Amazon’s buy means malls must adapt

The online retailer’s purchase of souq.com is both a bet and a promise on shopping here

As online shopping expands, the landscape for malls in the UAE and beyond will change. Delores Johnson / The National

With Amazon now in the process of buying souq.com, it is almost certain that online shopping will take off in a serious way. Amazon’s acquisition is both a bet and a promise: a bet that e-commerce will take off across the Middle East, and a promise that Amazon, with its enormous experience and financial heft, will make it happen.

Malls, then, should watch out. (Doubtless Emaar, which bid $800 million [Dh2.9 bn] for souq.com, knows this, since it runs the world’s largest mall.) As online shopping expands, the landscape for malls in the UAE and beyond will change.

Today, malls fulfil a variety of purposes. They are, of course, shopping destinations. They are entertainment venues, with cinemas and restaurants. But they also function as public spaces, gathering points for families and friends to meet, stroll about and talk. As online shopping begins to eat into the profits of retailers in physical spaces, the malls and their tenants will have to adapt.

How? The most obvious way, which is already happening, is to become entertainment venues. Walk through any of the big malls in the capital or Dubai and there will be something to see other than the shops. Dubai Mall often has fashion shows. Abu Dhabi’s Marina Mall has a mammoth on display. Malls will need to figure out ways to bring people into the mall – increasing footfall, in the industry’s jargon – that don’t rely on the retailers who have rented space.

The retailers, too, will have to do this, moving from merely showing items for purchase to running events that actually bring people in. Mixed-use development, in which malls host other businesses such as sports venues, for example, will increase. Bounce, an indoor trampoline park, is now at Remal Mall in Al Ain.

We would also like to see an increase in community connections at malls. This could take many forms, perhaps allocating space for pop-up stores – those outdoor markets that flourish during the cooler months could perhaps come indoors during the summer. Malls may also want to go the other way, offering space to online-only retailers to come in for a month or two. And in the future, new malls might have to be smaller and more locally focused.

The coming months will see exactly what strategy Amazon and souq.com will pursue. Whatever it is, it will definitely increase competition for the wallets of consumers.