Shopping centres: from retail convenience to innovation hubs

28/01/2021 Since the 1960s, consumers have flocked to shopping centres as a convenient way to browse and purchase the growing number of retail brands, all under one roof. Yet despite the addition of food courts and entertainment, the basic format has changed little over the years, whereas the way we shop has changed drastically. The arrival of online retail giants such as Amazon has taken convenience to a higher level. The result has been falling occupancy rates in shopping centres that have failed to adapt and evolve to the needs of a new generation of shoppers.

With footfall already diminishing and vacancy rates rising, the impact of the pandemic has also taken its toll as social distancing measures and lockdown regulations saw consumers increase their online spend or shop locally. However, as lockdown measures have gradually been relaxed, European retail footfall had begun to recover in August 20201, albeit still down on last year: around -25% in France, -30% in Germany and Italy and -40% in the UK, Spain and the Benelux.

Capitalising on digital to improve the customer experience

If nothing else, the health crisis has acted as an accelerator of much-needed innovation that commercial real estate professionals now see as vital to the survival of shopping centres that remain significant economic contributors.  As of July 2017, there were over 9,500 shopping centres in Europe, which in 2016 generated an annual retail turnover of 125.8 bn euros, 110.4 bn euros and 77.3 bn euros in France, the UK and Germany, respectively.2

To survive, shopping centres will be forced to adapt their offerings and reinvent the customer experience. To do so, they need to integrate more sustainable consumer models into their offering. With the digital revolution, new purchasing paths are emerging for today’s consumers, who have little in common with yesterday’s consumer.

In tandem with the health crisis, this change in consumer shopping preference has naturally accelerated digitalisation and multiplied e-commerce sales; up 45% in France alone in the second quarter of 20204. But at present, it is not a question of shopping centres trying to beat multi-product platforms, but rather a matter of successfully providing an experience for tomorrow's customers. Some digital directions have already developed creative and innovative solutions: drones to carry your shopping or smart mirrors for trying on clothes virtually. It seems that digital innovation is already becoming a significant lever for competitiveness and differentiation for shopping centres.

Three priority drivers of transformation

Retail centres now have no other choice than to focus on the priority drivers of transformation, while at the same time ensuring safety and convenience in order to make consumers want to visit again.

First, rethink the shopping experience; customers, who are generally well-informed about competing products and offerings by the internet, must be able to find their way around quickly and easily, Plus the human element must be restored to the heart of the purchasing experience through the informed advice of experts;

Also grasp the opportunity to make the shopping centre a lively and more appealing place by offering attractive services such as beauty and hair care, entertainment or exciting food options. Let us not forget that restaurant services are the leading source of turnover for many shopping centres.

Finally, tomorrow’s shopping centres will be radically different: they will resemble ‘micro-cities’, hyper-connected with co-working spaces, hotels, performance spaces and even agricultural businesses where fruit and vegetables are grown and sold directly to consumers.

It’s clear that shopping centres are on the verge of re-invention as new centres of attraction and community living spaces within cities. By transforming from shopping centres to future hubs of innovation they can offer a more relevant and sustainable experience for tomorrow’s consumer.

An earlier version of this article appeared on here.