Chapter 4_Retail2020_Going Beyond Retail

8/18/2019 Chapter 4_Retail2020_Going Beyond Retail

1/6

Retail 2020Going Beyond Retail

Retail 2020


2/6

Going Beyond Retail

02 • Jones Lang LaSalle Retail 2020 Going Beyond Retail

Again, what can be said is that these last 10years have been very favourable for occupiersand owners and the real need to invest in ‘theicing on the cake’ has not been there. By andlarge, products have sold themselves and in-store

environments and customer care has just had tobe par with benchmark, no better.

Experience? What Experience?

European retailers got very excited in the 1980s looking across the pond atAmerican concept retailers. Banana Republic had a jungle setting and real

life Jeep. Crate and Barrel looked like a dock yard with ‘just off the ship’discoveries in kitchenware and tabletop. Victoria’s Secret was a sensualFrench women’s boudoir.

Simultaneously, business author Tom Peters wastalking about “service with a smile – and for aprofit”. His book ‘In Search of Excellence’ pickedon US department store Nordstrom saying;“nobody does it better; its service secrets make

it a real winner”.Forward wind to 2010 and the retail industry is stilltalking about the need to achieve the Holy Grailof sensational customer experiences and inspiredin-store service. Does this talk to 25 years oflaziness and lost opportunity or to an extremedifficulty in delivering these aspirations?

USA


3/6


Retail Grows Up

Looking to the next ten years, a different picture emerges.The saturation of clone stores selling similar products

in similar ways is starting to look unsustainable.

Meanwhile, projections for a low growth Europeaneconomy suggest competition is about to get muchtougher. Finally, the growth online means thatoffline will simply have to offer something more. And whilst it used to be said that being able totouch and feel would be enough, the successof net-à-porter (net-a-porter.com) and so manyother online fashion retailers somewhat disprovesthis hope.

So, the focus will be back on experiences andservices for the next decade. In other words,retailers will have toGo Beyond Retail in the pureplay sense of simply distributing tangible goods.Retailers will have to become entertainers,compères, theatre producers, masters ofceremonies, butlers, concierge’s, pamperers,flatterers, psychologists, social workersand more.

The same applies to Shopping Centre managers,of course. A Shopping Centre can no longer simplybe a “machine to sell goods”. This is 20th Centuryreasoning. In fact, it is not even that. It is industrialage reasoning. It is treating the Shopping Centreas if it were a factory, with inputs (goods deliveries)and outputs (sales walking away with consumers).By this logic, customer service and communityrelations were just things you did in order to keepthe ‘factory’ out of trouble. Now that the logisticscan be handled without the factory (online withdirect deliveries), the ‘factory’ has a hobbledengine. Suddenly, the power is in a differentplace and the value lies in all those things youused to do because you had to, not because youwanted to. Put another way, the ‘icing on the cake’,is becoming the cake.

Finally, the growthonline means thatof ine will simplyhave to offer

something more.


4/6


Over the next decade, the Shopping Centre willhave to grow up; to become part of the leisure,service and information age, and leave behind theindustrial age. This time around, they will simply haveto deliver on experience and service or fall increasing

victim to online, dis-intermediated, supply circuits.To an extent, this is not news. Brand agship stores areall about selling the experience. High Street ShoppingCentres across Europe are creating new communityfeels. Libraries, conservatories, educational areas,quiet rooms – many initiatives are being tried to bringreal life to shopping in order to bring shopping to life.

Meanwhile, the model of open-air lifestyle centreshas attraction too. Lifestyle retail, eateries, free formmarkets in an urban setting of character and historyhave proven popular with consumers.

A multi-functional use of buildings on High Streets andCentral Business Districts is also part of this movement. A speci c space may be a coffee bar during the daybut a wine bar in the early evening.It’s about selling

the right service and the right experience at theright moment.

