Problem: The American mall is dying (see Times Magazine, The Atlantic, Business Insider, WIRED, or Forbes). It’s projected that 25% of malls will close by 2022.
Solution: I see two primary problems with malls today: first an over-abundance of unused square footage and second an added “tax” to consumers due to excess shipping. The business would solve both of these problems by converting malls to wholesale or warehouse stores (such as Costco or Sam’s Club) that offer a variety of brands and can be treated as a glorified show room or advertising front. These warehouse could also be blended with the Brazilian model of SESCs (essentially community centers with gyms, libraries, studios and galleries) to create new architectural gathering places. In this model, customers would come to the new mall to try on clothing for size, see prices in side-by-side comparisons to other items / brands, experience culture from within the suburbs, eat local food in food courts or at sample stands, and purchase goods for delivery to their home the next day (rather than picking up the item from the store on the same day.
This solution would solve the two problems I alluded to above. Problem 1 was the idea that malls require quite a bit of walking from place to place and contain a plethora of dead space. When calculating the revenue per square foot of a mall, this dead space in between stores brings down this overall average metric which is often used to determine the health of a retail business. Getting rid of this dead space (or repurposing it for another more profitable use) can increase the RPSF: this is the purpose of the wholesale re-design + SESC model. Problem 2 was the fact that goods purchased at malls are essentially shipped twice: once from the factory to the mall (by the business) and second from the mall to your house (by you). The node of the mall actually increases costs by requiring the business to ship to a third-party that is not you. The solution in the new mall context would be to allow people to try things on for size and ship directly to their homes after a purchase. While this would take longer than the traditional mall-shopping model, it would provide cheaper products to end-consumers or larger margins to businesses.
Monetization: Revenue from these new malls.
Contributed by: Michael Bervell (Billion Dollar Startup Ideas)