Montri - stock.adobe.com

The emergence of the shopping centre-as-a-service model

Shopping centres have been morphing into wider entertainment, leisure and hospitality venues for some time, but their role is set to evolve yet further

Chinese commerce titan Alibaba opened its first customer-facing physical presence in Europe in August, choosing Madrid’s intu Xanadu shopping centre for a new store.

Alibaba’s inaugural presence in the Spanish capital is a collaboration between its online marketplace AliExpress and Chinese mobile phone retailer D.Phone, and its arrival is indicative of wider shifts in the shopping centre landscape worldwide.

Alongside the growing trend for never-before-seen shopping centre occupants, as tenant mixes continue to evolve with the addition of leisure, hospitality and food and beverage (F&B) providers, is a shift in actual function of landlords and owners.

From a retail perspective, landlords including Hammerson, intu, Landsec and Westfield are backing industry body Revo’s Hatch programme to help drive and foster independent local businesses in their spaces. At intu Derby, for instance, three pop-ups – Project D, Design 44 and Solesmith – are appearing for six-week stints, with the landlord helping provide business and operational support that startups rarely have access to.

Solesmith is a personalised socks brand, which started digitally and has a presence on online marketplace Notonthehighstreet.com. The Derby store has an area where kids can draw their own sock designs, as well as tech-enabled space for people to play with photos and customise items.

In a world where many mainstay shopping centre tenants are reducing their store estate, or in some cases disappearing altogether, the injection of fresh blood and new ways of doing things in managed centres is critical. However, this evolution in the function of shopping centre landlords goes much deeper.

Shopping centres as a service?

Birmingham’s Bullring and London’s Brent Cross owner, Hammerson, offers multiple examples. Whereas software as a service and retail as a service are becoming common parlance in the industry, are we now seeing the emergence of a shopping centre-as-a-service model?

Among the research, projects and conversations keeping Kathryn Malloch, head of customer experience at Hammerson, occupied are ways the real estate company can use its sites as fulfilment or logistics hubs for retail partners and third parties, and what role these destinations can play in other growth areas such as urban farming.

“We have a massive opportunity because the venues and assets we operate are often in thriving, city centre locations, and we want to capitalise on the land that sits around those venues”
Kathryn Malloch, Hammerson

“We have a massive opportunity, quite uniquely in comparison to our peers, because the venues and assets we operate are often in thriving, city centre locations, and we want to capitalise on the land that sits around those venues,” says Malloch.

“It’s part of a bigger strategy at Hammerson, which is around evolving what we do to better support some of the changes in behaviour and megatrends such as urbanisation. We want to make use of the land around our centres to develop thriving neighbourhoods and communities.”

Other ways Hammerson might utilise its assets in the not-too-distant future, suggests Malloch, could be to host more events and leisure facilities in its car parks, or to work with third-party logistics providers to aid behind-the-scenes operations for its partners.

For example, for two years Hammerson has held The Rampage cycle race in its car park at Victoria Leeds, while several of its sites also regularly host driving schools in their parking areas.

“It’s about using our space more smartly, as well as supporting our existing tenants by helping them be more efficient,” says Malloch. “Everyone is trying to cut costs, so that feels like a smart thing to do.”

Indeed, the term “shopping centre” is arguably becoming a misnomer.

The British Council of Shopping Centres, the membership organisation for those in the retail property and managed centre worlds, renamed itself Revo in 2016. It now talks more about “placemaking” and less specifically about shopping centres per se, as exemplified by running initiatives like the locally driven Hatch scheme.

Commenting on the name change, Ed Cooke, chief executive of Revo, says: “It was a very deliberate move to diversify and extend our remit from what has traditionally been called shopping centres.”

He said the large real estate investment trusts (REITs) tend not to talk specifically about running shopping centres any more, and that a “much more active asset management of retail places is a key to success”. The likes of Bluewater and intu Lakeside regularly refer to themselves as destinations and day-out venues these days, over and above shopping centres.

“Historically, there was a clear distinction between shopping centres, a high street, a retail park and digital shops, but that delineation isn’t anywhere near as clear as it used to be – the terms we use for these places need to change to reflect that,” says Cooke.

