In the latest instalment of our Retail Reimagined series, Luke Tugby maps out the shopping centre of the future.
The UK’s shopping centre scene is becoming increasingly polarised.
As smaller malls in secondary and tertiary towns and cities focus on a value-and-convenience-led offer, the biggest and best regional locations are targeting high-profile retailers and brands, broadening their catering offer and bringing in fresh leisure activities to enhance their experiential credentials.
However, developments overseas have arguably outpaced the UK. Many of Dubai’s mega-malls play host to more than 1,000 retail and food and beverage (F&B) units, while on the leisure and entertainment front attractions include aquariums, zoos, dry ski slopes and Olympic-sized skating rinks.
It is a similar story at Intu Costa del Sol, which will boast its own circus, Ferris wheel and wave pool.
Even in the US, where the shopping centre market has experienced huge turbulence, new projects coming out of the ground, like Triple Five’s American Dream in New Jersey, will include an aquarium, an eight-acre water park, a Nickelodeon theme park, Legoland Discovery Centre, a spa and an indoor ‘snow park’ and chalet – complete with a 180,000 sq ft, 16-storey ski slope.
With an 800-room hotel also planned for the scheme when it launches next spring, Triple Five is considering dwell time in terms of days, not hours.
While those extremes may never make their way to the UK, shopping centre owners are increasingly focusing their time and capital on creating the biggest and best destinations.
Such a shift was laid bare in Hammerson’s strategy update in July, when the property giant said it planned to offload £1.1bn of assets in order to “elevate and accelerate performance with a higher-quality portfolio”, focusing on “flagship retail destinations”.
But what factors will shape the future of those major UK malls?
For Hammerson’s UK and Ireland boss Mark Bourgeois, the answer begins with the need to “imagine the customer 2.0”.
In the age of the digital generation, Bourgeois says these destinations will be referred to not as shopping centres but “customer engagement spaces” – places that “do far more than just sell stuff”.
“Visitors to these spaces will have their own digital ecosystem,” he explains. “They have a collection of devices – phones, cars, maybe even a bot to walk alongside them [to carry shopping or provide directions].
“When a customer walks into one of our spaces, we have to be able to physically tap into that digital ecosystem, whether that’s through delivery services, digital payments or face recognition. It’s happening to some extent today, but that is what shoppers will come to expect in the not-so-distant future.”
Intu is arguably facing into that reality more so than any of its rivals, with 40 staff employed in its Intu Digital arm and its Intu Accelerate programme working with start-ups and tech companies that want to take their innovations into shopping centres.
“The principal reason people go to a shopping centre is that people love shopping. We mustn’t forget that”
Martin Breeden, Intu
The property firm’s development director Martin Breeden says it is doing “lots of stuff” using chatbot technology, robots and augmented reality.
It is even working with companies that can transport a visitor’s purchases directly to their car and pack them away, while they continue shopping in the centre.
Developers simply cannot predict which of those areas the next big habit-changing technology will come from, but British Land’s deputy head of retail Darren Richards says the shopping centre of the future has to be built in a way that can quickly adopt whatever those new innovations may be.
“You’ve got to make sure that occupiers can come in and use whatever technology they want in their units – whether it’s using digital screens, or beacons to check stock – it’s making sure they have the ability to come and do that with ease, without ripping up the floor and the walls.”
Westfield UK and Europe chief marketing officer Myf Ryan agrees technology must be “very much built into the process around building a shopping centre”. But she says any tech implemented within malls must either “remove consumer pain points” – such as eliminating queuing at tills – or provide “a solution to a customer need”, such as helping them navigate the centre.
Westfield’s Destination 2028 report, which explores how shopping centres will look in a decade’s time, muses that eye scanners will identify shoppers as they walk in the door and establish their purchase history.
AI technology will then send personalised offers to their smartphones and recommend “personalised fast lanes” for them to take around the mall, using AI-infused walkways to guide their route.
“This sort of technology gives us an opportunity to make the whole experience for consumers very easy and a lot more seamless,” Ryan says.
Flexibility of store design and layout will become just as vital as technological innovation for retailers and landlords in the next generation of malls since, as Breeden points out: “The principal reason people go to a shopping centre is that people love shopping. We mustn’t forget that.
“I’m convinced that shopping remains a very key part of the future of our towns and cities because it’s an activity that people love doing, but you’ve got to do it well and make it an enjoyable experience.”
To help achieve that aim, Richards reckons the shopping centre of the future will not include permanent walls dividing stores, but removable partitions that can be used to flex spaces on an almost daily basis, depending on retailers’ requirements.
“Some retailers still want bigger space to stock their full range, but in terms of the nature of occupiers who want space, there are fewer businesses that want 10,000 sq ft-plus now. There are great retailers like Hotel Chocolat, Pandora and Smiggle who only want 1,000 sq ft,” Richards explains.
“Flexibility, therefore, is critical. You need to respond to evolving and changing requirements around the size of the unit. Can you flex the walls out or in? Can the back of the unit be flexed, in a modern world where you don’t need as much back-of-house space? The traditional thing that you would do, which is build fixed units that would sit there for 20 years, has to be challenged going forward.”
Steve Collis, managing director at retail design consultants JHP Design, agrees the notion of “putting retailers in boxes in a corridor” is a “dying” model – and insists property giants have got to start “taking the walls down” when designing future schemes.
Collis believes it is a mentality that is already being adopted in Asia – particularly in retail destinations in South Korea, Japan and China – and foresees the approach making its way to the UK within five years.
