Summary of Key Points
The ground floor of shopping centers (which are not considered high-end luxury venues) is undergoing a significant transformation. In the past, it served as the “face” of the mall, defining its prestige through a fixed combination of brands that catered to a mid-to-high-end consumer segment (such as Sephora and Tommy Hilfiger). However, with the expiration of leases for international fast-fashion retailers like H&M and Zara, the ground floor has become a battleground for various new players. Trendy brands, brands that were previously located on higher floors (such as Decathlon and Uniqlo), and technology/digital or renewable energy businesses (such as Huawei and NIO) are all vying for space. Currently, we are in an awkward transitional period where the traditional approach to attracting customers no longer works, and consumer habits have changed (people prefer to shop at nearby community malls). In the future, the ground floor may evolve in three directions: becoming more “small but premium with high rental efficiency,” “large and experiential,” or “thematic, telling stories.”
Detailed Analysis
#### 1. The Ground Floor Has Moved From a Fixed Image to a Battleground for New Players
In the past, the ground floor of a mall was like a visual identity card that reflected its target audience. For example, fifteen years ago, a typical ground floor would include Sephora (cosmetics), Tommy Hilfiger/CK Jeans (casual fashion), and MISS SIXTY (trendy brands), signaling to customers that the mall was for younger, more affluent shoppers. Seven or eight years ago, brands like Rochas and Theory took their place, still targeting a similar audience but with a slightly higher price point.
But now, with the expiration of leases for international fast-fashions, no one wants to lease such large spaces, forcing malls to seek new tenants:
- New Trendy Brands: For instance, Anta has recently acquired Musinsa Standard, and W.Management, which started as a street-based brand, can now open a 600-square-meter store in the mall, filling the gap for young, trendy consumers.
- Brands Moving Down from Higher Floors: Stores like Decathlon, KKV, and Camel Outdoor are moving to the ground floor. Some are looking to upgrade their image (a win-win situation), while others may be trying to take advantage of lower rent costs; however, it’s uncertain how long this will last.
- Technology/Digital/ Renewable Energy: Brands like Huawei’s Smart Life Pavilion and NIO House have become reliable options for malls, providing stable rent income and helping them survive in a tough market.
The ground floor is no longer about discerning a mall’s prestige at first glance; it’s about which brands can afford the high rent and attract customers.
#### 2. The Transition Period Is Longer Than Expected
The traditional logic for attracting tenants was clear: you needed certain brands to attract others. For example, you couldn’t have a cosmetics store without other related businesses. But this logic no longer applies:
- Unstable Brands: The popularity of some brands can fluctuate dramatically (think of CK Jeans a few years ago or Sephora today).
- New Domestic Brands: Brands like Songmont山下 and Jiaonèi have loyal fans but lack the presence to dominate the ground floor and are only suitable as temporary solutions.
- Malls’ Risk-Averse Approach: In tough market conditions, malls prefer stable-renting businesses (such as technology/digital companies) over investing in new brands.
The transition is prolonged because there’s no clear balance between the desired brand image and the actual needs of the mall.
#### 3. Consumers Are Becoming More Lax: Community Malls Are Competing with Traditional Mall Centers
Why is the ground floor becoming more diverse? Consumer habits have changed:
- Reduced Need for Long Journeys: Shopping used to be a purposeful activity, but now it’s often combined with other activities like dining and taking photos.
- Targeted Consumption: People go directly to specific stores for what they need; casual browsing is less common.
- Community Malls Are More Convenient: They are closer to home and offer a one-stop service (food, dog walking, daily necessities), attracting customers from traditional mall centers.
As a result, the ground floor needs to become more accessible and practical—a convenience store or an internet-famous bakery might be more popular than a high-end luxury brand.
#### 4. Three Possible Futures for the Ground Floor
Once the transition is over, the ground floor could develop in three ways:
- Small but Premium: Dividing large spaces into smaller, higher-renting units, similar to shopping centers in Hong Kong and Tokyo, where the ground floor serves as a showcase while the main shopping area is on higher floors. This approach works well for trendy brands and technology-related businesses, which can command higher rent prices.
- Large and Experiential: Malls could take over large spaces vacated by fast-fashions and create experiential venues that focus on lifestyle experiences, such as camping or product launches.
- Thematic: Malls could become “theme-based attractions,” similar to Disney parks, where visitors experience different themes (e.g., a “camping” or “anime” area), with shopping being just one part of the overall experience.
In the future, the ground floor will no longer be about selling products; it’ll be about creating memorable experiences that make customers want to spend time there.
Conclusion
This transformation is not yet complete. The current chaos on the ground floor is a temporary phase between old rules breaking down and new ones being established. Instead of nostalgizing for the past, we should embrace change. After all, consumer needs are constantly evolving, and malls must adapt accordingly. Who knows? In a few years, the ground floor of shopping centers might look completely different.