8/23/2011
By Brian Sozzi, Research Analyst

The essence of the smartphone and smart grid is that each has made pre-existing things, well, smarter.  Smartphones blow away the technologies that were housed inside of Gordon Gecko's handheld brick.  The smart grid's reach has sparked the creation of smart appliances that could be switched off by the grid to conserve power consumption.  Better ways to build the same mousetrap, I suppose.  Just like its smarty pants friends, the smart mall makes the brick and mortar shrines to U.S. consumerism smarter, or significantly more interactive and efficient.  The era of smart malls is upon us, and in all honesty the winds of change had to blow through these buildings if they were to survive in the future....

* Online shopping is posting strong growth rates seemingly unabated.  Feels like yesterday the online business was an afterthought for most retailers.  Now, the online store is the top of mind thought.  How to increase breadth of assortment and offer a richer user experience?  How do we go about properly integrating online with brick and mortar?  These are but a few of the hot button questions debated internally by retail executives in this technology mini -revolution.

* Smartphone technology is spurring change in all sectors, so malls must adapt or they will be overcome.

* Retailers continue to close domestic stores and allocate capital overseas, so the mall owner must devise an action plan to increase profits per square foot from existing tenants while enticing new tenants.

* U.S. consumers are a hurried, phone watching bunch.  Why not tap into that newly ingrained nature from where their eyes are the most fixated (phones) and so they can continue to be a hurried bunch (get in and out of the mall quickly by knowing where the deals exist).

What defines a smart mall?  Nope it's not the entrance of an Apple store on the ground floor.  A smart mall is wired up with an array of technologies that are designed to engage the shopper in new ways (proximity marketing) and aid in the better management of the mall itself.  I sense that although smart mall technology is still in its infant stages, the speed of evolution is moving very rapidly.  Location-based marketing, for example, by a retailer to a person's handheld device was an early arriver on the scene, but now mall owners and tenants are joining forces to market mobile loyalty programs.  How clever to alter the tired landlord/tenant relationship by working together to maximize what traffic does show up in the mall instead of the online store or iPhone app.  In this structure, a person signs up by giving out personal information and receives instant, tailored coupons.  To get into the shopper's head with consistent messages to buy merchandise that is already viewed favorably is powerful, almost drug like.  I would rather a retailer such as Gap get its hands dirtier with on the ground attack plans to capitalize on smart malls than dump another $114 million a quarter in traditional marketing that is not bringing in customers. 

The Beauty of a Smart Mall
* Timeless advertising for movie trailers and merchandise until the person hits delete on the ad.
* Low cost delivery method.
* Tracking ability.
* Implants a non-physical chip inside the heads of shoppers that says their most sought after items may be 20% off.

Brian Sozzi
Wall Street Strategies

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