Technology-astute, value conscious shoppers are redefining what they are looking for from a trip to a shopping centre. Mark Faithfull reports on the impact of a new consumer mindset

The issue at hand is not hard to define. Shopping centres, by their very nature, are large, expensive to build, long in the planning and long in operation afterwards. That solidity, permanence and physicality is at direct odds with the fast-paced, fickle and confusing consumer who populates them.

And with what Ibrahim Ibrahim, managing director of creative agency Portland, describes as a “generational tsunami” heading in the direction of the industry from an “always on” young consumer, things are only to get tougher.

The economic downturn has also sped up the pace and need for change. Secondary shopping centres, like tertiary high streets, face an identity crisis. Chain retailers are deserting them as they consolidate with larger stores in fewer centres and Primark will not come to the rescue of every flagging scheme that sees the future in value retailing.

Technology will also redefine how people value their time and what they choose to do with it, creating complexities for retailers and almost undoubtedly new opportunities for FMCG brands. A number of these are already experimenting with direct consumer interaction through pop-up stores and, despite the danger of overkill, well executed and imaginative pop-up retailing is providing a new route to market for brands.

“The opportunity to connect with the consumer is enormous,” says Charlie Miller, retail partner at agent King Sturge. “Technology and promotion will provide retailers and shopping centres with the ability to increase the relevance of their offer and enhance what they do. But it will be a big challenge.”

With an impending crisis in the supply pipeline as retailers struggle to find the big space they crave, a radical rethink is inevitable. Retailers that once were synonymous with single formats are now looking at a mixed property approach, which takes in shopping centres, high streets, retail parks and outlet centres.

Department store groups John Lewis, Debenhams and House of Fraser are prime examples. What they learn from each channel will undoubtedly feed back into what they look for from their store portfolio.

And, of course, the additional strand is the internet, which is already hugely influential in retail strategy and will shape not just future retail sales but the content, shape and size of stores.

Social engagement

In the US, architects are actively involved in taking the lids off old malls, redesigning them and remodelling them to engage with the surroundings they were once closed off from.

In the UK, a number of new developments are going through similar iterations, or reinforcing their community role.

“Gone are the days where a centre can afford not to engage with its local area,” says Mark Boor, head of asset management at Bluewater owner Lend Lease. He cites an increase in the number of community groups that use the centre’s lake and high levels of local employment as two examples of progressive relationships with Bluewater’s surrounding area.

“We have really thought ahead and Bluewater is much more than a shopping centre, with a cinema, catering, outdoor entertainment and an events venue,” he says. “Bluewater has kept fresh. A property owner cannot afford to not know what’s going on.”

Glasgow’s St Enoch Centre has been transformed by extension, refurbishment and bringing exciting new brands in from Hamleys and H&M to Cult, Pulp and even a Harvey Nichols pop-up store.

GDR UK managing director Kate Ancketill believes that community engagment could even be a way of reigniting the fortunes of troubled shopping centres. “You really need to engage fully with the local community,” she stresses. “In the US, a mall called Galleria at Erieview in Cleveland, Ohio had effectively closed down. By introducing a hydroponic garden where fruit and vegetables could be grown, the owner created a hub for an eco-village and a range of retail and non-retail companies have moved in.”

Miller adds: “Shopping centres have to create a sense of place, with their own character. For many that may require a reengineering of their space, taking roofs off and stripping down centres so that service charges can also come down. Princesshay, Exeter is an exemplar of what can be done to work with a city.”

Ed Jenkins, fund manager for Standard Life Investments’ UK shopping centre trust, says integration has been central to the planning for Newbury’s Parkway, which opens next year. “Ancilliary uses, lifetsyle and ambience are all key elements of schemes now,” he stresses. “And retailers have a big part to play. Driving footfall is not just a landlord issue.”

With an aging population, Boor points out that shopping centres may also need to consider how they engage with older consumers. “We need to look at the physicality of shopping centres and what can be done to make environments easier to shop for older consumers,” he says.

