E-commerce and Shopping Malls are not mutually exclusive
As online shopping continues to grow year on year and as the millennial generation’s influence across fields propagates, the world of retail is changing dramatically and in consequence the retail real estate industry is undergoing one of the most profound transformations in its history.
Technology and millennials may be changing retail as we know it, but according to Yoram Kedem, General Manager of Nicosia Mall, e-commerce and shopping malls are not mutually exclusive. With his 13 years of experience in the field of commercial real estate in Europe and Asia, he offers an insightful account on the trends defining the industry.
“The growth of online shopping and the culture-shifting habits of millennial consumers are undeniably the trends which are driving the reconceptualization of both retail and retail real estate. These trends and their consequences are expressing themselves in varying degrees in different markets around the world and Cyprus is no exception. Future success, for both retailers and shopping centers, boils down to how organizations can position themselves in what is to be a radically different business environment” says Yoram Kedem.
The rise of omni-channel consumers
According to Yoram Kedem, there is an obvious convergence of physical and digital retailing. Consumers are searching online and buying offline or searching offline and buying online or buying online and collecting their purchase in store. In explaining this trend, he states that “There is a crossing of paths between physical and digital that is driven by the rise of omnichannel consumers; consumers who rely on more than one channel to aid their purchase decision. At the end of the day, consumers buy where they get higher value – this can be the most convenient or the most cost-effective way available to them.”
Dubbed as the digital natives, Generation Y, also known as the Millennial Generation, has been creating shockwaves across industries and across fields. “Millennials may be the first truly digital generation but when it comes to shopping they are still interested in brick & mortar shops. Understanding and addressing their needs is and will remain important for retail because they represent a significant percentage of the population and have a growing buying power” says Kedem.
He adds that “Contrary to popular belief, most millennials prefer to shop in stores, although they spend a substantial amount of time browsing and researching products online. While they value technology, in essence what they want is a better in-store experience”.
“Beyond shopping, millennials tend to place a high value on experiences and one of these experiences is eating out. They are a generation of foodies and shopping malls need to adapt their mix to cater to the culinary experiences millennials are after.
“Shopping malls and retailers’ must also remember that this is a generation eager to make a difference in the world and favour companies that are socially responsible and environmentally sustainable” he says.
The changing face of shopping malls
Shopping malls are not immune to the influence of e-commerce, the millennial generation and omni-channel consumers. “The business model for the shopping center industry has historically been to connect consumers and retailers physically and it was the retailer’s responsibility to drive sales conversion. Today, the role of the real estate owner is shifting. Malls ought to play an active role in connecting the retailer to the consumer not only physically, but also digitally. Forming a direct relationship with the consumer is now an important part of what we do.” says Yoram Kedem.
Technology is also empowering mall owners and retailers to better understand consumers and many are investing in technologies that provide insights into shopper behaviour. “Understanding shopper behaviour is critical and we now have the tools to gauge knowledge that will eventually make us more adaptive and effective in what we offer. To extract the maximum benefit from such investments, it’s also important for malls and retailers to engage in a greater level of data sharing and establish a data relationship” he says.
Demand and supply
Both the demand and supply of organized retail real estate looks very different across markets. While in some markets there is an oversupply of malls, others are evidently undersupplied. As Kedem notes “In Cyprus there is still higher demand for organized retail real estate centers than there is availability. The island has the capacity to host 3-4 more shopping centers before demand is met.
“The shopping mall culture is also fairly new in Cyprus and it has yet to reach its maturity”.
Embracing the fast fashion model
In addressing the industry transformation, implementing the fast fashion model may be the solution. “Fast fashion is more about responding to changing patterns of consumer behaviour rather than being bound to a set strategy. Responsiveness is what we need to embrace” says Kedem.
“Despite the surge in online sales, it is important to remember that brick and mortar retail still accounts for the majority of all retail sales. Malls just need to keep reinventing themselves.
Shopping malls are forever as long as their focus is on the experience they offer rather than on stock out.”