malls—properties with the best locations and most attractive mix of tenants—are performing much better than B and C malls,” the report said. “They have lost fewer inline and anchor tenants and have significantly lower vacancy. In contrast, Class C malls are much more likely to lose struggling department stores, which results in an exodus of inline tenants.”
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The difference in basis points between the Class A and C mall vacancies stood at 760 in the third quarter of last year, according to JLL’s report.
As of now, The ShopNow feature is in different phases at Centennial’s malls. Seven currently tout the ShopNow portal, where retailers’ products are curated into what’s new and what’s in store, with the option to create a wish list. That’s phase one, with Green Tree Mall in Indiana and Westland Mall in Florida expected to see launches of this initial iteration’s rollout this quarter.
Centennial’s portal is backed by Adeptmind, a technology company that helps retailers use artificial intelligence for online search functionality.
Phase two of ShopNow beefs up the proposition with a fully shoppable marketplace from tenants that want to participate in the program and is currently offered at MainPlace Mall in Santa Ana, Calif. Consumers can browse and buy products through the portal, with a single checkout process. Orders placed before 3 p.m. are delivered same-day within Orange County and fulfilled on site by mall employees acting as personal shoppers, of which the team totals three during peak hours.
Inventory accuracy on ShopNow is tied to individual stores and how often those retailers update that information in their systems. In some cases, that may be immediately after a product is purchased and, in other cases, the update may be made daily or at some other cadence, according to Adeptmind vice president of sales & strategic partnerships Jesse Michael.
MainPlace uses a space inside the mall as its fulfillment hub for pickups, with several last-mile fulfillment companies contracted to handle delivery. Heydon declined to say who Centennial works with for delivery.
Two more Centennial properties are set to turn on the phase two features in the first half of this year.
MainPlace, anchored by Macy’s and JCPenney, is currently undergoing a redevelopment with construction on a 309-unit apartment community that began in January. The mall served as a litmus test for ShopNow in October 2020, tapped because of the stricter restrictions coming out of the pandemic in California.
“That was a critical window over the holiday period to really test this solution,” Heydon said of the starting point for ShopNow.
Dozens of gift guides for the more recently ended holiday selling season were created to further ramp visibility of the service, aimed at specific consumer profiles such as the tech lover and the sports fan.
The program is still early days, with the shopping portal nowhere near the point of eclipsing sales from typical mall traffic. However, Heydon noted, as more shoppers become aware of ShopNow, behaviors are slowly changing.
“I would definitely consider those who are utilizing the marketplace, the checkout and the full offering of phase two would definitely be considered early adopters, but we’re seeing on a much broader platform that with increased awareness, we more than doubled the usage of the platform year over year from the holiday season in 2020 to 2021. And, the number of orders has steadily increased,” Heydon said.
Those placing orders and having product delivered fall into different buckets, she added. Some are MainPlace loyalty club members, who are offered incentives such as free delivery or discounts. Another group of mall e-commerce shoppers are repeat buyers who use the platform to purchase items, such as beauty products, where they know precisely what they want or are purchasing a product they’ve owned before.
From the tenant side, Heydon said retailers understand what the mall operator is attempting to do with the program, and it hasn’t been met with resistance.
“The retailers have really welcomed it and are working with us to execute on the platform in a way that provides the best customer experience,” she said.
There’s plenty of unexplored options with the program to be had, too.
“The analytics are key, especially as we’re exploring such new territory,” Heydon said. “Now that we have a full year behind us and this holiday season in particular, I think we’ll be in a position to really leverage those analytics.”
Logistics will also be further refined the longer the program is in place.
“We will continue to evaluate phase two to streamline the logistics of fulfillment and reduce the overhead costs of running a fulfillment hub,” Heydon said. “As you can imagine, from what I’ve described, there’s some significant operational expenses associated with operating the hub. So, we will look for ways to either offset those expenses going forward and the continued growth, expansion and improvement of the technology is going to be key in there as well.”
Centennial is currently covering the cost of fulfillment and the overall ShopNow program in recognition of retail’s shifting landscape as it seeks to remain competitive.
“We understand that there’s a shift in the marketplace and how consumers shop, and by delivering a platform that allows them to shop when they want to shop, puts us at an advantage in the marketplace when the consumer decides to shop,” she said. “We took on the financial commitment to this program as an amenity to our customers but, in all reality, it also differentiates us from a retailer standpoint.”