I was invited to the Retail Property Analyst Future of Shopping Centres conference at TH Real Estate Office building in Bishopsgate. The conference involved the discussion of the future of shopping centres: whether they will survive and, if so, how? The conference had a fully diversified line up of leading experts from various fields, all contributing to answer the central question of the conference from different angles. There were three main themes to the conference: Understanding the Shopper, Creating Future Destinations, and Great Expectations. These were all combined to provide powerful insights to how the retail sector and, especially shopping centres, have moved on and will continue to do so.
Understanding the shopper
David Roth, CEO of WPP The Store, started off the conference by giving an insight into what the ‘modern consumer’ needs and wants. He argued that the concept of ‘going to the shops’ was reshaping, fuelled by the influx of online channels, austerity thinking, and an experienced economy. Giving examples such as Uber compared to cars, he explained how consumers are moving from ownership to a service-oriented nature. Together with the fact that retail has long been the sector that has adapted technology faster than most other industries, David highlighted that the mindset of retailers should now turn to ‘what I can help you achieve’ rather than ‘what can I sell’.
On a similar note, Dilys Maltby, the founder of Circus, delved into the needs of a modern-day consumer and what ‘space’ can do to match those needs. She started off by asking what a good space is and what it is not. She argues that a good space is well defined to cater to services needed or wanted by a consumer. This is because the only reason why people will come out their homes is either because the opportunity is rare, focused, or connected. The creation of spaces and places that gives consumers compelling reasons to visit, interact socially, and connect with their environment whether for leisure, convenience, or discretionary spend is what is needed in today’s world. She gave a range of types of spaces: market, public, point of view, and platforms as services, in an ascending order of competitiveness. She concluded that future shopping centres will have to define themselves and incorporate technology to serve as platforms for consumers to enjoy streamlined and convenient services, just the way they want them.
This was followed by Natalie Berg from Planet Retail who explained the logic behind Amazon’s recent acquisition of Wholefoods. First, she emphasised the power Amazon had by mentioning a few figures that showed the company’s impressive growth. The important thing to note here is the fact that Amazon is not treated as an e-commerce company but a data company. This distinction is extremely important in explaining the acquisition. She mentioned two weakness of Amazon: online barriers to grocery shopping, which is not limited to Amazon, and a virtually non-existent bricks & mortar presence. The combination of these reasons and the vast amount of analysed data by Amazon is precisely what led to the acquisition of Wholefoods.
Creating future destinations
The conference moved on to how the conceptual “place” that uses technology and caters to the needs of the specific target population exists in the real world of today. Louis Bonelli from Klepierre gave some insight by providing examples from some of the company’s completed developments. Louis started off by mentioning that although a generation of mega malls has been developed across the world, this does not mean that they are the most successful ones. He showed clear signs that shopping centres must integrate within the fabric of their locations and not just exist as separate entities from their surroundings. He mentioned the importance of staff and their role in delivering the passion and values when running a store and this role is affected by attitudes and technology. Hence, he incorporated how technology can help make centres a desirable place. However, the focus was more on the shopping centre serving the needs of the population in a specific location and even contribute to enhancing the larger environment that surrounds the shopping centre. He gives the example of the Markthal Shopping Centre in Rotterdam, Netherlands, which has 96 food stalls all supplied by the local community. The centre, in the category mentioned by Maltby, falls within the ‘point of view’ place, in my perspective. Incorporating more up-to-date technology would further enhance the consumers’ experience of the centre but it still provides a benchmark to what a well-defined place is like.
On the other hand, Slawek Murawski of Apsys Polska provided a benchmark for a shopping centre filled with technological innovation. The flagship shopping centre of Posnania comes packed with digital innovation such as giant LED screens, LED rings on totems, and the linkage of technology to social media. The centre provides an example where the incorporation of technology leads to a completely new experience for customers – what they call “digital immersion”. It suggests the many ways in which digital and, in the future, even virtual reality technology can be brought into the consumer space to create a point of purpose to a place.
