Forget Brand Temples, Get The Basics Right Then Innovate To Thrive In Retail Real Estate

As traditional retailers increasingly look at ways of squaring up to the threat of online shopping, creating the right value proposition has never been more important. Ahead of Bisnow's next Dublin event on 29 November, focusing on the future of the capital's retail and logistics market, we look at some of the elusive elements that can help drive footfall and increase dwell time.

According to CACI Property Consulting Group Director Alex McCulloch it’s all about understanding the customer and creating engaging spaces. CACI has conducted exit surveys with 600,000 people at 200 shopping centres across Europe over the past five years.

Speaking at an event in Dublin in October, McCulloch outlined some of the basics people want when visiting shopping centres and they’re pretty simple: a pleasant environment, the option to have a good coffee, and a space to linger if they want to. 

Creating this kind of space pays real dividends, he said. “We see consistently that a shopper who engages with catering of any sort spends substantially more on retail than someone who doesn’t,” he said. “This trend occurs in every centre type, from a retail park to a high street to a regional mall and it includes every type of catering, even down to a cup of coffee.”

Getting the basics right

It’s not just about food and beverage offerings. “When we asked shoppers to rate from one to five the quality of the public amenities, those shoppers who gave a five out of five rating spent 16% more on retail than those who gave a one to three," McCulloch said. "And that applies across architecture, safety and cleanliness — all of these things drive retail spend. If you get them right, consumers will spend more.”

He cited the example of Capital & Regional, owner of seven shopping centres across the U.K. The company invested in changing facilities and a family room at one of its centres after a focus group revealed families were particularly disengaged. “In the next six months they saw a 13% jump in footfall,” McCulloch added. He added that people who rated their overall trip five out of five typically spent 72% more than people rating between one and three.

“By thinking about the shopper in the round, we should be creating something that connects the customer, that facilitates engagement through the whole path to purchase. Basically, we need to be putting customer engagement and experience first.”  

Harvey Norman Ireland Managing Director Blaine Callard stressed the importance of the physical elements within and around retail spaces, including natural light where possible, more glass for strong visuals and impact spaces, and wider walkways. “Better lighting has been a key area in our sectors of technology and interior retail,” he said.

Creating a sense of place is also important, he said. “It’s a rather abstract concept, but perhaps captured and done well by the outlet formats such as Kildare Village,” he said. Other considerations include better car park flow and wider parking spaces. 

Retail over marketing

Callard does not favour retail moving towards ‘brand temples’ that are being seen on New York and London high streets. “That’s an exciting space and good for inspiration, but it isn’t retail — it’s marketing,” he said. “It’s dangerous to see that as a future state for retailers, sports shops with basketball courts in them or ski slopes, or stores full of ‘art installations’, or technology-for-technology’s-sake. That’s great for inspiration, but only one extreme — not the future of core retail. Those flagship formats will never pay for themselves as trading units.”
 
He said rethinking Harvey Norman’s stores has meant better use of colour, better lighting, measured spaces for pure product interaction, and a sense of discovery. “That’s the thinking that has been at the heart of our recent fit-out decisions,” he said.

Other examples from the retailer’s recent store refits include kitchens with water and power that can be used for live cooking demonstrations; dedicated virtual reality spaces for consumers to experience VR in-store; a 'FujiFilm Wonder Photo Shop' in the flagship Tallaght store, a photo printing and crafting space with seating and a large table to allow customers do their own scrap-booking, and flexible event spaces in some stores.

Compelling reasons

Sigma Retail Partners is asset manager of a €500M portfolio that includes eight retail parks and six shopping centres across Ireland. Included in the portfolio are the Square Town Centre in Dublin and Gateway Retail Park in Galway, both of which are about to be extended. Increased leisure and food and beverage facilities are important considerations in both extensions.

“Shopping centres today must give customers a compelling reason to get in their cars and visit instead of purely buying online," Sigma Retail Partners Managing Director Marcus Wren said. "So a strong food and beverage and leisure offering is a must. Likewise, a cinema and other offerings like hairdressing and other retail services are good for increasing dwell time. Added extras such as free WiFi and customer-friendly car parking spaces are also an important consideration for making the shopping experience more attractive."

Innovation

Landlords and operators will benefit from innovating and taking some risk to engage customers, McCulloch said. “Catering is one of the easiest places to innovate because consumers are willing to experiment. The key is to take a risk and know exactly who your customer is.” He gave the example of his own local pub which lets its kitchen out on a nightly basis to local operators.

An example of innovation in the leisure space is indoor climbing centre company Rock Up taking climbing walls into shopping centres, including British Land’s Whiteley Shopping Centre. On the retail side, meanwhile, centres may consider offering vacant units as incubation spaces, running craft markets or building in event spaces.

“This isn’t just about paying lip service to new ideas,” he said. “There is an endgame. Making small changes, taking innovation risk up front, providing the right environment to allow ideas to grow can create environments where people want to go to.”

Find out more about the basics — and the extras — at Bisnow's next event in the Shelbourne Hotel on 29 November focusing on Dublin's retail and e-commerce revolution.