In the face of a challenge

Trends in the retail sector, which have been discussed for a long time, are understood as challenges and an opportunity to look for new opportunities on the shopping centre market. Experts point out that business is affected by a great number of factors related to rapid changes in the society and the technological acceleration. In the case of Poland, there is also the limited trade on Sundays, which will turn into a trade ban on these days in the future. According to experts the processes that have real impact on the shopping centre sector include: online sales, development of technology, which is related to the generational change, expanding the tenant mix of shopping centres in order to create so-called third places (introduction of entertainment elements and emphasis on modern food courts). Analysts also point out that customer experience will gain importance and may soon be a determinant of shopping centre strategies. “Customer experience in the retail real estate sector is the resultant of a great number of customer contact points when interacting with a particular brand, regardless of whether it is a sales outlet or a shopping centre. In the past there was not much needed in order to generate positive experiences – sales assistants had to smile and the store or the shopping centre were to look aesthetic. Today, the acquisition and retention of the customer is becoming more and more complicated, and consumers – more demanding,” says Anna Wysocka, the director of the retail space leasing department at JLL. The agency together with its partners prepared the ‘Tomorrow's retail’ report in which it clearly stressed that the combination of technology and broadly understood diversity will have the strongest impact on shaping our shopping experience.

Using opportunities

On-line trade, or actually the speed of its development, can impress the owners of shopping centres. This is particularly evident in the results of the tenants that boast of a very fast sales increase in the online channel. In its Q3 2018 report the LPP group, which owns the Reserved, Cropp, House, Mohito and Sinsay brands and is an anchor tenant of shopping centres at the same time, indicated that the growth of its online sales was more than 100 pct in this period. In Q3 2018 it accounted for 8.3 pct of its revenue from Poland and 7.4 pct of the group’s sales. At the same time the company maintains its declaration of increasing the share of e-commerce to 20 pct in total sales by 2021. This trend is also sensed by CDRL – the owner of the Coccodrillo brand. From January to October 2018 the company cumulatively generated PLN 122.1 mln of revenues in its Polish brick and mortar stores and PLN 17.5 mln in e-commerce, which equals a 31-pct increase year-on-year in the case of online sales. This implies that large chain tenants are fairly good at taking advantage of the opportunity. Knight Frank addressed this issue in the ‘Polish-style omnichannel’ report, indicating the need to combine sales channels. “Developing a brand in a multi-channel way is extremely important. Online and offline sales should seamlessly permeate in the era of the digital revolution. According to the omnichannel concept, the future of trading is to conduct online sales while encouraging customers to go shopping traditionally. Such an approach does not doom shopping centres to the loss of their market position,” says Elżbieta Czerpak, the director of market research at Knight Frank. Shopping centres find it a bit more difficult to introduce the omnichannel sales slogan but they also try to take advantage of the trend. “My idée fixe is to create a shopping centre in a digital version modelled on western systems. We are wondering how to use the trend in order to join the omnichannel mainstream,” said Anna Malcharek, the managing director of Gemini Holding, during the Annual Property Market Convention in Poland organized by ‘Eurobuild CEE’. Is online sale adversely affecting footfall in shopping centres? It is difficult to assess, although according to representatives of some retail chains, the shopping centre should use the traffic generated by the internet business of its tenants. Customers are increasingly using the option of picking up goods in the store (click & collect), which could generate turnover in other retail outlets used by the customers during their visit. “The International Council of Shopping Centres estimates that more than 20 pct customers who choose this form of order collection buy more. A corresponding situation takes place when customers decide to return the goods bought on the Internet in a brick and mortar store. According to our research, only 36 pct of surveyed brands permit the return of purchases made online in their brick and mortar stores. Meanwhile the option of checking the availability of a product in a brick and mortar store on the website is provided by around 40 pct brands but the level of this availability was only provided in a few cases,” says Maria Piedziewicz, a consultant in the market research department at Knight Frank. However, this may cause some inconvenience in the regions, which have a large share of local tenants. “A great number of small tenants that do not sell online or operate online to a limited extent complain about e-commerce. They are afraid that the stores will only become pattern rooms. And this group is losing the competitive battle on the market where the share of virtual purchases increases,” remarks Zbigniew Nowak, the director of Gemini Park in Tarnów. Issues related to settlements and rents are still to be resolved. There is a pressure on signing contracts with turnover-based rents, and the turnover can be executed via the Internet. The issue remains open and will be gradually regulated by market participants.

