EG 7/10/17 Amber Rolt
Retail investors interested purely in rents and covenants will play no part in the establishing sustainable destinations.
That was the key message offered by a panel at a debate at REVO Liverpool 2017 called “Finding the human connection in a tech world”.
Retail is a real estate sector that can easily be both disrupted by technology and enabled by it, according to panel members Cameron Scott, chief executive of Nash Bond, and Gaston Gaitlan, chief executive of Spain-based The Leisure Way, which provides advice on how to bring emotional value to schemes.
The pair offered insights on how shopping malls and town centres could survive in an increasingly robotic world.
For Gaitlan, the answer is going backward in time, not forward.
“In early times, markets were places where people did more than just shop,” he said. “They were negotiating, discussing, meeting friends. The market was the activation of that town, it was the social hub. This is what we need to study again. How do we activate our malls so that they become the social hub of their community?”
“You have got to get your anchor tenants right,” said Scott, pointing out that this did not necessarily mean retail anchors. They could be theatres, museums or similar attractions. He added that curating the tenants around those anchors was also vital for creating spaces that people wanted to visit.
“Food and beverage, leisure and public realm are very important,” he said. “People want to shop and spend time in beautiful places.”
Gaitlan agreed, adding that it was happiness that kept people coming back to malls and town centres and that it was this that should be measured when determining the success of an investment.
“We have to think about what we need to do to make people happy. If people feel good, you will have more people in your asset, they will stay longer, talk about it more, and post on Instagram,” he said.
Gaitlan said this was already the way that retailers were thinking about retail, citing examples such as Nike, which uses its physical stores as places for people to go to explore and test, and have fun.
“We have to understand that it doesn’t matter where people do their purchasing,” he said. “They can do it in the bathroom or on the bus. What they need to have in their memory is a moment, a feeling, an emotion. We need to work on the individual. We need to go back to the primary need to connect with people and understand that people are not machines.”
Understanding your customers is the key
With the growth in the digital platform it will be important that landlords create or evolve schemes with a greater sense of identity and place.
To do so they will need to move away from the generic and create a more heterogeneous mix of retail and leisure, to create retail locations that have real currency.
Shopping centre owners or major urban landlords will need to understand their catchment and how to relate to their customer. The major London estates such as Cadogan or The Crown spend a large amount of time understanding their catchment and studying how to relate to them from a retail and leisure perspective. They will know the gender breakdown of their customers, the average dwell time and spend.
Major shopping centre owners will need to understand their customers, the upcoming generation, and how their spending patterns are going to change.
Attracting the right anchor tenants will be of paramount importance and clustering tenants that have synergies with anchor retailers is imperative.
Single ownership allows landlords to control the consumer offering, but where a high street is in multi-ownership we are now seeing the formation of BIDs that allow landlords to work collaboratively and are supplemental to services provided by the local authority.
As the consumers and younger generations become more influential, we will see new iterations of the shopping centre model. We will see more of the community in centres that aren’t focused on fashion and accessories retail. Leisure uses will become an increasing component in shopping centres. Landlords will need to curate a more integrated and experience-inspired offering that will help increase dwell time and thereby enhance sales across all categories.
The key component in creating successful retail environments will be to provide a complementary basket of uses that suit the consumer, which interests them and excites them. Today’s customer will value experiences and these will need to be unique and offer social currency.
Cameron Scott, chief executive, Nash Bond