Shopping center marketing in times of digital change
Published by “Shopping Center Future”, Falk Verlag
Article by Dr. Christof Glatzel
1. Competition is getting tougher
“Shopping centers no longer have a future”, or so the saying goes almost daily – in the media, from the online trade and sometimes even from our own industry. We are also advised that stationary retailers have to come up with something to keep their customers. This is how the Süddeutsche Zeitung recently titled online: “Staging to survive”.
It thus implied the swan song of the “temples of consumption”, as long as the stationary trade does not differentiate itself from the online trade.
It is true that stationary retail, and thus also the shopping center industry, is under enormous pressure. As a result of the digital revolution, it has awoken from its slumber and has been omnipresent around the clock ever since. Internet giants such as Amazon, Zalando or the portals of major brands offer practically everything. Detailed views of the products from all angles allow zooming until the customer recognizes all facets and the texture of the product. The immediate availability, one of the last bastions of stationary retailing, is also becoming increasingly relative. Amazon, for example, is already working on foresighted shipping, which forecasts ordered goods, puts them on the shipping route and thus brings them as close as possible to the customer. This accelerates delivery times. On the other hand, the stationary trade seems old-fashioned and politics almost dreamy: on Sundays the shops are usually closed. Even the number of Sundays open for business has been reduced in some federal states – North Rhine-Westphalia, for example, recently from thirteen to just eleven.
The wind of competition is blowing icily through the shopping center industry – it has already blown the one or other project developer in Germany away. The development pipeline of their still active colleagues is empty. On the one hand, because the city council and administration of many cities make sometimes absurd demands on the projects in terms of design, size and function. This makes one thing simply impossible: the functioning of the shopping center, its economic survival. On the other hand, because it is more difficult to let new projects. Small and medium-sized towns in particular are increasingly feeling that even well-known project developers are withdrawing quickly if important success factors such as a sufficient catchment area that can be analysed or infrastructural connections are not provided. The yardstick for these framework data is much higher today than it was just a few years ago: For tenants, the Internet is another sales channel – the expansion pressure of past years is a thing of the past.
However, the increased attentiveness of project developers towards small and medium-sized towns is not the cause of the problem, but the effect. The cause is always the customer. Until a few years ago, stationary retail was almost without alternative for consumers. The limited supply of smaller cities had to be sufficient. Because the way to the next big city, vital middle city or shopping center could sometimes be long. This is the reason for the increasing popularity of online shopping. It is a welcome alternative with positive attributes: an (almost) unlimited variety of goods, far-reaching price comparability, almost without any transaction costs, from home, 24 hours a day, seven days a week. Small and medium-sized towns are therefore facing difficult times. Large cities without a vital centre have the same prospects. It is too easy for the modern consumer of the 21st century to substitute their small range of goods.
Good locations have their price
When the retail trade takes the risk of opening a store, it invests where the stationary retail trade is still intact – in the prime locations of the solid medium-sized and large cities and the established shopping centres. Even if the rents are high, the turnover is the same: such an investment has its price for both tenants and project developers. The plots are usually covered with commercial buildings that generate high yields. Owners of such properties have little interest in a sale in times of low interest rates and little lucrative investment opportunities. This is nothing new for project developers – good locations have their price. But the concentration processes already mentioned are aggravating the current situation. This is why the industry is talking about the great opportunities in the stock of shopping centers – these are not to be found in new construction. Sooner or later, the great era of center development will be over.
Inventory modernization is therefore the magic word. Studies suggest enormous potential here, but there has been no major wave of modernisation so far. Long-term leases and restrictive planning and building regulations are the external obstacles. In addition, the owners often lack knowledge and financial resources. From time to time, it is also recognised that proper modernisation and restructuring requires tens of millions of euros. But there is no doubt that the potential of the industry lies in the existing stock, in the consistent work on the “asset”.
What does this mean in concrete terms for the shopping center industry? For shopping centres, it is not about playing in the concert of stationary retail. They must be perceptible to the customer even when the Internet seems to drown everything out. And this succeeds if the shopping center industry adopts three insights:
It doesn’t go against the Internet, it only goes with it.
A shopping center must be recognizable to the customer as a brand that tells a story, is clearly positioned and arouses emotions.
Shopping centers must offer excellent service.
Shopping centers must offer a “digital experience
The vast majority of customers are already online today, anytime, anywhere. Smartphones allow price comparisons of the selected product in the shop. Additional product information is available, photos of the goods are shared with friends who can give their opinion. The shopping center must be adjusted to this and support the customer in his shopping patterns. A free, everywhere available Internet access with high transmission rate is obligatory. The advantage: If the customer accesses the Internet via the shopping center’s network, he is in contact with the center. Lounge areas and charging stations for mobile phones and tablets from all manufacturers complete this offer.