But he takes this idea further, suggesting that shopping centres of the future will contain “experience courts”, where retailers can showcase their products to consumers in a much more interactive environment. Retailers will operate stalls lining the perimeter of a buzzing central zone, akin to a market, where shoppers can demo the products they buy.
“In front of a food store, there are open kitchens where you can go and learn how to cook and make meals to take home,” Collis says. “In front of the DIY store, there is a place to assemble furniture. In front of the book store, there are poetry readings and book signings.
“In front of the fashion store, there are stylists helping you put together combinations of garments. And the tech retailer next door has a photo studio so you can take pictures in your new clothes and post them to Instagram. There will always be stuff happening and it’s a place you would choose to go every Saturday.”
Shaking up the tenant mix
Such “experience courts” form just one of the ways that shopping centre owners will need to repurpose space in their destinations of the future.
The retail/leisure mix will continue to evolve at pace, with the prominence of F&B operators continuing to grow and community facilities such as libraries, co-working areas, police stations and churches being reintegrated into the proposition, just as they were in the first-ever shopping centres in the late 1950s.
The move of global brands such as Samsung and Microsoft, alongside smaller digital natives such as Missguided and Skinnydip, into the physical world will further reinvigorate the tenant mix.
“As cities get bigger and people live in apartments rather than houses, there is a real desire and need from people to have access to greenery”
Myf Ryan, Westfield
“Around 15% of our portfolio is leisure and F&B at the moment. Will that grow? Probably,” Bourgeois predicts. “That being said, it’s really important that beyond leisure and F&B, we are curating a mix of brands that people can interact with, enjoy and either purchase in-store or go online at home and have delivered.
“What we expect is a strong rotation away from many tired retail formats. Department stores, for instance, will reduce in significance and some of the high street fashion retailers currently in play will be replaced by stronger, more focused brands.”
Ryan agrees, pointing to the way car manufacturers such as Tesla, Mercedes and BMW have extended their physical footprints beyond out-of-town dealerships and into shopping centre showrooms in the past 10 years. But she says it is impossible to predict where the next wave of new tenants will come from in the next decade.
“I don’t think the retail mix and the categories we have in shopping centres now will remain constant in the future – it will continue to evolve based on what consumers are demanding,” Ryan argues.
“We have no idea what that will be in 10 years’ time. It would be way too bold a prediction to try and make because it could be anything, but we have to think about that when designing our centres.”
Richards believes one thing is a certainty: a rethinking of anchor tenants.
Historically, department stores such as John Lewis, House of Fraser and Debenhams have been coveted tenants for shopping centre owners. But Richards thinks a shift is already underway, with F&B, events spaces and public realm increasingly being seen as anchor attractions in a new generation of malls.
“If you look at the trend of brands going direct to consumer rather than trading through department stores, you have to think about whether you would have one as an anchor,” Richards says. “A retail anchor isn’t the only anchor to have – and that’s a step-change from viewing food and leisure as a bolt-on to seeing it as a key feature.”
He uses the example of Eataly, the Italian food marketplace that is due to open at British Land’s Broadgate scheme in 2020, as a classic next-generation anchor. He says a regular programme of events, in designated spaces that play host to everything from music to eSports, will also be seen as an anchor in itself.
A drive towards “bringing the outside in” to regional flagship centres, creating more green spaces and public realm, will be just as vital to a mall’s success as its catering and events offer in the coming years, according to Ryan.
Westfield’s Destination 2028 report goes as far as to suggest shopping centres will have gardens and allotments, allowing visitors to pick their own fruit and vegetables.
“As cities get bigger and people live in apartments rather than houses, there is a real desire and need from people to still feel a part of the outside world with access to greenery, trees, water and light,” Ryan explains.
“The integration of greenery will become a much more emotional experience. How we integrate all of that and how it adds to the experience is a key part of the shopping centre of the future.”
Car parks repurposed
With that shift towards inner-city living, accompanied by the emergence of driverless vehicles, the role of shopping centre car parks will also have to change dramatically.
They will need to give greater space to electric car charging points and dedicated Uber pick-up areas – like those seen in many US destinations.
Meanwhile, Bourgeois sees car parks effectively doubling up as “logistics hubs” in the shopping centre of the future.
“We think the number of cars owned will reduce. That surplus car-parking space could easily be a very big carpool for driverless cars and delivery vehicles, allowing them to be stationed near to the consumer action,” he explains.
“There’s also an interesting opportunity around the top floor of car parks. I think these will be increasingly used as drone launchpads as we look to the future and airborne delivery becomes an increasing feature of the retail landscape.”
There is another aspect of fulfilment to consider, though – click and collect. The collection method has proven incredibly popular, and with companies such as Deliveroo, Uber Eats and Just Eat constantly broadening their menu of restaurants and fast-food operators, Richards says the impact this has on the shopping experience must be considered when designing store and centre layouts.
He alludes to the need for devoted click-and-collect or delivery lanes in stores and catering units when designing the future mall.
“One thing we’ve noticed following the advent of click and collect and Deliveroo is that they clog up the tills for customers – and that is a big problem,” Richards states.
“As a customer, if you’re queuing in Zara and there are four click-and-collect customers in front of you, or you’re waiting behind three Deliveroo drivers to get food, it’s frustrating. That has to change the way you design a centre.”
With so many other facets to consider, developers and property owners have their work cut out when constructing the malls of tomorrow.
If they can deliver the needs and wants of the digital generation, the flagship shopping centres of the future will look radically different from the ones we shop in today.
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