Then the discussion proceeded to a panel session with representatives from various fields (Stefan Wundrak, TH Real Estate; Larry Brennan, Savills; Paul Sargent, Queensberry; John Mothersole, Sheffield City Council; Simon Williams, Catapult Future Cities). The session involved a discussion of the realistic difficulties of decision making in investment and retail spaces from the point of view of different actors. The panel looked at the rise of the city as the key driver of economic activity and the complexities that exist far beyond simply collecting facilities and amenities in an urban area. One of the most interesting points made in the session was the discussion of whether the current system is inadequate to make full use of, or even keep up with, the fast-changing nature of the industry and John made a point that consistency of policy and direction of development are the major factors needed for the effective operation of the system.
Mary Wallace and Lindsay Herbert of IBM iX give an excellent insight to the projection of future consumers, mainly millennials. The common knowledge is that those born in and after 2000 are radically different from previous generations, with their own set of rules. Mary pointed out that this fear of the unknown new generation that will soon become the main consumers in the upcoming years is irrational. Change in the requirements and values between generations is a phenomenon that has been with us since the beginning of civilisation and, now that technology allows for data gathering and analysis of behaviour even more rigorously, the new generation is not something that is unknown anymore. In terms of the relevance of the abundance of data to the future of shopping centres, Lindsay suggested that the current problem of shopping centres is that they cannot make use of the massive inflow of data due to structural reasons. Barriers exist in technological adoption as existing imperfect platforms and the absence of communication between systems prohibit full use of the data for both landlords and tenants. In my opinion, she has posited a very key structural problem that all retailers, investors, and even regulators may have to work on together in order to successfully deal with the future consumers.
— Herculano Rodrigues (@hercretail) July 6, 2017
The last talk before the final panel session was interestingly done by a retailer. Monki is a special brand within the H&M Group and Catharina Frankander, head of store concept, took us on a journey from the very beginning of the brand to its successful current state. Monki is a dedicated youth-relevant brand intended to empower young women and has a very extraordinary concept called ‘Monki World’. Different Monki stores in different locations represent different parts of this ‘Monki World’ and are remarkable visually to generate a ‘wow’ effect. What is of key importance is that this concept of visual shock is not something that stands by itself to boost short-term footfall or media coverage. The concept is linked between the stores within a consistent theme or by dedicating a committed space for young women to come around, have fun in, relax, and feel empowered. The concept of Monki as explained by Catharina considerably showed the needs of future consumers who expect much more personalised, even bespoke, products and services, and highlights how this is not limited to physical space itself but also applies to online retailers.
The grand finale of the conference was taken by the second and the last panel session of the day where, interestingly, two retailers and two landlords were invited (Darren Williams, T2 Tea; Myf Ryan, Westfield; Catharina Frankander, Monki; Matthew Mcmilan, Boxpark). The panel session was designed to show the two different sides’ strategies to fit into digital-led consumerism and, furthermore, their contrasting views of shopping centres as spaces. Both Matthew from Boxpark and Darren from Tea 2 emphasised giving consumers genuine experience is their strategy and this stream of thought was well aligned with the general insight given by the conference. Myf from Westfield stressed the importance of the landlord’s partnership with retailers and Darren agreed with this point that he, as a retailer, wants a more transparent relationship with the landlord which, again links with Herbert’s point of the current barriers to technological adoption in shopping centres.
As a student who has just recently entered the field, I have reaped quite a lot of benefit from this conference as I grasped, at least vaguely, the general picture of where the retail sector is heading. All speakers from the conference drew a stroke each, which added up to a rough sketch of what is required by the shopping centre of tomorrow. What was certain was that the expectations of consumers will rise in the future as the quality of services they receive from other sectors are bound to increase exponentially along with the growth of technology. Future shopping centres, or at least the good ones, will eventually embrace technology harmoniously with their own tenants and provide streamlined, personalised services to consumers in order to attract them in. As the means to understand and analyse consumers’ needs and wants are getting better, shopping centres that clearly define themselves and provide a tailored mix of goods and services for customers’ maximum convenience will flourish and those who don’t keep up will die out.
By SJ Seung Jun Oh, Retail Research Intern at Bayfield Training