It’s time for Retail Renaissance and not Retail apocalypse!! – How mall owners can help their tenants?
The Retail apocalypse! – is the buzzword that I hear very often within my Retail fraternity & in Retail forums while talking to brand owners as well as landlords (mall developers).
Let me for a second give it a new dimension i.e. instead of calling apocalypse, let’s view it as an interesting times, a renaissance which is going to push both retailers and landlords to their limits to re-invent & re-engineer themselves for brighter future.
Albert Einstein once said, “Insanity is doing the same thing over & over again and expecting different results”.
This statement holds true in all kinds of businesses including retail and my article is my sincere attempt in pointing out as to how Landlords (mall owners) can utilize current retail challenges to their advantages
Few Main Challenges being faced by retail sector:
- a)E-commerce is posing a severe threat to mall’s footfalls resulting in overall traffic drop which reflects in category decline in spends.
- b)Competition from other malls as they try to lure tenants/brands with attractive rent free period options in order to retain tenants in their malls.
- c)Small retailers are shutting down, bigger ones are not expanding and new brands are being very cautious to enter the market in the current scenario. They prefer playing wait & watch a game.
- d)Striking a good merchandise mix balance in maintaining a good brand/tenant mix within the mall despite various brand’s shop closures.
As a basic premise to deal with any challenges is to have forward looking & positive mindset. Consider current scenario as Retail Renaissance i.e. the natural evolution of life and business. If stores can’t adapt to changing trends and technology, they will die of natural causes.
If malls fail to impart an exceptional customer experience which millennials desire then they would too fail. Oftentimes, you walk out of the stores empty-handed, frustrated, and feeling like you just wasted your time. These mass experiences with mediocre customer service are exactly what we are trying to get away from!
Instead, World is moving towards personalized experiencesthat are tailored to our every need.
How Landlords can help retailers/ brand owners?
- a)Collaborative partnership: Gone are days wherein landlord and tenants used to meet only at their annual day gatherings, today time demands them to become partners with their tenants and understand their problems by being brand’s partner in crime. Today mall’s manager needs to spend time with their tenants in their stores and understand the key issues pertaining low sales and low feet-ins. Become brand’s partner and consider yourself as an extension of Brand’s marketing team.
- b)Using data analytics to resolve tenants/brand’s issues: Most of the tenants are contractually bound by submitting their monthly sales to malls regularly, this data is generally discussed at the time of lease renewal or negotiation meetings.
How many landlords are using this information of daily, weekly sales to help their tenants to come up with a collaborative approach to resolve issues or take corrective action?
- c)Convergence is the buzzword & to play a pivotal role:
Historically the business model for the shopping centre industry has been to connect consumers and retailers physically. It was the retailers’ job to convince consumers to buy something. That model is shifting as a result of technology.
The real estate owner or mall developer now has a large part to play in connecting the retailer and consumer both physically and digitally, and to do that mall would need a direct relationship with the consumer.
According to the Fung Business Intelligence Centre, “Showrooming” — the practice of researching a product in the store but buying it online — gets plenty of attention, but recent studies suggest it is far less common than “Web-rooming,” which entails researching a product online and then purchasing it in a store.
In fact, 90 percent of all U.S. retail sales still occur “within the four walls of a physical store,” according to a report by management consulting firm A.T. Kearney.
Case study: Westfield, London.
I would like to quote an example of Westfield London who has created a lounge for COLLECT PLUS, (mall’s initiative wherein the partnered tenants/brands offer their merchandise or discounts which are purchased by online customers and they come to collect the same from the mall.
Perfect example wherein Mall has partnered with brands and helping them reach out to online customers.
The current lounge of “CollectPlus” is the result of Westfield’s initiative which they undertook in 2011, by launching an online mall (and later a mobile app) with 150 stores, 3,000 brands, and over 1 million products.
Driven by the knowledge that 60 percent of the 1.1 billion annual shoppers in its malls use mobile devices, Westfield also created a research lab located in San Francisco, with the mission of finding technology applications and services that can further enhance the retail experience for both shoppers and retailers.
- d)Adoption of technology to dominate Leadership stance:
Installing Beacons in the Common Area of Shopping centre: Most of the mall owners & shopping centres have embraced mobile apps, they can install beacons to identify hot and cold zones within their malls and share useful insights with their tenants to increase their sales.
The mall could also roll-out digital directories and concierge services that help mall visitors find their way around properties, locate deals and get information about events. Indeed, new technology is empowering mall owners and retailers like never before.
A prominent leading group, owning malls in KSA (Arabian centres, part of al hokair group) uses mobile phone tracking data through its apps to identify hot and cold spots in their malls and works closely with their tenants in those areas to improve their sales.
In the end, I would like to end my article with an extension of Brand promise which Majid Al Futtaim (leading mall developer) group makes and that is
“Create a place that will become the centre of people’s lives”.
I think this sentence sums up the key message of the above article beautifully.