Bringing leisure to shopping has been the other greatthrust in Shopping Centre development over manyyears. From cinemas to food courts, passing viaice-rinks and mountaineering walls, Shopping Centresare more leisure destinations than ever before. Theaquarium in the Forum Istanbul, Turkey (forumistanbul.com.tr ) is winning many fans, as is the Kidzaniaconcept in Dolce Vita Tejo, Lisbon (kidzania.pt ) andin the Dubai Mall (as well as other global locations).Not forgetting the skiing in Xanadú, Madrid or the

integration of casino’s and tness centres intoShopping Centres either!


5/6


Real developments will comeboth through the new ideas andthrough a more sophisticated

execution of those ideas.Consumers want emotion andthey want realness; a poorimitation will fall atter than a bad joke. They want local and global,they want ethical, they wantsmooth seamlessness, they wantgreat design. They want moreauthenticity (either somethingwhich is really authentic, or agreat execution and stagingof something which is notauthentic). And they wantmore lively change.

What will this demand lead to?

- Resurgence of ‘old forms ofretailing’ e.g. night markets,antique markets, ee markets

- Something new each day ofthe week, not the same marketbarrow year-in, year-out

- Retail in unexpected placesand integrated into authenticsettings e.g. villageswithin towns

- Much more playful, internationaleating (in the style of Yo! Sushi)

- Fewer ‘plastic’ food courts;more genuine offers(e.g. authentic streetfood, Wahaca Mexicanmarket eating)

- More consumption with aconscience (e.g. fairtradeand equitrade)

- New diversity & professionalismof independents within ShoppingCentres (e.g. selling genuine

Peruvian knitwear)- More ‘value for life’ experiences

where consumers come awaychanged, rather than simplyentertained

- Wider leisure activities (not justthose that can be charged for)

- More pop-up retail: differentbrands, different places,different times

- Cross-activity promotionsto encourage customers tostay longer

- New sparkle through theintroduction of brands fromChina, Japan, Brazil etc..

- Older people’s clubs generatinga sense of belonging

Meanwhile, from retailers,consumers are just waitingfor more retail theatre andbetter service; service theyremember and which they gossipabout later. And they occasionallywant the kind of involvementin-store that Build-a-Bearprovide, for example.

The Latte Factor Can we expect more of this ‘Latte Factor’ over the next 10 years? Absolutelywe can; Shopping Centres represent a huge physical space and, with visionand courage, this can be adjusted to suit many purposes (retail, leisure,culture, health...).


6/6


If you have any questions about thisreport, please contact us at:Paul Guest, Head of EMEA Research+44 (0)20 3147 [email protected]

The truth is that, even in the good times, retailcould not afford the lifestyle consumers demanded,so what hope is there in the next ten years? Could avalue retailer really recruit and pay for high qualityfront-line staff rather than the 18 year old schoolleaver in the future? Could a retail property ownerreally afford to think first and foremost aboutcreating a Third Place people want to come to,before considering how many of those attracted

will actually make purchases?It is tempting to look at this as black and whitei.e. the retail industry will either have to ‘squeezeand please’ (taking a margin hit in order to attractand satisfy consumers) or risk losing marketshare to online.

However we forecast that there will be a third way.The very best and most agile Shopping Centresand retailers will nd new, inventive, ‘challenger’ways to get more ‘bang’ from the same cost base. It will require smarter thinking, better marketing,rigorous execution, full use of technology but it willbe possible to deliver expert service with a smileand a compelling brand experience and not sufferhuge margin erosion.

Added to which, as a related activity, the nextdecade will see a significant tightening of looseoperational practices which will yield efficiencysavings that can be reinvested in the consumerexperience. For example, Shopping CentreManagers will nd economies in outsourcing, energymanagement, avoiding old-style blanket marketingetc. all of which will contribute to the newGoingBeyond Retail budget pot.

Who Can Afford It?But here’s the rub. Who pays for all of this?

Chapter 4_Retail2020_Going Beyond Retail

Documents

Transcript of Chapter 4_Retail2020_Going Beyond Retail