Internet and demographics shape future of retail, briefing hears

Internet and social media as well as demographics are the main factors shaping the future of the European retail sector, PropertyEU's Retail Investment Briefing at Expo Real in Munich heard.

Commenting on the impact of internet, Herman Kok, international research director at Multi Corporation and a member of the panel, said: ‘Basically whatever can be replaced by internet is at higher risk of becoming less relevant whereas things that can’t be replaced by internet like experience and emotion, identity and meeting places will be the future for shopping centres.’

Shops will continue to exist, he noted, but retailers will in future be able to make do with fewer stores. ‘In order to remain strong and relevant, stores and locations will have to work hard at redeveloping and improving themselves.’

For those shopping centres which ‘have a strong place in the mind of the consumer’ in terms of fashion shopping or even grocery shopping, factors such as experience, identity and presentation will become increasingly important, he said. ‘Retailers in successful, strong stores often want more space and more extensive showcases along the lines of flagship formats.’

Thilo Wagner, director of property Europe at Henderson Global Investors, said some sectors would not feel the heat of internet as much as others. ‘For most food retailers in Europe, the margins are so thin that they can’t operate through the online route only, plus the parking fees for distributing goods are killing,’ he noted.

Nor are luxury goods suitable for online sales because people ‘want the experience of shopping’, Wagner said. ‘Retailers who might be struggling with internet are those in the middle between discount and prime luxury goods so you have to be careful there that you choose the right channel.’

Union Investment’s Waldburg said investors needed to adjust their investment criteria to focus on shopping centres that offer ‘more than just the fulfilment of daily shopping needs’. ‘What do you do with the space that is freed up by an anchor tenant which downsizes, for example? What is the future of former classic anchor tenants such as department stores and electronics retailers?’