How can developers and investors future-proof their shopping centres?
Across the US, the shopping centre dream has turned into a nightmare, with empty malls from Ohio to California haunting property investors across the world. In this new age of retail, where online shopping is increasing and showrooming is commonplace, what do landlords, developers and their tenants need to do to keep consumers visiting and spending?
Unsurprisingly, there is no silver bullet solution, but we’ve highlighted six key areas to enable owners/investors to future-proofing existing or new shopping centres.
1 Original consumer insight
Understanding how consumers want to use their shopping centres (and who they are) has always been important, but is becoming harder to do effectively. Traditional primary research (such as in-centre face-to-face exit surveys, telephone surveys and focus groups) can help draw out insight but its effectiveness tends to be at the mercy of too many uncertainties.
Mobile phone network providers (e.g. Telefonica, EE and Vodafone) have been capturing actual data about their network users for many years and are now using this data to deliver valuable insight. The deployment of signal “boost boxes” in shopping centres further enhances the ability for this data to drill down from venue level to zones and even individual shops. Data aggregation at all stages helps to avoid any privacy issues, turning huge volumes of data into genuine insight.
2 Catchment and competitor research
Traditional catchment research remains valuable but needs to take account of how spend dynamics are changing. Is the catchment growing or declining, and does it change by day or week and season? Which retail categories will continue to be spent in-store over the next 5-10 years? Where should a shopping centre’s valuable advertising budget be focussed? What role does public transport play?
Once again, the new wave of insight delivered by credit card and mobile network data as well as new generation travel time tools (e.g. from TomTom and iGeolise) are delivering a level of dynamic catchment insight that was previously impossible for centre owners to access. Allied with spatial analytics tools, these can deliver powerful models of shopping patterns to help owners understand what drive their scheme’s performance today and into the future.
3 Scheme optimisation
Getting the offer right – category mix, brands and services (both physical and digital) – will continue to be the most important aspect of ensuring the future of shopping centres.
Delivering an offer that sufficiently differentiates from the competition and is pitched correctly for the target audience, with the right tenants in the right space in the right location, and with the right digital tools for enhanced customer engagement, is vital.
Logical considerations such as clustering like-minded tenants and good way-finding (physical and digital), especially in the bigger centres, seem obvious but are often forgotten. Also important is using the public realm to create a genuine sense of place, where people can meet, shop, eat, take part in leisure activities. Understanding that the way consumers use a shopping destination can change over the course of a day will help to keep consumers coming back to fulfil different missions. Digital tools such as smart apps will help to deliver this evolving offer.
Of course, the future-proofed shopping centre must also deliver a sustainable rental return. A new rental model, based on the footfall which a shopping centre can deliver and the support it provides to non-store channels, plus the sales taken directly through the tills, is needed. This will require tenants and landlords to become more collaborative in working together to understand the role different channels play in delivering consumer value in the omni-channel era.
4 Digital engagement
With the rapid growth in smartphones, digital engagement with consumers is key for landlords and tenants. Recognising that your shopping centre occupies both a physical and a highly competed digital environment is the first step. Dynamic websites, apps and social media integration can and should be so much more engaging than a directory of shops and their opening times! Engaging consumers with compelling offers sent to the right person at the right time in the right location is now leading to significantly higher conversion rates compared to other forms of direct marketing.
Although centre owners and retailers are still largely in the foothills of developing the agile marketing models that will make the most of this channel, the winning centres will move quickly to invest, experiment, learn and optimise their approach.
5 Business insight & analytics
The volume, velocity and variety of data now available from structured, semi-structured and unstructured sources has catapulted the shopping centre industry into the ‘big data’ arena. Sales data, footfall, shopper survey, loyalty card, event participation, social media and digital assets all offer the potential to differentiate through actionable insight.
Finding a way to compile, blend, cleanse, analyse and visualise insight that can then lead to actions will rely on powerful Business Insight (BI) tools. A new breed of software providers (e.g. Alteryx and Tableau) are leading the way here by allowing decision-makers fast and easy connection to all data types in real-time, providing flexible analytics and compelling reporting.
6 Technology planning
Technology planning, such as user experience (UE) audits, technology audits, systems selection (e.g. CMS, CRM and mobile technology), encompasses a range of activities that will be new to many shopping centre owners. Recruiting human resource and/or working with partner companies that are comfortable with technology, data and analytics will become a prerequisite for sustainable success in the shopping centre sector.
In this period of strategic shift in the retail sector, the winning shopping centres will be those that can adapt fastest and keep moving; the future-proofed shopping centre will be one that embraces change and builds this culture into the heart of its commercial model. We will build on these themes in future blogs, but in the meantime, consider this: is your centre truly ready to evolve?