Israeli Malls Shift From Retail to Entertainment to Compete With Online
Translated & summarized from Ice by baba
Israeli malls are shifting from a retail-centric model to incorporating entertainment and leisure activities to combat the rise of online shopping. This "Retailtainment" approach focuses on attracting visitors by offering experiences like sports courts and entertainment parks, aiming to make the mall a destination that encourages longer stays and increased spending. Experts note that malls now compete for consumers' time, not just their money, and must offer unique experiences to draw people away from online options. The success of this strategy hinges on understanding local demographics and creating tailored experiences, rather than simply replicating popular trends.
The story in 5 lines · by baba
- Israeli malls are integrating entertainment and leisure to compete with online shopping.
- Malls now compete for consumers' time, offering experiences beyond traditional retail.
- Examples include padel courts on rooftops and indoor extreme parks.
- This "Retailtainment" model aims to make malls destinations, not just shopping centers.
- Success depends on tailored experiences for specific local audiences.
Israeli malls are transforming their business model, moving away from a primary focus on retail to incorporate entertainment and leisure activities, a shift driven by the rise of online shopping. Previously, malls prioritized maximizing retail space and sales per square meter. However, the convenience of online platforms like Shein, Next, AliExpress, and Amazon has fundamentally changed consumer behavior, prompting mall operators to reconsider what draws people to physical locations.
Consumer behavior researcher Moti Azulai explains that malls now compete not only with other malls but also with online retailers, streaming services like Netflix, food delivery apps like Wolt, and the smartphones in consumers' hands. "You can order clothes in minutes without looking for parking," Azulai noted, emphasizing that malls must offer experiences that online platforms cannot replicate to entice visitors.
Despite the growth of e-commerce, Israeli malls are not disappearing; leading centers maintain high occupancy and visitor traffic. The core issue is a redefinition of their role, embracing what is known globally as "Retailtainment." This strategy integrates retail with food, sports, and entertainment, recognizing that while a shopping trip might take 30 minutes, an entertainment experience can last for hours.
Examples of this transformation include Rananim Mall in Ra'anana, which added 12 padel courts on its roof and plans to reopen a small cinema. Seven Stars Mall in Herzliya converted a former cinema space into a 2,000-square-meter indoor extreme park. "The resource malls compete for today is time," Azulai stated. "If you turn a twenty-minute functional visit into a two- or three-hour outing, the entire economics of the place change." This extended stay encourages spending on food, drinks, and unplanned purchases, providing a reason for repeat visits.
Globally, commercial centers are also diversifying beyond shops to include sports, entertainment, and dining. This aims to make the entire property a destination. Older malls, unable to expand physically, are strategically repurposing areas like rooftops and vacant spaces. Dror Ukashi, CEO of Rananim Mall, highlighted that this diversification spreads risk, as different attractions cater to varied demographics and times, extending the mall's operational hours beyond traditional shopping periods.
Yaniv Feinsneider, CEO of Seven Stars Mall, observed a reversal in priorities: "If previously the reason for coming to the mall was primarily for shopping, today the order is reversed: the visitor comes first to have fun, and only then also to shop." He added that entertainment is increasingly becoming the anchor that drives foot traffic to stores. However, Azulai cautioned against homogenization, warning that malls must understand their specific target audience and create tailored experiences rather than simply copying popular trends, which could lead to a loss of differentiation, similar to the decline of some fashion chains.