Retailers will need to respond to a “really significant” shift in consumer behavior as a result of the coronavirus crisis, billionaire mall owner Rick Caruso told CNBC on Monday.
“The biggest threat to brick-and-mortar retail is really the current version of themselves,” Caruso said on “Closing Bell.” “Many of them have to evolve. Many of them have to change because the consumer is going to change.”
Caruso, whose eponymous firm owns outdoor malls The Grove in Los Angeles and The Americana at Brand in Glendale, California, said he thought there would be retail winners and losers after the coronavirus.
“I think the winners are going to be very connected. They’re going to be curated. They’re going to feel more local,” he said. “They’re going to feel more personalized, and they’re going to have a better value proposition.”
Caruso said there were already retailers embracing these characteristics before the COVID-19 pandemic, which has infected more than 355,000 people in the U.S., according to Johns Hopkins University data.
And those companies will continue to be rewarded, Caruso contended.
The Grove Mall in Los Angeles, California
Robyn Beck | AFP | Getty Images
Caruso said he thought consumers may want more space on the other side of the coronavirus crisis.
“The challenge for retailers, inside their four walls, is going to be to meet the customer where the customer wants them to be and so the very innovative, very smart retailers, I think are going to do very well,” he said.
The developer, Triple Five Group, now plans to increase the share of entertainment-focused tenants from 55% to 70% when it’s completely finished, CNBC’s Lauren Thomas reported. The share of retail tenants is also now set to be 30%, down from 45%.
Caruso said he didn’t think the stay-at-home economy that has proliferated in an attempt to slow the spread of COVID-19 will last forever.
“What we have seen is that isolation gets very tiring, very quickly, so I think people are going to want to come out and they’re going to want to celebrate life,” Caruso said. “They’re going to want to connect to their community.”