3.1 Online communication is not a one-way street
This service is only a small, if significant part of a comprehensive digital policy. Every mall should also have an app and professionally networked web and mobile sites. Programming a center app and putting it online is easy – creating an app that always offers real added value for the customer, on the other hand, is complex. Current offers from retailers should be updated as daily as possible. mfi/Unibail-Rodamco has developed a “Content Loader” for this purpose. This allows the center management or so-called scouts to take photos of the offers in the shops with their smartphones and automatically send them to a central location. Once approved, these can be accessed by customers on all centre pages such as apps, websites, information pillars and digital screens in the shopping centre. In addition, for example, offers from restaurateurs should be available on a daily basis. The same applies to trailers of films shown in the cinema of the centre, combined with the option of ordering tickets online with just a few clicks.
However, online communication is not a one-way street, but must function in both directions. Only then is it really successful. Social networks such as Facebook and Co. offer platforms for communicating with customers and using them as promoters for the centers. mfi/Unibail-Rodamco always monitors its own “Net Promoter Index” and tries to improve it: Contacts to active proponents of a shopping center are cultivated and promoted, while opponents should be persuaded to change their minds as much as possible by addressing them directly.
Shopping centres are protected and managed by a central management team, which accommodate a large number of trendy brands and have high daily frequencies with high repeat visitors. These are optimal conditions for the “Click&Collect” offer. This enables customers to process their online orders via the Center Service.
3.2 “Big Data” in the Centers
The “digital policy”, however, not only results in maximizing the service and experience for the customer, it also opens up further possibilities for the center operator. This is because customers with smartphones always send signals. Encrypted and thus decoupled from the person, they offer the center manager the opportunity to follow the customer’s path. Combined with appropriate camera systems at the entrances and vertical axes of movement of the shopping center, fascinating information can be derived regarding customer behavior, frequencies and the composition of the customer group. In short: “Big Data” has long since arrived in shopping centers. Another example is Apple’s “iBeacon” technology. It enables direct contact with the customer even without an Internet connection. The system recognizes the customer’s current location and can submit suitable, individual offers.
Tenants and center service providers can also be in direct contact via appropriate hardware and software: If the salesperson in the store sees that something is wrong in the center, he sends a signal to the corresponding contact partner. The digital systems thus also offer a multitude of possibilities for optimization and improvement.
Shopping centers tell a story and offer experiences
The mfi founder Roger R. Weiss was aware early on that shopping centers are subject to the laws of the brand world just like any other brand product. This is why he created the Arcaden brand more than ten years ago, which represented the roof for all mfi centers. This brand stands for high construction, execution and center management quality and is an efficient advertising space. Customers, cities and investors know what to expect in an mfi Arcaden-Center.
With the entry of Unibail-Rodamco into mfi, this direction changed: Today, each newly created shopping center offers a unique solution, adapted to the respective location with its very individual customer and competitive situation. A positioning process is implemented for the individual centers, in which all relevant market research tools are used (e.g. focus group survey). The information obtained from this forms the basis on which the architects and design teams develop the concept for the shopping center. The basis for this is a story that runs like a red thread through the entire appearance and accompanies the customer on his “customer journey”. The result is a consistent brand product such as the new center in Mönchengladbach, which appeals to all five senses.
4.1 Differentiation as a feature
This approach of the new shopping centre in Mönchengladbach is most clearly illustrated by the highlight façades, a design element that leads the customer into a certain emotional world, sometimes across floors and stores. On each of these facades, the customer experiences a certain scent, matching sounds and a special kind of haptic, which creates a mood with the customer through the visual design of this mall section. In the future, each mfi/Unibail-Rodamco shopping center will offer customers their own unique experience. Each center is given its own individual name. Differentiation is therefore an essential criterion. To make shopping an experience for the customer that makes it seem sensible to shop in the stationary world – and not online – a number of instruments are available to centers. An important point is the gastronomic offer: Whereas in the 1980s and 1990s the share of gastronomy in shopping centres was only four to six percent, today it has risen to up to ten percent. Seating in the “food courts” used to not be allowed to be too comfortable – the customer was supposed to consume and then free up space for the next paying guest. Today, quality of stay and length of stay are the premise. The centres are increasingly trying to supplement the fast-food range with sophisticated service catering, preferably with outdoor seating and evening operation. The “Dining Experience” is a matching concept from mfi/Unibail-Rodamco Shopping, which lists a comprehensive catalogue of services and experiences for the food sector.
4.2 Paying for the positioning
The kiosks and promotions on Ladenstrasse also offer particularly impressive experiences for visitors. Therefore these surfaces deserve special attention, mfi/Unibail Rodamco bundles its Mall marketing under the term ?fire Events?, a marketingffine organization unit, which is responsible both mark purchase related ?Road Shows?, short term ?Removal units? (short term lettings), and medium-term (two to three years) Mall lettings. The yield is important here, but not everything: The letting has to follow very special requirements to the quality, which pay as much as possible into the positioning of the center to help tell a story.
