As originally written for and published by Across Magazine
The headlines on the demise of physical retail due to e-commerce are more or less gone. Consumer behavior post pandemic has proven that it's the combination people want. And who are better to tie all of this together than the local shopping centres now becoming mixed use properties?
The first shopping centre in the world was a covered shopping passage, the Passage du Caire, which opened in 1798 in Paris, France. The tenant mix was all about retail.
Since then, the shopping centre format has been on a path of continuous evolution adopting to meet the latest consumer demands and taking market trends into account as far as possible.
Over the last 20 years dramatically increasing property prices has put pressure on increasing the yield of retail real estate locations. The alternative value of use has become more evident, especially in city locations. Why not tear down your retail location and build and sell apartments for immediate returns rather than hoping for 7% annual returns over the next 50 years? Especially as capital for investment in new developments has been close to free.
An attractive middle ground has become mixed use, where the optimal combination of retail, food and beverage, services, entertainment, residential, office and maybe hotel is sought for. The combined developments give the property owners a hedge in all the aforementioned asset classes, and at the same time become much more attractive to the users and the local communities.
And yes, catchment areas are communities. It is brilliant how the industry is now embracing the term rather than talking about retail this or F&B that. The biggest industry association ICSC rebranded back in 2021 from “International Council of Shopping Centres” to “Innovative Commerce Serving Communities”. In a very clever way they are re-positioning the whole industry to be relevant for the unforeseeable future.
“Communities” is also a much-used term when it comes to sustainability and is relevant in several of the United Nations Sustainable Development Goals, especially goal 11 “Sustainable Cities and Communities”. So the whole approach to communities also gives property owners a nice opportunity to tick the needed ESG boxes as all businesses need to do. In some cases this might come across as green-washing, but in many cases the contributions to sustainable communities really make a difference.
As always the Placewise purpose is all about developing digital solutions for our clients that make creating a community experience scalable through communication, connection, engagement, personalization, and inspiration. In part, community comes from a sense of belonging, of being understood, and from feeling rewarded. We create digital reach for our clients allowing them to establish and maintain “personal” relationships with hundreds of thousands of customers in their respective catchment areas which would be impossible without personalization and automation. In fact, in contrast to the old anonymous customer demographic group characteristics used to “understand” consumers in the past, digitization allows centres to know their shoppers on a more individual level, essential for both maintaining relevance and establishing a community.
The headlines on the demise of physical retail due to e-commerce are more or less gone. Consumer behavior post pandemic has proven that it's the combination people want. And who are better to tie all of this together than the local shopping centres now becoming mixed use properties?
Placewise clients on average convert 10 % of their annual footfall to digital consumer relationships per year. Some of our best performing clients have more than 70 % digital reach in their community. That puts them way ahead of any individual retailer, local media offering and also social media in the same area. This digital reach gives the property owners the opportunity to evolve their business and stay relevant. Mainly they use this reach to serve their tenants, which is a prerequisite for anything they do. But it also gives a direct opportunity to engage directly with individuals in the community for events, charity activities, education etc. And not at least, it gives an opportunity to solve many of the challenges related to e-commerce like unsustainable transport and waste from returns.
Pre digital shopping centres never had the same opportunity to create these personal relationships, now making everything more relevant and interesting for all parties. This gives the property owners the opportunity to take the center of the community stage, however with that position also comes great responsibility. A responsibility to create good for communities with a long-term perspective. Combining community digital reach with fast evolving mixed-use offerings gives endless opportunities to do just that.
Google used to say they would “do no evil”. Shopping centres have the opportunity to do better by their local communities, by simply “doing good”.