While just one of a number of factors driving the market, e-commerce is having the most significant impact on the European shopping centre market, according to a new survey by Cushman & Wakefield launched at MAPIC. The survey reveals opinions on the impact of e-commerce among the largest and most active property owners and managers representing nearly 1,500 centres or 20 percent of the total European market.
A total of 68 percent of the respondents to the survey either agreed or strongly agreed that e-commerce is the most significant factor impacting the sector. Others surveyed see it more as an enabler for bigger macro forces, such as demographics, economics, sustainability and globalisation. However, according to Justin Taylor, head of retail at Cushman & Wakefield in EMEA, “Whilst we recognise that e-commerce is not the only factor driving the market, it is embedded in every aspect of retail from value and quality through to brand and therefore in our opinion, it is transformational for the industry.”
With regard to center size, the surveyed revealed that mid-sized schemes are thought to be most at risk while both larger destinations and smaller convenience centres have more potential to withstand or even benefit from e-tailing, particularly if well positioned and with a clear identity.
The top priorities for landlords overall were found to be improved centre design, followed by a stronger food and beverage offer and then more in-store and in-centre technology. Interactive screens are the most adopted technology in-centre, closely followed by landlords operating their own transactional website and operating free Wi-Fi. Interactive mobile apps are next in line as mobile technology increases in importance. A whole series of technological developments are coming forward; from beacons to “wearables”, mapping, digital wallets and more personalisation. Mobile technology in particular will be a catalyst for short-term change, inspiring more pop-up and mobile businesses for example.
Respondents agreed that further changes in tenant mix were required to help generate higher footfall and also they agreed on a need to improve centre design and ambience with food & beverage and leisure being the key winners alongside international brands and more local start-ups. Relations between landlord and tenant will be put under pressure by some of the differences in their opinions however, with security of tenure perhaps under threat for example as landlords seek more flexibility to adapt the offer of a scheme.
Leases are expected to become more flexible and probably shorter. There was a widely held view amongst respondents that some effort to capture non-store sales would be included in lease terms as the growth of e-commerce makes store sales a less significant indictor of store viability and relevance.
Differing views are also apparent with respect to lease structures, service charges and unit sizes. At the same time however, there is more need for landlord and tenant to work together and indeed more opportunities for landlords to provide new services for tenants; in web hosting, technology and fulfilment for example.
One area of strong agreement among respondents was Logistics which is seen as a major area of opportunity to improve service and efficiency as retailers move towards omni-channel and look to capture customer attention and loyalty. The relative value of logistics in absolute terms and to the success of the centre is expected to increase.
The quality of the shopping centre environment and of the services available is expected to improve and centre managers as well as retailers will be looking to capture, analyse and make use of the vast amount of information open to them on customer behaviour. Greater and more intensive use of loyalty programmes will be one way forward.
David Hutchings, head of EMEA Investment Strategy said “Large multi-purpose destination centres that appeal to the whole family will dominate in the future. However, size is not everything and there will be room for more diversity, with small, well-focused urban galleries for example as well as more local convenience as a strong anchor in all catchments. The message is clear: centres need a clear ID and “reason to be”.
“For investors, the pattern of winners and losers stemming from these myriad changes is not yet clear beyond the obvious fact that centres must innovate and managers have to be better at understanding the differing needs of consumers, retail, technology and property. This will be critical for the survival and prosperity of the shopping centre destinations of the future.”
Justin Taylor, concluded: “While exceptional out of town retail destinations are well positioned to survive in the digital age, the shopping centre of the future will be urban, strongly linked to public transport, fast changing and flexible and will play a key role in helping to integrate the local urban area through its role as a social meeting hub and as a destination for a variety of events, functions and services.”