Repercussions of the recent global economic crisis continue to affect the retail industry, says Marta Reñones
As we continue to climb out of the global crisis, we hope to see a bit of light at the end of the tunnel in 2012. The retail sector, however, must adapt to the new economic situation. This means less financing for new projects, reduced buying power for families due to the rise in unemployment, and new consumer habits.
First, let’s view things from the standpoint of the business management model. Shopping centre operators will have to change their budget management strategies. Cutting costs is essential —through the setting up of energy efficiency systems or by renegotiating contracts with service providers, for example,as is boosting marketing efforts. Shopping centres will need to adapt to new communication techniques, such as social networks, professional trade fairs and television channels. The rise in online sales is also a factor to be taken into account. Shopping centres must see this new distribution channel as something positive and try to redirect their business strategies to use the Internet to their best advantage.
Another point of interest that needs examining is the new economic landscape, particularly investments in the retail property market. A lack of funding has been the main problem throughout Europe, and the situation has steadily worsened since the beginning of the economic crisis. Today, securing deals is extremely important, more so than implementing new projects that, in the end, never see the light of day. The same goes for reforms and capital increases since, in most cases, assets have depreciated. In Spain, nearly all investors interested in buying shopping centres are foreign. These are usually listed companies that do not require external financing but can instead rely on their own capital. Since profitability is decreasing in economically stronger countries, Spain may very well be an ideal opportunity in 2012 for investors seeking higher profitability, which currently stands at around 6.5%.
Retail professionals need also be concerned by the new consumer model or, in other words, new consumer behaviour. Customers are increasingly more demanding and, as a result of the economic crisis, consumer habits have changed. It is therefore vital that businesspeople and store owners adapt their strategies to new consumer needs. If they want to secure customer loyalty, they must be able to create a unique shopping experience.
Marta Reñones is a journalism graduate from the Complutense University in Madrid. She began her career more than a decade ago as a documentarian for various companies and as an editor with the Spanish daily, El Mundo. She is currently the Editor-in-Chief of the magazine Centros Comerciales.