Facing an ever-growing threat from e-commerce, mall landlords across the country are trying to counter their falling retail revenues by making bets on tech startups.
In recent months, Macerich Co., Simon Property Group, Westfield Corp. and CBL & Associates Properties have all taken venture capital-style risks into clicks-to-bricks ventures, the Wall Street Journal reported.
But it’s a strategy that comes with heaps of risk.
Macerich, for example, wrote off $10 million that it invested in WithMe, a company that promised to bring online sellers into physical retail spaces with pop-up shops, opening in six malls in California, Oregon, Virginia and Illinois. The cost of the build-outs was more than Macerich anticipated, according to the Journal.
“They really built themselves as being the bridge between clicks and bricks, which, had it turned out to be that, it would have been a wonderful business,” Macerich CEO Art Coppolla told the newspaper.
Some of its other investments in tech-oriented tenants and retailers total about $8 million, and have been more successful.
Mall owners have also looked to improving their customers’ smartphone experiences to compete with e-commerce giants like Amazon, which last week announced it will buy Whole Foods for $13.7 billion, breaking into brick-and-mortar in a big way.
In 2015, CBL had a pilot program to promote beacons, in-store devices that engage with mobile apps to offer location-based discounts and coupons to customers.
But mall landlords say it’s difficult to gauge the lifespan of firms and products like WithMe. “We want to make sure we’re not jumping onto a bandwagon on technology that’s going to be obsolete in 18 months,” said CBL’s Jim Ward. [WSJ] – Grace Guarnieri