Following our first part in our new series ‘The Future of’ we take a look at ‘Shopping Centres’. With the British high street in crisis it would be naive to think that other areas of retail are not affected. Retail centres too have seen a decline in footfall as weary shoppers show an appetite for more than just somewhere to complete a transactional purchase.
However, it’s also fair to reflect that on the whole, retail centres are actually fairing much better than the high street, largely due to their ability to change and transform more quickly in response to customer trends.
Designer malls
We all watched with interest when Westfield opened its doors in London back in 2008, a shining vision of what a ‘designer mall’ looked like. Ten years on, rather than showing signs of struggling, the shopping centre has attracted more than half a billion visitors and generated over £16.7bn in sales. More than £4bn has been invested in the site with another £2bn planned in the coming years. This is just one example of a shopping centre that is thriving despite the woes of the wider retail sector.
So what does the future look like for retail centres and can they continue to thrive in the face of such difficult conditions faced by the sector?
“Last year, almost 2,000 new independent stores opened in retail centres, an increase of 1.1%. The willingness from landlords to approach their available space a little more creatively, the flexibility of pop-up stands and the desire of shoppers to buy local and niche all mean it’s a great time to be an independent brand”
Looking beyond retail
The biggest differentiator for retail centres, and perhaps the key to their success, is the ability to dial up, and down, their mixed-use profile. Food and drink, leisure and even residential and office space has been steadily increasing in its utilisation of space within retail centres, creating a unique eco-system of tenants and customers within a single space.
In the last seven years, the amount of space utilised by food, drink and leisure brands has increased by 12%, now standing at around 25% (according to research by Dennis Harper Hobbs). This could realistically reach 35% in the next ten years.
With online sales continuing to hover around the 20% market share point, it’s clear that buying habits have fundamentally changed; shopping centre landlords have had to adapt to this by evolving their own models. Many newer schemes are being designed as mixed-use, reflecting the approach that is most likely to be future-proof.
There’s also a shift from the big commercial landlords towards consolidating and restructuring their portfolio. The focus is on closing down centres that cannot be transformed into something profitable and instead ploughing funds into those that can – the centres with opportunity to create more of an experience than something transactional.
Experiential retail
Building on the growing understanding of customer buying behaviours and the impact that omni-channel is having on purchasing journeys, retail centres are capitalising on the desire to create experiences. Entire floors are being dedicated to food and beverage outlets, but nestled alongside some of the more familiar fast-food brands are newer, more high-end brands offering everything from organic world-foods to a high-end restaurant experience. Alongside this are micro-breweries and wine bars as well as health-focused offerings and even market-hall spaces for fresh produce.
As well as traditional leisure offerings such as a cinema or bowling alley, centres are also dabbling with live music shows, pop-up events and even full centre takeovers from leading brands as they fight to attract more footfall and create somewhere that people want to visit for the day, rather than somewhere to just pop in and pick up an item or two. Helping consumers make memories is the new goalpost.
Creating mixed-use neighbourhoods
Adopting the urban concept of ‘quarters’ seen in many cities across the globe (think the jewellery quarter, the business quarter, the student quarter etc), retail centres are increasingly compartmentalising their site, offering a neighbourhood feel with a commercial edge. This is bringing not just office and residential space into the mix but also hotels and event space, spreading out the appeal even further and adding to the reasons to get someone on site. For those who live or work there, they can now find everything they need within just a few minutes’ walk.