“Shopping centres are now more outward-facing, working with business improvement districts and councils on ‘the place’ in a more holistic sense – including transport, infrastructure and housing, rather than focusing on filling a centre with retail shops.”

Shopping centre F&B 2.0

Today’s mooted changes follow the food and beverage and leisure wave that washed over these venues at the turn of the last decade, but now F&B is getting an overhaul – illustrating that nothing stands still for long in this sector any more.

Market Halls, a company looking to bring a new generation of food halls to the UK, opened The Hall at intu Lakeside as part of the venue’s £72m leisure extension.

With sites in London’s Victoria and Fulham neighbourhoods, and one soon to open in the former BHS premises on the city’s Oxford Street, Market Halls has been creating new managed spaces for independent food traders. The food companies take on six- to nine-month contracts, and the concept is to keep switching traders to maintain newness.

“It’s all designed to be simple – the traders don’t have to pay service charges, electricity or rates,” says co-founder and CEO of Market Halls, Andy Lewis-Pratt, who adds that the independents pay a percentage of the sales they generate.

He calls the concept, which is already being mooted for other regional shopping centres such as Bluewater, intu Trafford Centre in Manchester and intu Metrocentre in Gateshead, “a real alternative to a traditional dull food court”.

While the key goal is the quality of the food and the option for consumers to find independent businesses to buy from in a “fun environment”, the blueprint and infrastructure Market Halls offers could work in other landlord-tenant partnerships.

As well as taking care of rates and service charges, the company provides the tech infrastructure via tills and point of sale from Tevalis, as well as the kitchen facilities. By taking care of this, Market Halls effectively offers up white-labelled space.

Some property companies have talked up using such formats in the wider retail industry, replicating much of what is done in outlet retail. It cuts down complexity and cost for those taking the space, and helps fill vacant units at a challenging time for the sector.

“If someone moves out, all we effectively need to do is change the name on the PDQ machine and we can start again with someone new,” notes Lewis-Pratt. “We can change traders within 48 hours.”

Some things stay the same

Malloch says Hammerson has seen an upturn in dwell time in its centres, and the company attributes that to the changing habits of visitors, who increasingly come to eat, view films or watch a live event.

“Of course, they will shop, but it’s not necessarily the primary reason they came,” she comments. “That’s a big change.”

However, retail will remain a key cog in these new-look shopping centres. Health food and supplements specialist Holland & Barrett, fashion player Joules, and general merchandiser The Works continue to target shopping centre locations for openings.

Toy retailer The Entertainer is also in growth and development mode, and has plans to bring new concepts and touchpoints to its customers – especially in what executive chair and founder Gary Grant describes as higher revenue-generating mall locations.

“We have renewed leases and opened new stores and relocated stores in most of intu’s shopping centres,” he says.

Grant says Westfield is “always pushing innovation”, and that resulted in a refurbishment of The Entertainer store in Westfield London in 2018 which introduced animated screens and tablets, as well as family-friendly lower shelving and wider aisles.

It appears to have kick-started a trend for The Entertainer, with the company planning a similarly tech-influenced store at Birmingham’s Bullring in the first quarter of 2020.

“Yet again, we’re trying to bring about differences and changes that are appealing, so the proposition doesn’t become mundane,” says Grant.

Digitally led businesses such as Alibaba and digitally enabled new concepts such as Solesmith are playing their part in changing shopping centres from a retail perspective. And incumbent retail businesses in The Entertainer mould are responding in kind with the roll-out of interactive stores that rely on more technology to support operations.

But the changing face of the shopping centre is much more than just a digitisation of stores and an evolution of tenant mix. The switch in positioning to placemaking is making the retail real estate industry rethink its role and extend the array of services it offers partner businesses, consumers and the communities they serve.

Read more about retail technology

  • Samsung puts its Galaxy range, the internet of things and community events at the heart of its new central London consumer space – but don’t call it a store.
  • Adoption of artificial intelligence in retail has been relatively slow, but it’s starting to pick up as retailers see the benefits of AI technologies and the realities of e-commerce competition.

Read more on IT for retail and logistics

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

SearchCIO

SearchSecurity

SearchNetworking

SearchDataCenter

SearchDataManagement

Close