ULI conference: Pace of change forces retail rethink

The rapid pace of change and the unpredictability of new trends in the retail industry are forcing landlords to rethink their business models. That was one of the key conclusions of a panel devoted to winning strategies in a changing retail landscape held on Wednesday at the annual ULI trends conference in Amsterdam.

'We have to understand the world is changing and we need to engage with retailers and customers and try out a lot of things before something works. And even then, it may be innovative for only a short time,' noted Glenn Aaronson, CEO of Multi Corporation.

The sheer quantity and speed of information available today mean consumers and industry alike face an unprecedented challenge to make choices about what to digest and how, he added. 'We have to feel more comfortable with uncertainty and being more unsettled. We need to take that on as a challenge day after day.'

Online retailing is also making major inroads, the panellists agreed. Indeed, an impromptu poll held during the session indicated that the majority of attendees believe that online purchases will increase significantly in the next couple of years to over 40% of the total. The percentage of purchases influenced by internet could be as much as 75%, Aaronson estimated.

Multi-channel retailing is also taking off, noted Josip Kardun, deputy managing director of development at Hamburg-based ECE Projektmanagement. While some consumers read up about a product before going to a store, others go to the store first and do their research afterwards or make the actual purchase online. Some retailers are even incentivising their customers to pay online by providing instruction at their physical stores, he pointed out. ‘In the last two years, the quality of internet tools has improved dramatically.’

Another trend landlords need to watch closely is the role of social media such as Facebook, YouTube and blogs in determining new trends and what is cool, observed Scott Abbey, vice president of real estate at US retailer Footlocker. 'Retailers who engage the customer will have a longer life.' But the development of new online communities around a favourite brand, movies or books also offers opportunities for landlords in the physical shopping world, argued Seth van der Meer, creative director at Sandfire. 'The members of the communities and clubs want to meet - a shopping centre could be the place where that happens.'

Aaronson predicted a 'massive' shift to redevelopment, adding that shopping centres that cannot find their own niche and create their own identity would fall by the wayside. He cited the example of Multi's Forum Istanbul mall in the Turkish capital which is being branded as a family destination with an aquarium, ice palace and a soon-to-be-developed Jurassic Park. ‘A shopping centre needs to redevelop and readapt itself: that's what I think the future holds. We don’t need more locations. Shoppers don't want another shopping centre: they want a better one.’

Kardun agreed that retail developers were in the throes of a process of fundamental change and said the key problem was not that the retail sector was overbuilt, but that it is under-demolished. ECE is also adapting its business model, he added: 'ECE is not just a developer, it is an investor, property adviser, property manager and an asset manager. The scope of our work is changing every day.' Kardun stressed that there were no manuals to help landlords choose the right direction. 'We don’t control the process; we have to live with that. But we can have confidence thanks to our past experience.'