Malls evolve into ‘third places’ as next-gen consumers reshape retail

Physical stores are taking on a different role as consumers increasingly form opinions about brands before entering a store.

The shift is prompting retailers and shopping centre owners to reconsider how retail space is designed, operated and leased, according to Cushman & Wakefield’s Retail in the Trust Economy report.

“What has changed isn’t the importance of physical retail, but what it’s expected to do,” said Sona Aggarwal, MD and head of retail sales and strategy, Apac, at Cushman & Wakefield. “Consumers are forming opinions before they enter a store, which means the store has to deliver on a promise that has already been made online.”

The report describes this shift as part of the ‘trust economy’, where trust has become the primary currency. It found that younger consumers, particularly Gen Z, are leading the return to malls. 

Cushman & Wakefield said the trend is leading retailers and landlords to review tenant mix, store layouts and in-store programming to increase customer engagement.

The report also points to increased use of pop-up stores, short-term leasing and modular store layouts as retailers adjust physical formats. 

The Asia Pacific pop-up retail market accounted for 32.4 per cent of the global market and generated about US$4.8 billion in revenue last year, according to Cushman & Wakefield.

Retail is also becoming part of mixed-use developments that combine shopping centres with residential, office and other uses rather than operating as standalone retail assets. 

In South Korea, districts including Myeongdong and Seongsu combine retail with beauty, wellness and cultural offerings. Vacancy rates remain at 5.6 per cent in Myeongdong and 3.7 per cent in Seongsu.

“What we’re seeing in Korea is a retail ecosystem where multiple consumer needs are being addressed within a single environment,” said Suki Kim, head of research, South Korea, at Cushman & Wakefield.

The report also examines changes in the luxury segment. The Wealth in Motion report forecasts that Next Gen and Gen X consumers will account for 80 per cent of the global ultra-high-net-worth population by 2040. Cushman & Wakefield said this group is placing greater emphasis on experiences and meaning alongside product ownership.

The trend is contributing to the expansion of experiential retail concepts, including Audemars Piguet’s AP House in Singapore and Louis Vuitton’s The Louis in Shanghai.

Aggarwal said clienteling is also expanding, with more retailers adding private suites and concierge spaces to support longer-term customer relationships rather than focusing only on sales transactions.