Vacant car parks, dwindling crowds, anchor stores closing their doors for good and replaced by cheap and not-so-cheerful discount stores. It’s a scene that has become all too familiar in shopping centres across the UK, and has fuelled a debate over a so-called retail apocalypse.
As consumer behaviour becomes more influenced by digital, once-thriving shopping centres and malls – both in town centres and out-of-town – are struggling to stay afloat. Rising business rates, the impact of technology, evolving consumer behaviour, political uncertainty and a raft of high-profile failures that undermine confidence in the sector as a whole are just some of the factors that have made today’s retail landscape that much more challenging.
It’s not all doom and gloom, however. There is hope. Research shows that shoppers still crave physical retail experiences, and 80 percent of purchases are still expected to happen in stores in 2020. Digital might sound like the death knell for bricks-and-mortar retailers and retail spaces like malls, but it can also provide some solutions, too. The malls of tomorrow will need to be less transactional, more inventive, inclusive and committed to creating something unique for shoppers that cannot be found online if they want to thrive.
Digital placemaking is central to this focus, creating experiences for shoppers that can transform vast retail spaces into something meaningful and magical. So what are some of the issues for shopping centres, which malls are bucking the downward trends, and how can digital help put these retail destinations back on the map?
Shopping centres in crisis: The ripple effect of struggling retailers
The relationship between shopping centres, retailers and high streets is symbiotic; the success or failure of one has a significant knock-on impact on the others. Each is struggling, and each can provide its individual solutions. One look at the figures shows the mountain ‘real’ retail has to climb.
While growth from online sales continues to skyrocket – climbing nearly 15.9 percent year on year in 2017 – physical stores have struggled, showing growth of just over 2.3 percent over the same period according to the Office for National Statistics (ONS).
Retailers are struggling, and they’re moving out of shopping centres as a result. In October 2018, Retail Dive reported that shopping centre vacancies throughout the UK had hit an all-time high. High street closures of some of these major anchor stores pushed shopping centre vacancies to 9.1 percent. Neighbourhood and community shopping centres continue to feel the heat, as well, with vacancies remaining stagnant at a concerning 10.2 percent. Vacant shopping centres don’t attract visitors.
Empty units mean lower profits and less foot traffic, which result in less investments into malls and a growing number of UK shopping centres falling into administration. It’s a vicious cycle, but some shopping centres are bucking the trend. So what are they doing differently?
The death of the middle
“Retail isn’t dead. Boring retail is.” So ran a 2018 feature from Forbes. The argument made by the author was that high street retail is fragmenting, with luxury stores and discount retailers seeing growth, and the saggy middle losing out.
That doesn’t necessarily mean shopping centres need to evict their retailers and replace them with designer outlets, but it does speak to a deeper point – ordinary won’t attract shoppers. Think about the retailers that have struggled of late – Debenhams, BHS, Maplins, Toys-R-Us. There are a host of reasons why each failed, but a lack of investment in the stores themselves is certainly high on the list. Nobody bemoaned the loss of the ‘BHS experience’, and there’s nothing in any of those stores you couldn’t find elsewhere on the high street.
Shopping centre operators should take note. The retailers seeing the most success are the ones focused on customer experiences, on providing something unique, on caring about their visitors. For those that want to thrive, the focus has to be on quality.
Quality is amenities, cleanliness, ambience and all manner of things. But it also leaves space for retail spaces to do something new, exciting or different. Harnessing digital placemaking is one tactic that can raise standards, create magic and provide rich experiences to visitors.
Digital placemaking done right
Shopping centres need to move on from average as the norm, and they can either evolve or be replaced by a faster, more convenient shopping experience. So how are some centres embracing change and using digital to create something unique and appealing to visitors.
The Mercury Mall: Smart Rewards App: This pioneering London shopping centre is enticing customers back to its shops with rewards for literally every step they take. In a series of sustainability initiatives, the centre now features a smart walkway that uses customer foot traffic to generate off-grid electricity to power its services. Screens above the walkway show customers how much off-grid electricity their footsteps are generating, which they can convert into in-store discounts and rewards via the “Mercury Smart Rewards” app.
“As a community shopping centre, our loyal customers choose to shop local and often – it fits around their daily lives and offers them value for money and sociability,” said Spencer Hawken, Centre Manager, Mercury Mall. “This is a great way for customers to have a real social impact for every step they make in their physical journey. The whole idea is that sustainability should be fun and engaging – this installation is a visual place maker and when customers realise that their steps will be converted into reward points that they can spend here in our shops, that’s a win-win for all of us.”
The Qwartz App: This shopping mall in Villeneuve-la-Garenne, just north of Paris, is shaping visitor experiences to maximise money spent, while driving in-store sales through smartphone notifications. Through their mobile devices, shoppers can access digital product information, price comparisons and a search engine for all products sold in the centre. The Qwartz App also provides personalised loyalty programs and wayfinding.
An added bonus for centre operators: this technology also allows for comprehensive data collection, which means that shopper movements can be tracked, revealing recurring patterns that shopping centre teams can take advantage of. For example, this can help with identifying traffic patterns that can help determine the best locations for maps and kiosks, and how to direct shipments more accurately for retailers.
Hammerson: Brent Cross PLUS App: With a portfolio of 37 shopping centres and retail parks across 14 countries, this property management group is a great example of how shopping centre operators can work directly with retailers to create a full-scale shopping experience for customers. With the comprehensive PLUS app, and its latest tool, Style Seeker, a shopper can take a photo of an item in store, upload it to the Style Seeker and instantly receive product recommendations from multiple retailers or add to their favourites to save for later. This model not only enhances the customers’ shopping experience, it’s a way for retailers and shopping centres to work toward one common goal – bringing customers back in.
The result: 90 percent of shoppers who tried the app said they found it useful and 92 percent said they would use it again. What’s more, 94 percent of shoppers said the app would encourage them to visit more stores in the centre.
Calvium: Successful digital placemaking does not have to be tied to smartphone apps or notifications. Calvium’s Digital Town Crier is an ideal example of how retail districts can collectively benefit from bringing digital into physical spaces. As part of a Porth Teigr redevelopment project in Cardiff, Calvium designed a ‘digital town crier’: a buoy which came to life when people walked near it, informing passers by of deals for local cafés and restaurants. Even simple steps like this can bring a sense of joy to an otherwise mundane shopping trip and, more importantly, entice people into those businesses to spend their money.
A better retail experience
The truth is, there is no quick fix to the retail landscape. The £900 million promised by Chancellor Philip Hammond in his November 2018 budget to reduce business rates will have an impact, the £675m fund set up by Jake Berry, the minister responsible for High Streets, will also help high streets adapt to modern challenges.
For shopping centre operators, the focus should be on improving quality. Part of that means an investment in technology to improve accessibility, encourage more footfall and create unique experiences you can’t get online. The goal is, simply, encouraging more visitors and fostering greater interaction. Attracting people means more spend, more spend means happy retailers, which means an injection of life into the centre.
The spaces are there, and everyone – from government and investors to brands and the public themselves, want to see the decline reversed. But we need to work together to create retail destinations that people want to visit, not just showrooms for products that people then buy online at a discount. With a clear vision, planning and creativity, shopping centres can win back consumers who are looking for engaging retail experiences.
Digital Placemaking is not a magic bullet, but it does provide some solutions and possibilities for the UK’s struggling retail industry. To find out more, read our extensive guide here.
Debenhams image, via Wikimedia Commons (CC 2.0)