Secondary centres

Some secondary and tertiary shopping centres are facing the same dilemma as ailing provincial high streets, a fundamental question as to whether they have a meaningful role in the modern retail landscape. The recession has simply accelerated a trend away from small centres towards larger, regional shopping centres and metropolitan high streets.

“The key for struggling schemes is teamwork - landlords, agents and retailers. If we want to improve schemes we need to look at how we reposition them, understand the potential customer base and build the offer around what they want,” reflects MJ Mapp director of shopping centre management John Tinley. “If the decision is to take a fashion-based scheme and move it towards value then the landlord has to come up with a clear plan of what it intends to do and it must demonstrate to the retailers that investment is continuing. There is no way round the fact that the investor must pump prime the project.”

Cushman & Wakefield head of retail asset management John Prestwich agrees and says maintaining investment is vital: “It’s important that landlords keep pushing incentives, such as free parking after 3pm or at quiet times. There are a lot of landlords offering grants to refurbish the upper parts of shops and retailers are demanding significant incentives to move into or stay in secondary schemes.”

For landlords, the dilemma is whether they are throwing good money after bad but bitter as the pill is, there are few alternatives warns Tinley: “Privately-owned secondary schemes need to take advantage of their freedom to duck and dive, moving with trends and doing what they need to asset manage their properties. One thing we are seeing less of this time round is retail start-ups - perhaps the entrepreneurs are putting their time and money into websites instead.”

Ancketill believes shopping centres need to rethink what the space is for and give over facilities and opportunities to services that can draw footfall. She cites the Brixton School of Everything, an educational service that has run courses at Brixton Indoor Village Market, south London. “They ran free classes on just about anything, which brings community engagement and footfall,” she says. “Landlords need to lose their preconception about what their spaces are for.”

Future technology

“We spend a lot of time talking about technology and apps for iPhones and so on but the real challenge is the technology we can’t see yet. The property industry is not really the right age or demographic to be leading this,” admits Boor. “We believe there will always be a place for physical retail and that internet sales will flatten out at perhaps 20% of all retail sales. But the question is how do we encompass all of it and interact physically and technically?”

Boor says control is another issue. “A lot is talked about offers to mobile phones but at Bluewater, with 330 stores, a customer doesn’t want an offer from everyone. So we need to look at some sort of control and how we use the shopping centre as a co-ordinated marketing platform,” he says.

Jeff Dakin, managing director of transactional platform provider HTEC, agrees: “Consumers will embrace technology if it is meaningful, relevant and timely. If it fails against any of those criteria you can throw anything you are doing out of the door.”

Dakin believes there are enormous opportunities for mall-based loyalty offers that keep spend and promotions within the centre and add to the sense of “a good day out”, although he concedes that retailers need to think collectively for such an initiative to work.

“The technology has to be industrial strength, people will not take kindly to a system failing, for example, to add on their loyalty points,” he says. “You have to think customer and ideally you should start simple and take customers on an evolutionary journey as you increase the sophistication of what you are doing.”

Digital opportunities

“The public realm is the area where landlords have a real opportunity and they need to think completely differently about it,” says Ibrahim. “What we are seeing with technology is amazing opportunities to redefine public space and to create some incredible interactive environments using digital technology. What shopping centre developers need to realise is that, never mind what will be possible in the future, all this technology is available now.”

Ibrahim cites a host of technologies that allow people to “digitally splat” shapes and words onto a wall using a slingshot, for example. Forever21 has used a huge augmented reality digital billboard above its Times Square store to show images taken by a Forever21 model of people walking on the Square, making them part of the entertainment. It has become a huge public draw.

“Public realm space represents a massive opportunity to engage with young shoppers and drive footfall and a huge chance to work with brands,” says Ibrahim. “We have to move away from the idea of making retail entertaining to the concept of monetising entertainment.”

