When making the initial comparison between shopping malls and open markets, you may think that most customers prefer shopping malls. However, such a closed market does not necessarily promote the sale of the goods on the basis of their quality, but rather only the products from brands who can afford the excessive rent of the mall. You can be forgiven to think that only good and successful brands can afford the rent, however the reality is more complicated than that. These malls also tend to have very steady pricing that can make one go bankrupt within a day of shopping. On the other hand, in an open market the law is of the survival of the fittest. The quality of the goods is the primary factor that dictates how a brand survives. Let’s take a look at some of these differences in detail:
Just like the free market economy, an open market has no red tape to prevent entry or exit for businesses. This also reduces the administrative costs for business owners and makes them more likely to invest in improving the quality of their products than simply paying excessive rents to mall owners. Both open markets & malls feature big brands, however only open markets subject them to fair competition. This also goes well to support the economy of your city since you give the local businesses a fair fighting chance. Malls on the other hand only feature big brands which have minimal competition. This leads to a more monopolistic situation since most people in a mall would go to a certain brand to satisfy certain needs.
Open markets tend to favor innovation more than malls, and therefore provide businesses with the freedom to innovate in order to adapt themselves to the local market. This also allows them to be free of mall dependencies on whether they can invest their capital in improving the infrastructure of their business or not. Here businesses are more likely to study consumer behaviors and listen to feedback in order to establish themselves above their competition. This competition is mostly absent in the case of malls, due to which brands are more confident about their ability to sell products without improving them much. Open markets & malls both feature sales during various season, however you are bound to get better discounts in open markets. The reason behind this is the excessive competition. Moreover, it is much more viable to bargain in open markets than it is to do so in big shopping malls with fixed prices.
Investors have recently seen the diminishing returns from their commercial properties within malls, while those in open markets and townships have been on the rise. This is because most urban residents are beginning to realize the advantages of supporting open markets, and have therefore encouraged investors to take a step towards commercial properties in open markets. This is a good sign of the viability of these markets when compared with large malls.
Lower Risks of Failures
Market failures always affect brands – whether big corporations, or local stores. However, brands which open their establishments in open markets tend to have a more loyal customer base. Also, they have to pay lower rents than the establishments within large malls which gives them more leverage for investing instead of simply going bankrupt.
As you can see here, both open markets & malls have had their fair run in the economy, however the consumers have made their choice to support open markets. This is great for all parties involved – consumers, investors, and the local businesses that empower the economy.