Europe has ‘too much retail space’, Andrew Vaughan, CEO of Redevco, warned at the annual ICSC European Conference in Warsaw.
Speaking on a panel addressing the shopping centre industry’s ‘challenges and opportunities in uncertain times’, Vaughan said that recent big economic and political changes had altered the way people consume, citing youth unemployment and the residential trend of downsizing.
Co-panellist David Fletcher, chief executive of Pradera, agreed. ‘A lot of retail is probably in the wrong place,’ he said. ‘Where are the upwardly mobile moving to? Changing work opportunities mean that people move more frequently, and are happier to change country, in the pursuit of life quality and culture.’ He added: ‘Megacities are a key trend, but also create security issues and demand greater understanding.’
Joseph DeLeo, senior partner and investment committee member at Benson Elliot, wondered if retailers were currently getting the merchandising mix right. ‘Are we matching retailers with our target demographics and thinking about the shoppers of tomorrow?’ he asked.
The London School of Economics’ Amlan Roy said that the key challenges for him were matters of data and analysis. ‘Cities and countries aren't homogenous,’ he said. ‘Even within a country, cities have vastly different characteristics and we need to look more deeply at those differences.’
Challenges bring opportunities
Even in a challenging environment, there is opportunity, the panel found.
‘Word of mouth is one of the oldest methods of promotion,’ Fletcher said, ‘but it was traditionally one of the slowest. Social media does have its downsides – it’s essentially uncontrollable – but is a fast and powerful means to transmit a message.’ And while 25% of shopping has gone online, ‘overall, the retail spend has gone up,’ he noted. ‘Omnichannel retailing is here to stay.’
Said Vaughan: ‘There are a lot of concerns about falling birth rates in Europe, but while population growth is flat in a country like Germany, cities like Berlin and Stuttgart are just getting bigger and bigger.
‘We need to focus on local dynamics in cities, and be ready for plenty of structural changes in the industry,’ he concluded.
