BCSC - Retail General - Shopping Centres Face Retail Revolution
Date: 13 Nov 2002
New research reveals that a dramatically changing retail market will alter the face of shopping centres by 2020 and the good news is that there is capacity for significant extra development amounting to 50 million square feet.
The research, Shopping Centre Futures, jointly commissioned by BCSC – the retail property organisation and international property company Grosvenor, was launched in a speech today by Dr Richard Barkham at the 2002 BCSC Annual Conference and Retail Showcase currently underway in Manchester. The research identifies social, economic, demographic and technological projections up to the year 2020 and the consequent changes and challenges that retailers and shopping destinations will face over the next two decades.
The projections examined in the report include:
• A richer but time-poor, more demanding customer – the average household income is expected to rise to an average of £47,000 compared to £29,000 today, with extra money being spent on value-added products and services.
• The increasing importance of the ‘grey’ pound - by 2020, 46% of the population will be aged over 45 compared to 39% today.
• A larger proportion of male shoppers as domestic roles converge and the gender gap closes.
• An increasing range of means of shopping with the advance of technology.
The report predicts that spend through the shopping centre sector will remain high, estimating that £47.8 billion of goods and services will be sold through shopping centres in 2002 and predicting that this figure will increase to £97.5 billion in 2020. However, the report also concludes that landlords and retailers and will have to look at adopting new retailing practices to take advantage of this.
Comments Jenefer Greenwood, President of BCSC:
“Our research demonstrates that shoppers are going to become older but bolder and are increasingly going to demand more convenience and personalised service in what they perceive as an inconvenient and impersonal world. This points to a real vitality in our industry, giving us the opportunity to create new ‘shopping places’ to satisfy the demands of the consumer of the future.”
Comments Dr Richard Barkham:
“The report is an important resource that retailers and landlords should be looking to capitalise on, demonstrating where long-term growth prospects lie. The fundamental principle behind it is that understanding the consumer and providing the right mix will become increasingly important.”
The six major areas of change that landlords and retailers will face are:
Enhancing the richness of the tenant mix
The report predicts that a changing consumer mix will lead to a new retailer mix:
• There will be more emphasis on services such as particularly high quality leisure and less on the traditional anchors such as clothing and footwear stores, as shopping centres match the demands of the consumer of the future.
• With the retail market becoming more competitive, the report suggests that those retailers who survive and flourish will be the largest retailers or niche innovators.
• Whole new categories of outlets may develop including health, education and automotive.
It will be the responsibility of shopping centre owners to proactively manage their tenants to ensure the best possible offer for the consumer. This will involve actively recruiting new and exciting retailers. Paying the most rent and taking the most space will no longer be a guarantee of success. Shopping centre managers must also be prepared to offer more flexible space usage and leasing arrangements to ensure flexibility of the entire retail offer as consumer demands change.
Creating a unique sense of place
With consumers willing to travel and able to spend an increasing proportion of their income on leisure services, shopping centres will have to compete not only with other centres but also with other leisure destinations. The report suggests that shopping will therefore have to become more of an enjoyable, recreational experience. This will involve the consideration of everything from the design and architecture of the centre to customer loyalty schemes, security and general ambience.
Attracting new shoppers
Changing demographics will mean that shopping centres will have to amend their offer, which has traditionally focused on attracting young, predominately female shoppers. The country’s aging population, for example, will demand a shift in the retail mix and type of products sold to prevent them from spending their money on alternatives such as holidays and restaurants.
Developing segmented offers
Traditionally, shopping centres aim to cater for all those in a given catchment area. However, the current trend towards segmentation will be become far more important by 2020. In addition, the segmentation process will need to be more sophisticated, based not so much on income or age but on moods, modes and lifestyles.
Raising standards of customer service
For the more demanding consumers of 2020, standards of customer care will become a vital point of difference. This is not only a concern for retailers but also for shopping centre managers who can help their tenants recruit and retain the best possible staff, for example, by offering communal staff facilities or discounts across the centre. Other services that could be offered to the consumer could take the lead from department stores, for example - central gift-wrapping services, repair services and home delivery.
Providing integrated property management solutions
The report predicts that the gap between primary and secondary sites is likely to widen still further over the next 20 years. Prime retail sites are likely to become brand showrooms with warehousing and other non-core functions displaced to cheaper off-site locations. Property owners should therefore be looking to offer an integrated service to their tenants - managing their entire estate on the company’s behalf.
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