“Shopping centre owners will need to think a lot more laterally,” adds Miller. “The better the quality of the attraction, the more powerful it will be. Certain locations will have to morph in terms of what they are offering.”

However, Realis Estates managing director Duncan Mathieson points out that there are still locations where the public realm offer remains a simpler, yet vital function. Realis plans to develop the East West Centre as a major shopping destination for Stoke-on-Trent and one that also give the Potteries area a true city centre at long last. “Stoke is made up of a number of areas, none of which is a fully defined centre,” he says. “One of the key jobs of public realm is to provide a sense of place and a focal point for the community it serves.”

Design

Areas like London’s Carnaby Street and the much-lauded Marylebone High Street have proved that a more imaginative approach is possible, adopting leasing strategies that bring a cluster of niche brands together in an atmospheric setting.

SouthGate, Bath is hoping to create another example of this niche approach. The first phase of Multi and Aviva Investors’ SouthGate, Bath opened last autumn and brought retailers like Apple, Republic and Cult to the city, while multiples such as River Island and Topshop took larger units and department store Debenhams opened as an anchor.

However, the one remaining section of the centre still to open - Little SouthGate - is by contrast a modern incarnation of the traditional shopping arcade. Multi leasing director Stuart Harris adds: “At Little SouthGate, rather than just rent the space to a high street multiple, we wanted to add a different ingredient. For inspiration, we took a look at what worked well in the city’s past and adapted relevant elements for the future.”

The result is a series of white-box units of varying sizes in a highly-finished, contemporary environment. “We want to generate a standalone boutique destination with a mix of quirky, stylish designer brands,” says Harris, citing Brighton-based Pretty Eccentric as typical of the type of boutique retailer he is targeting.

Harris sees SouthGate, Bath as a pointer to the way retail may go in the future - a combination of mass market brands to anchor the scheme integrated with other flexible spaces able to appeal to the niche end of the designer market and pop-up retailers.

At Westfield Stratford City, which opens next September, the Australian developer is eager to introduce progressive fashion and food fascias, particularly in The Street and Central Arcade areas.

Andrew Ogg, managing director of architect Leslie Jones, points out that the physical configuration of store units still poses challenges for centres, especially if the current trend for larger units is not sustained. “If retailers want 30 to 40 metre depths then it is hard to see how these can be broken up effectively in future,” he reflects. “Retailers like Arcadia give themselves flexibility by leasing a block of units together, which they can divide up how they want, and, of course, developers can try and provide the maximum choice of unit types and flexibility in a centre.”

Ogg does believe, however, that the design of new malls and shopping centres should achieve “place-making”. Shopping centres “need to integrate retail, grazing and entertainment” to increase dwell time and the shopping experience, he says. “But you have to remember that while it is good to mix things up, the tenant mix and store locations need to be legible for the shopper.”

Social networking

Few doubters remain on the influence and importance of social networking but creating a business model out of it is another matter, as is determining its impact on physical space. “Will retail formats get smaller as technology continues to develop? One of the challenges is to get cars away from shopping centres so perhaps we will see hand-held ordering with delivery then immediately organised or a cab ordered. It’s about blending the physical and technology to make shopping more of an experience,” says Boor.

Some retailers are experimenting with interactive features, such as fashion retailer Diesel. It has a Facebook-enabled digital mirror that allows shoppers to try clothes on in the dressing room and then share the results with friends. Dutch fashion retailer WE does something similar on Twitter. US retailer The Shack (formerly Radio Shack) has used video-conferencing to link its San Francisco and New York stores, with customers providing the entertainment for each other.

“It’s a growing area and something that could be used in public space, not just in-store,” points out Ancketill. “Then there is the fact that most shopping centres do not have a strong brand identity. Using Facebook to create a community could be very powerful. In the US, they estimate that having a ‘friends’ group of 1 million equates to $1.3m of free advertising.”