How should shopping centres reinvent themselves to fit in the evolving retail landscape? FGRT's Head of Technology Research explains...
At FGRT we look at the retail landscape and evolving consumer preferences through a global lens, as well as track technological innovations in the retail space. We analyse brick-and-mortar retail and the blending of channels from offline to online and from online to offline. The pace at which the transformation of the retail landscape is taking place is accelerating and causing shockwaves for traditional retail businesses, and by extension, the shopping centre industry. We have labeled this process the “Retail Revolution.” Naturally, the Retail Revolution is taking place at different speeds around the globe, from the US to China, but we have identified the characteristics that will shape the future of shopping centres everywhere, regardless of geography.
The evolving retail landscape and the changes in shoppers’ expectations call for the shopping centre to reinvent itself around three core aspects: connecting with the consumer in a direct fashion, delivering experiences and entertainment, and housing new types of tenants. We believe each of these components will be facilitated and empowered by technology-driven solutions that are increasingly available in the market. We have further made an effort to provide examples of the tools that are at the disposal of shopping center operators to help them reinvent their business models.
The New Paradigm for Shopping Centres
Connecting with the Consumer: Reinventing the Relationship with the Consumer
Social media and indoor tracking tools now empower the shopping centre to know its visitors and interact with them directly. This empowers shopping centres to move away from being viewed as a shopping destination to being viewed as a place where communities gather and engage socially. In addition, this interaction can now be augmented through personalised services, which improve visitor-retention rates. Ultimately, technology-based solutions can improve engagement, footfall and the value the asset delivers to its tenants.
Experience & Entertainment: Reinventing the Mall Experience
Mall operators are already rethinking how they deliver experiences to consumers and how to keep occupancy rates high. Some of the ways they are doing this, which we believe we will see more of going forward, include:
- Curation and novelty: Pop-ups are used to create a curated mix of smaller stores that add a sense of novelty and urgency to the mall offering.
- Content and events: Art exhibitions, performances and exclusive events have proven effective in driving traffic to shopping locations.
- Locally grown and made: Consumers are seeking goods that are grown, made and produced locally, and that incorporate more regional, artisanal flavors and designs. For example, Kimco Realty has expanded a program that offers small businesses one year of free rent and reduced property charges.
- Convenience: E-commerce companies are partnering with mall operators on more compelling omnichannel offerings, including a “drive up, pick up” service at malls.
New Types of Tenants: Reevaluating How They Think About Their Tenants
The new retail paradigm necessitates that mall operators revaluate who their potential tenants might be. We see two big trends emerging.
- Online going offline: For e-commerce retailers, physical stores are marketing assets that support their online business models. They require more innovative leasing models.
- Office and wellness service businesses: Co-working spaces and gyms require flexible access schedules to offer more convenience to users.
Rethinking How They Approach Technology
Technology sits in the middle of the new reality of REITs and shopping centre operators, and many are turning to investments in startups and running accelerator programs as a way to access technology innovation and futureproof their business models. Over the past five years, companies such as Westfield, the Simon Property Group, GGP and Macerich have invested in retail startups, while Westfield Labs, partnering with R/GA Ventures on the Connected Commerce Accelerator, opened a retail lab in San Francisco. We believe this will be the new norm for many successful real estate players going forward.
Shopping Malls Partnering with Technology Companies
Below, we have compiled a global overview of startups and solutions providers that tie into the framework of the connected mall of the future.
Entertainment: Location-Based, Fully-Immersive Virtual Reality (VR)
- Dreamscape Immersive is a new Los Angeles-based startup focusing on location-based VR that is planning to open a VR Multiplex in Los Angeles.
- Nomadic VR is a California-based developer of VR games that can be touched and felt. The company received an investment from Horizon Ventures and demoed its technology at the Wonderful Worlds of the Whampoa mall in Hong Kong in July 2017.
Security: Robots in Shopping Centers
- The Prudential Center in Boston and the Westfield Valley Fair in San Jose have piloted security robots.
- The K-5 robot by Knightscope takes pictures and video, and can detect heat and CO2. It leases for a monthly fee of about $8,000.
Security: Using Crowdsourcing to Catch Shoplifters
- SpotCrowd is an online platform that streams existing, real-time footage from retail stores’ surveillance cameras.
Loyalty and Rewards
- Spring Marketplace is used at 75 live mall locations in the US to date. Clients include Simon, Taubman, Macerich, PREIT and GGP. When consumers use their credit or debit card, Spring tracks their spending in real time and offers personalised marketing and rewards.
- WithMe: Pop-up stores are designed to be assembled quickly from the ground up. The company has eight locations in the US.
- Storefront, an Airbnb for retail, is a rental platform operating in eight markets, including Hong Kong.
Omnichannel Solutions: Solving the Issue of Same-Day Delivery and Easy Returns
- Happy Returns accepts in-person returns from participating online retailers at six malls.
- ShopRunBack is an on-demand returns service for e-commerce businesses, which operates returns drop-off points as well as a network of delivery professionals. The company currently works with Mango in Europe.
- ShopTurn, a Techstars-backed company, is an on-demand, returns service enabling consumers to return purchases directly from home.
- OLAM is a technology-enabled logistics platform solution for mall-based retailers, providing convenient, same-day purchase options for shopping mall purchases. The cost per pickup is $5.
- Shopic is a QR code-based, express self-checkout app. The company collaborated with Tyco on an application that enables consumers to remove the security sensor on items at the point of sale—without requiring any assistance.
- QueueHop lets customers check out on their phones without having to wait in line. It uses QR-code scanning and RFID-powered security tags that automatically unlock after payment is made.
Personalised and Data-Driven Marketing
- ActiMirror helps stores become omnichannel hubs by creating a personalised consumer-communications channel and enhancing the overall guest experience.
- Neoma helps shopping malls create, launch and promote beacon-powered and AR applications, and helps retailers within the mall inspire and attract customers as soon as they enter the building
Kiril Popov will speak about the future of retail at MIPIM Asia this November. Click here to learn more!