Real and virtual pulling power

Shopping centre owners are faced with a set of new challenges. Experts are already trying to figure out how to succeed in a world dominated by new technology. But city centres have also been changing, becoming more and more attractive to shoppers, and this will have more than a little significance for large-scale retail projects

One thing is now clear: the shopping centre segment is set for a lot of changes. The owners of these temples of retail now have to think about the future as the era of internet shopping approaches. How to find your way in this new world? There are still more questions than answers, but consultants have been trying to analyse the new challenges. Take for example the Retail 2020 a report prepared by Jones Lang LaSalle, which is addressed to the challenges shopping centre owners have to face in the next ten years.

Virtually everywhere
According to the report, by 2020 over 50 pct of all retail transactions on mature markets (excluding the food industry) will be supported by the internet in one way or another. This applies to searches for products, comparing their prices and making payments. Meanwhile, nearly 30 pct of retail space in developed markets is outmoded, both functionally and technologically. What does this mean? According to the Jones Lang LaSalle specialists, starting from 2018 about 15 pct of shopping centres might be hard to sell in some markets such as the UK, so funds and developers might be in for a cold shower - particularly considering that at the moment shopping centres are enjoying a popularity unparalleled for many years among institutional clients. Are the billions of euros being pumped into retail under threat? "The future of shopping centres is still bright," believes Patrick Delcol, president of the management board of DTZ Polska. "However," he adds, "this does not mean that we cannot see the changes that lie ahead of us which will force owners to alter their approach. Currently, the majority of formats are similar to one another. You could even say that shopping centres cannibalise each other. This has not yet been seen in Poland or other CEE countries, but the changes are coming. The owners of shopping facilities will increasingly have to look at more aspects of their centres. E-commerce is a challenge. Moreover, there are plans to revitalise whole city districts, and this will also have a significant impact on the situation for shopping centres. So the private sector should also participate in discussions with the authorities over the future of cities."

Changing cities
The region's cites have going through a dynamic transformation. More and more of them are preparing revitalisation schemes for whole districts. Public areas are being made more pleasant for residents. Shopping centres are no longer needed to serve the function of attractive but artificial enclaves pretending to be small towns or districts. "So the owners of shopping facilities are now wondering how to attract customers, how to make them spend more time there," says Anna Wysocka, director of the retail space leasing department at Jones Lang LaSalle. But how can they make this happen? "On the one hand the product offer is luring customers. The richer and more unique the offer, the more attractive the facility. According to our research, customers continue to expect new brands to appear. The younger generation is particularly well-educated in this respect. Customers are waiting for outlets of such brands as GAP, All Saints or French Connection. Their appearance in new or existing projects is certain to create a sensation and attract crowds of customers," explains Anna Wysocka. Interestingly, it is not only the choice of brands that matters in winning customers. In a way shopping centre owners have to try to compete with public areas and high streets. In the region these still tend to be neglected; however, they are more frequently being revitalised and undergoing positive changes. Can an attractive city drive customers away from a shopping mall? Yes and no. There is no definitive answer. "City authorities are often unaware that a shopping centre can have a positive influence on the development of a city or town. We just have to remember that the construction of one facility cannot be the end; it should be the beginning of the whole process of changes. Unfortunately, what is often referred to as the "revitalisation" of streets in most cases just turn out to be face-lifts. If no attractive retail outlets are opened on high streets, shopping centres will not need to worry about losing customers" remarks Patrick Delcol.

The future is electronic
"The biggest challenge is e-commerce. Traditional shops of course are not going to disappear, but they will have to offer something more," predicts Patrick Delcol. And he is not alone in this view Most developers are already aware of this changing approach to retail. The question is: what more should they offer? "This is still an open issue. Consumers habits need to be monitored and their needs attended to. The quality of service has to be improved and staff training has to be done properly. Trends need to be analysed as well as how people make use of new technologies," comments Patrick Delcol. "The internet is completely changing the balance of power," adds Anna Wysocka. "We are now looking to answer the question of how to attract the generation of today's 14-15 year-olds. This is a generation of tablets and social networking sites. How to drag them out of their homes and what to offer them to make them want spend their time in shopping centres? It seems that the answer is to create friendly places that fulfil social needs. Places where they can spend time and not spend a lot of money at the same time. Perhaps shopping centres should offer free access to the internet. Thanks to this it would be possible to combine traditional and internet-based shopping," she explains.

Radosław Górecki