Clear wayfinding system

Moving with the times

The rapid development of technology and generational change result in shopping centres gaining a new type of customer. Reaching the customer requires the development of routes that were rarely used before. We are talking about modern communication tools and entering into a dialogue with the young generation as well as maintaining contact in the language that young people use. It is about mobile technologies, social networking sites and tools that improve the comfort of using a shopping centre. There are opinions that not all systems work like dedicated applications or beacons. However, some of the technological achievements can be successfully used in contact with the customer. Some of them make shopping turn from a compulsory activity into a pleasure or at least not a torture. They leave a good impression after visiting the centre and build loyalty as well as appropriate shopping experience. Gemini shopping centres provide free Wi-Fi, furniture equipped with electric equipment chargers or modern parking systems indicating free spaces and a route of departure as well as wayfinding systems inside the building, like in the case with Gemini Park in Tychy. A characteristic feature of the sign system in Gemini Park Tychy is the combination of digital and traditional information carriers. “The main assumption that accompanied us during the design was the desire to adapt the system to the needs of the modern recipient, using mobile devices but also sometimes in need of help in reaching their goal. Furthermore, we wanted to emphasize the character of the place. Hence, colourful image prints and friendly icons in the system,” explains Bartłomiej Witański from Blank Studio which created the system. The system operating in the mall means that the management of Gemini Park does not find it necessary to create an infopoint. “The system guides the customer so that he or she navigates the mall without difficulty. At every stage of walking around the shopping centre they also see clear clues as to where they are. What is more, the customer can easily return to them if necessary,” says Tomasz Misztalewski, the director of Gemini Park Tychy. There are also technological systems for the owners of shopping centres that facilitate building management. These are the so-called ‘black boxes’ installed in tenants’ units, calculating store parameters and turnover. There are also modern traffic monitoring systems embedded in the cameras. Three Gemini Park centres: in Bielsko-Biała, Tarnów and Tychy are examples of effective use of data collected in this way. They use a system that provides traffic analysis. The cameras installed make it possible for the system to work even when there is no communication with the server. “Counting cameras are installed at every entrance to the centre and at selected tenants' stores. We have 46 of them in Gemini Park Bielsko-Biała. With the system we can assess e.g. how the traffic in the shopping arcade spreads, where the customers go and which zones are particularly popular,” says Krzysztof Brączek, the director of Gemini Park Bielsko-Biała. In his opinion, the information about the footfall and popularity of stores directly affects the work of the marketing department and negotiations with potential tenants as well as the re-leasing process. “This allows you to compare traffic data in the centres and individual stores with sales data. “We can see then which tenants are the most popular among our customers. This is valuable information for the leasing and marketing departments,” adds Krzysztof Brączek. These cameras were installed in all 130 units in Gemini Park in Tychy. Furthermore, the building has modern amenities which are part of the ecological certification and make the building adequately illuminated as well as provide it with the right temperature. The building holds a BREEAM In-Use certificate with an excellent rating.

Gallery accesible for cyclists

To the cinema and for coffee

According to the Future of Retail 2030 report prepared by CBRE, entertainment and services related to health care and education will become inseparable parts of shopping centres. Retail trade under the roof of a shopping centre will also be more and more often combined with other functions. “This is one of the most visible trends in the shopping centre sector. Owners of new shopping centres strive to expand entertainment zones and they invite tenants from this sector to cooperate with them. This is why shopping centres include trampolines (such a concept will work in Gemini Park in Bielsko-Biała), fitness clubs and cinemas in the latest arrangements as well as expanded gastronomic and cafe concepts and relaxation zones. One of the most popular attractions is the cinema. A 10-screen Cinema City operates in the Gemini Park in Bielsko-Biała while the other two buildings from the Gemini Holding portfolio plan to have a cinema added. All three food courts either have already been modernised or will undergo refurbishment in the near future. Meanwhile the centre in Bielsko-Biała excels in entertainment and amenities for children e.g. a playroom, a rope park, the only Toys'R'Us store in the region and toilets for the young ones.

Gemini Park Tychy

Forbidden trade

According to Cushman & Wakefield, within six months of the act limiting the trade on Sundays, shopping centres recorded decreases in footfall (by 6.6 pct on average) and turnover (3 pct) compared to the same period last year. “According to economists’ forecasts (ING), the dynamics of consumer spending growth will weaken in the near future and the importance of investment will increase, which should generate GDP growth at around 4.8 pct in 2018. However, the Polish government is working on an amendment to the act, which would concern the extension of the trade ban to Saturday (from 22:00) and Monday (until 05:00) and the provisions regarding the possibility of opening stores as post offices on Sundays,” reads the ‘Marketbeat retail market in Poland – Q3 2018’ report prepared by C&W. Meanwhile data from the Retail Institute show that the number of visits to more than 120 shopping centres in the period from January 1st to May 20th, 2018 decreased by 2.6 pct compared to the same period of 2017. This means that the centres were visited by more than 3.14 mln customers less than during the first twenty weeks of 2017. The largest decreases were recorded in the centres located on the outskirts of cities (-4.4 pct) and those in which the food operator plays a dominant role (-4.3 pct). Since the beginning of the year shopping centres have lost 5.7 mln customers who have been shopping on Sundays before (-30,25 pct). Some of them, more than 2.5 mln people, visited shopping centres between Monday and Saturday, which allowed the centres to minimise losses. “This year we will have app. 4-5 pct lower footfall than last year. Still, we know from the tenants that report their turnover to us that they record an average increase in turnover of 3 pct. This is more than the level of inflation. Visits from further non-urban areas have decreased. These customers usually went shopping on Sundays, using Saturday as an extra day of work. In my opinion, the ban on trade deepened the isolation of the people from rural areas, where there are no large shopping centres, limiting their shopping opportunities. Moreover, small businesses that do not have a strong base or support will lose the most on the trade ban. You can see another change – people are more determined to go shopping. If they know that they only have a Saturday, they decide to go shopping and look for specific things,” comments Zbigniew Nowak, the director of Gemini Park in Tarnów. “The upward trend in footfall that we observed so far has slowed down because of the introduction of the trade restriction on Sundays, despite the fact that the building is open on non-trade Sundays. We believe that we have the best product range in the town on the Sundays subject to a trade ban: Cinema City, a 2,200 sqm fitness club and the largest food court in the town. In the first few months of the ban (March-April-May) around 5,000 people visited us on non-trade Sundays compared to an average of 17,000 people who visit us on a regular Sunday. Around 10,000 customers currently come to the centre on non-trade Sundays,” says Krzysztof Brączek from the Gemini Park in Bielsko-Biała.