Shopping centre star shines bright in Turkey

The internet was let off the hook in Turkey this week in more ways than one: amid predictions that e-tailing signals the death knell for the traditional retail centre, the International Council of Shopping Centers Europe gathered in Istanbul to promote a sector that is very much alive, and Turkey is one of its star performers.

Thanks largely to Turkey's burgeoning consumer society, Southern Europe emerged as the winner in ICSC's European footfall survey presented during the organisation’s annual European conference. Based on 2012 and 2013 data, the region recorded a 8.6% increase in like-for-like footfall, due to the performance in Turkey and a rapid bounce-back in Spain. Northern Europe notched up a 2.2% increase.

Istanbul was also singled out this week, in research published by CBRE, as the most active market in Europe in terms of shopping centre development. Twenty-seven shopping centres, equivalent to 1.9 million m2, are currently under construction in the city, the survey found. The second-largest development hot spot is Moscow, with 1.5 million m2 of space due to open over the next three years.

Western and Eastern Europe, at first glance, seemed to be the big losers. In the ICSC survey the two regions each registered footfall increases of less than 0.6%. In terms of development activity, Eastern Europe is reaping the benefits of international retailer expansion: the region claimed 26 of the 35 new centre openings in Europe in 2013. Western Europe was the laggard with just five openings.

But you can't judge by quantity alone. CBRE noted that while new shopping centre development remains at historically low levels in much of Western Europe, many larger centres have extensions planned to accommodate the strong occupier demand.

SERIOUS SHOPPERS
Alexander Otto, CEO of shopping centre developer-investor ECE Projektmanagement and chair of ICSC's European advisory board, also raised the point at ICSC’s opening press conference that crucially, footfall has not dropped, despite concerns across the bricks-and-mortar retail community. Even though the number of pairs of feet entering European shopping centres may not be rising sharply, this does not necessarily mean that shoppers – overall - are spending less in such centres.

In fact, in Germany - where footfall growth is flat - ECE still managed to chalk up a 0.8% like-for-like sales increase. Otto also noted that ECE manages one shopping centre in Moscow, Vremena Goda, which has the weakest footfall but the highest turnover. 'The difference is that if you have a few ladies coming out with big bags from Prada and Gucci it is easier to achieve (strong sales).'

INTERNET IN ITS PLACE
Given that such ladies could also order their luxury goods online without leaving the house, the internet, and particularly the impact of e-tailing, was an important topic during the ICSC Europe conference. It can't be denied that e-tailing is growing strongly, with annual growth of around 10% or more in several European markets. This would seem to imply that more online buying means fewer customers for shopping centres.

Not so, if you go by the footfall survey. Drawing on the results, Otto said: 'The findings of this survey fit with our own research at ECE and it is good to see that despite all the gloomy predictions of falling footfall, the industry is more than rising to the challenge of making our shopping centres relevant and attractive to today's shoppers.'

The idea that it is simply a bare-knuckle fight to the death between bricks and mortar shops and the online environment is one that retail property professionals have challenged for years. The industry is finding ways to combine the two, with physical retail units acting as showrooms and pick-up and return centres for items purchased online; and secondly, by introducing free WiFi and the internet experience directly into centres. Events like ICSC's annual conference help to show that far from dying at the hands of new technology, the shopping centre industry must explore ways of working with it.

Whether or not due to higher online sales or increased shopping centre spend, Eurostat figures published this week also show that retail trade figures across Europe are rising: by 0.5% in February, following an 0.6% increase in January.

As the ICSC conference drew to a close, Turkey's Supreme Court ruled against prime minister Recep Tayyip Erdogan in his Twitter tiff, deciding the block on the social media site had to be lifted. Plenty of opportunity, therefore, for the shopping centre industry to resume and refine its multichannel retail strategies.

Cormac Mac Ruairi
PropertyEU

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