It is no secret that the shopping centre has gone through disruption and is continuing to adapt and change with changing consumer preference. No longer does a centre find revenue growth through increased rents alone. So, I wanted to look at some other ways overseas shopping centres are both driving footfall and alternate leasing models.

Linking education with experience:

We have seen the days of ‘pile em high, sell em cheap’ retail being quickly eroded by the rise in ecommerce. Retailers have had to evolve from a showcase to an experience, giving the customer something that they can no longer get: a unique connection to the brand. Shopping centres suffer the same erosion, with more and more investing in experiences for their shoppers and ensuring a full annual program of activations and entertainment. A key area of this focuses on education. At the base minimum, school holiday programs combining fun and learning have been adopted, right through to a centre-funded, dedicated ‘maker’ space.

Catalyst

Just this summer Tucson Mall opened a new community arts and maker space within their centre. Replacing the 14,000sf (1300sm) Gap and Gap kids retail spaces, it will cater to all ages and interests, with flex education rooms, collaborative co-working for creatives and performance and art gallery spaces. It’s not a low level investment, but is said to be part of a ten-year redevelopment plan in which the mall is refocusing its larger spaces as retailers seek out smaller locations. Kate Marquez, executive director of the Southern Arizona Arts and Cultural Alliance SAACA (collaboratively working with Tucson mall to run the space) said “If you could envision the entire mall being 40 to 50 percent experiential, that’s where they’re going. We’re looking to start an artist-in-residency program. There’s a community theatre here. So the mall has truly reshaped the way they engage with the community and this is really the start phase.” Read more about it here

OC Stem Lab

Within Olympian City Shopping Mall in Hong Kong, at the top of the escalator, there stands a well-positioned workshop/makerspace, containing 3D printers, electronics and soldering supplies, and a laser cutter. Capitalising on the surrounding residential towers, the space is called OC STEM Lab, with a focussed offering for children, holding workshops and activities including coding, robotics and craft. It is run by the centre marketing team with some external sponsorship funding.

Offering retail as a service:

A second area is looking at alternative leasing models, we’ve seen pop-ups become a permanent fixture in most precincts and new models such as the Air BnB of rental spaces Appear Here. Another model is where the centre or aggregator provides the store for smaller brands concessions, supplying the retail model as a service and you focus on your product.This is great for establishing brands, removing the initial start-up costs of retail outside of a wholesale model.

Rose and Loon

This 4,000-sf (360sm) store, opened in late September 2018, and features multiple vendors under a single storefront that sells individually branded merchandise direct to customers. “All of the merchandise is under a single POS (Point of Sale) system to create a seamless and efficient transaction for the customer”. The products centralise around the ‘maker movement’ theme supporting men & women who craft, design, cook, sew, mix etc. The store sells their wares in a curated environment and works to support them grow their businesses. Apart from purchasing products in store, customers can take part in workshops and classes on how to undertake the craft themselves. The concept was established by, commercial real estate management firm JLL (Jones Lang LaSalle), who manage the Minnesota precinct and is said to be “already paying off in spades”.

B8ta

B8ta is retail-as-a-service company with a chain of retail stores which serve as presentation centre’s for consumer electronics and other innovative products. The company operates 15 standalone locations. Companies can rent space for their product to be displayed inside the locations, along with a tablet that each brand customises with software. All of the products in store are on display out-of-the-box and can be touched, demoed and sold directly to consumers. In July 2019 a partnership with bankrupt Toys R Us in Houston was announced using a retail-as-a-service platform. Read more about that here.

I think there is something positive to be said about the disposable nature of these retail as a service models; where selling the product comes before building the brand. Brand follows if there is a demonstrable demand for a product. This puts the consumer demand or sentiment at the fore. Essentially, you can suck it and see without over-committing investment and spending your lifesavings or wasting time looking for backers for something that isn’t actually a worthwhile product.

Those are just a few I have come across in my search with one thing being clear that landlords, just like retailers need to continue to refresh and respond to consumer changes with their offer and product (leasing) structure in order to remain relevant and profitable as opposed to continuing to do what has always been done.