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PLACING CONSUMERS FIRST

A recent conference held by the International Council of Shopping Centers (ICSC) in Miami discussed the future trends of retail in a global environment.

August 2015

Like other areas of commerce, retail is becoming more complicated. Where once the terrain was divided between large department stores containing everything one might need and small local shops for food and other necessities, today’s retail still includes the big and the small stores and adds boutiques that have superseded some department stores, department stores that house a number of boutiques, and, of course, online stores from Amazon down to small specialty suppliers.

To say that retail has been disrupted by online is putting it mildly. But the retail industry is trying to work out solutions for what has been called one of the most profound and comprehensive transformations in the past 60 years. The International Council of Shopping Centers (ICSC) which was founded in 1957 has more than 70,000 members in over 100 countries including shopping center owners, developers, managers, marketing specialists, investors, retailers and brokers, as well as academics and public officials.  Many of them are already thinking about the retail marketplace of the 2020s.

Part of that is a yearlong initiative called Envision 2020 that will provide developers and retailers with a roadmap for the 2020s.

Envision 2020 was unveiled in May at a retail conference in Las Vegas. It began with Eight Bold Statements that define the fundamental changes impacting the retail real estate industry over the next five years.

  1. Unification of Bricks-and-Mortar and On-Line: Positioning shopping centers at the apex of the omni-channel movement, merging integrated digital channels with renewed physical space and cohesive social media strategy.
  2. Adaptive Mall Environments that Engage Millennials: Customised, personalised appeal to important younger market, featuring a diverse tenant and merchandise mix, engaging and free-flowing environment, and modern display and marketing concepts.
  3. Unprecedented Intimacy with the Consumer: Leverage technology to create a customised experience with enhanced customer service initiatives, providing multiple connection and interaction opportunities, location-based services, and compelling in-store environments.
  4. Accelerated Developer-Retailer Collaboration: Restructured relationship into a collaborative partnership, sharing resources, insights, and technologies to maximise consumer engagement.
  5. Flexible Center Formats Incorporating Distribution Sites: Evolution of center into direct-to-consumer distribution steam, embracing a physically, technologically, and legally flexible format that fulfills both bricks-and-mortar and e-commerce demands.
  6. Conversion of Shopping Centers Into Communities: Transformation of traditional center into a community, where retail and entertainment offerings are seamlessly integrated; the lifestyles of respective key demographics are emulated; and an increased range of tenant mix and nontraditional retail components are offered.
  7. Emergence of a New Blended Rental Model: Revaluation of rental model into a flexible system that includes both online and in-store sales, revising how rent is calculated and sales data is reported.
  8. Arrival of a Retail-Friendly Investment Outlook: Lenders will become more knowledgeable and interested in the emerging retail real estate sector, resulting in a higher level of consideration throughout the investment community.

ICSC President and CEO Mike Kercheval explained how the Eight Bold Statements were derived. “We did a survey of industry participants in the Middle East, Latin America, Asia Pacific, Europe and Africa, asking the same question that we did in North America – what do you think will be the leading trends and what will the industry will look like five years from now?

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