“Wow” effects at strategically important points of the shopping center provide additional experience and stay quality. As is so often the case, theoretical knowledge of the significance of all these instruments is available – disciplined implementation is relevant and ultimately determines success or failure.
5. Shopping centres offer excellent service
The “4-star” service label – a catalogue comprising more than 600 individual measures – is a special service offensive of the mfi/Unibail-Rodamco Centers. It retraces the customer’s entire “customer journey” and checks at each station how the visitor’s stay can be made as pleasant and simple as possible. The “journey” of the customer usually begins at home with the planning of his purchase. Optimal design of the websites and apps with well-dosed “push mails” are relevant here. Then the first impression on site counts. Our “Welcome Attitude” starts in the multi-storey car park – with corresponding welcome gestures: friendly, bright colours, music and parking guidance system all the way to the reception lobby. When you arrive at the center, the orientation is as simple as possible. Indoor navigation, small brochures with floor plans, interactive navigation desks and information pedestals on escalators and elevators are now standard. But here, too, the difference lies in the details: a glance in the customer toilets, for example, clearly shows the different philosophies of the center developers and operators. While in some Shopping centers liable to pay the costs and little respectable customer toilets, hidden in the parquet floors, are settled, they are offered in other centers free of charge, the entrance to the toilets is high-quality arranged and equipped with seat opportunities for waiting companions. The customer is also offered every conceivable service at the location – from contact-free taps, make-up mirrors and baby changing rooms with the appropriate equipment to small details such as hooks for coats and umbrellas.
However, the “4-star” criteria catalogue does not only cover the equipment features of the centre. The entire staff – from the center manager to the house technicians to the security and cleaning personnel – is involved. A trainer trains the employees with regard to their appearance and prepares them for customer meetings. Everyone should see themselves as the centre’s figurehead. The “4-star” catalogue has another positive side effect: the employees are aware of the importance of their respective roles and are pleased about the attention. This is how they feel valued in their work. From this situation they proactively approach the customer and help him to find his way around the centre. This increases the quality of the customer’s stay enormously. Tenants are also included in the service offensive: Everyone has the option of having their employees trained by the service trainers at mfi/Unibail-Rodamco. In the Pasing-Arcaden in Munich, around 80 percent of tenants made use of this service.
The successful implementation of an excellent service is checked monthly by “mystery shoppers”. They take a close look at both the centre and the tenants and document their impressions from the customer’s point of view. The results are then evaluated and discussed. If the service criteria are met satisfactorily, a center can be certified with the “4-star” seal – as happened in the Pasing Arcaden in Munich. The shopping center will be the first shopping center in Germany to receive four stars in 2014. mfi/Unibail-Rodamco cooperates with an international auditor from the hotel and restaurant sector, who checks the implementation and adherence to the service catalogue and awards the seal of approval when a minimum score is reached. This will ultimately become an integral part of the centre logo.
6. outlook The battle for the customer
The battle for the customer begins even before the shopping center opens with the acquisition and continues with customer loyalty programs – because winning a new customer is more costly than retaining a new customer – and ends with recovery programs. In times of boundless communication, social marketing plays an increasingly important role. In particular, the shopping center’s active contacts must be cultivated, because they promote the center in the social networks more sustainably than some of the owner’s advertising campaigns. In the truest sense of the word, “space” must be given to these customers.
Experience and service have a special meaning in stationary retail. It is important to be better than the competing locations – the shopping center must stand out positively. Owners and developers must be prepared to invest money in the development and maintenance of the success components described above. Capital-strong owners who own many successful shopping centers will exploit their economies of scale and distribute the development costs among the individual centers. If they are also able or willing to critically review and optimize their portfolio at all times, they will emerge as winners from an increasingly competitive stationary retail market.
One thing is certain: shopping centers with their weather-protected space have a great advantage over shopping streets – which, by the way, department stores also have. Here, products and services move closer to the customer than on the street. In the Munich district of Pasing, for example, mfi has further refined this together with the internationally active architecture firm Schwitzke und Partner. Tenant separation elements were made wider and pushed in from the mall to the shop. The next step could be the successive dissolution of the clear separation between the mall and the individual shops – different retail worlds then merge, for example, in the entrance area and discover common action areas, which they use together with the centre management.
So-called “Open Spaces” are created. But until then it’s still a long way to go. Moreover, such experiments only make sense in top locations. Because only there are retailers prepared to break new ground and venture an experiment.
As before, the shopping center unites a large number of retail brands in one room of the highest quality. At the same time, it can always adapt the tenant mix to the latest customer requirements on its own responsibility. As long as there is stationary retail, the shopping center will continue to play an important role in the world of retailing.