The shopping centre industry is constantly developing, which offers opportunities but also challenges to management teams. Consumer’s expectations relentlessly changing; the increasing importance of the tenant mix and the major developments in technology are a mere few challenges centre management teams currently and will undoubtedly continue to face in 2017.
We talked with industry experts in our network to divulge what the market believes to be the biggest management challenge for the year ahead and found (unsurprisingly) there is not one main challenge – there are numerous, but interestingly there is a common trend around tenant success and leasing.
Sabri Marsaoui, FCMI MBIFM, Shopping Centre Manager, Praxis Real Estate Management has said “As retailers continue to rationalise their positions across the country and close poorly performing stores, the situation is only going to get worse before it gets better. This, coupled with the fact that footfall has been on a downward spiral with statistics showing a decrease of -1.8% year to date, leads to concern. An obvious challenge over the next 12-18 months will be reversing these trends. It’s time to review leasing and asset management strategies; we need to find new and innovative ways of attracting the right mix of national and independent retailers that not only fill vacant space (and increase NOI for Landlords) but also meet the wants and needs of the local catchment area. We need to give people a reason to visit our centres again and striking the right balance between in demand retail, F&B and leisure offering is key.” Sabri went on to say “We shouldn’t overlook the entertainment factor either as anything that centre management teams can do to increase enjoyment whilst visiting our centres will ultimately lead to a higher number of visits, increased sales transactions, better-performing tenants and positive brand re-enforcement.”
A Director of Retail Property Management has said “The biggest shopping centre management challenge for 2017 will be working with retailers to improve their trade. Retailer engagement is a big focus, in the past, some tenants have been reluctant to share their data, so working with retailers to support their trade, and maximise their performance will be a major focus next year.”
It is important for centre management to understand which tenants are thriving, and those that need support. This could highlight areas of the centre with lower footfall, showcase products that are popular with the centre’s demographic and understand what marketing initiatives have been successful. This information can be used to create new strategies to increase performance for specific tenants. Lance Stanbury, Managing Director of Mall Consultants (previous JLL Centre Manager) has said ‘‘A huge challenge is the consolidation of space by some retailers who can no longer sustain a presence in every new scheme in some regions for which there is now an over supply, i.e. Middle East.’ Lance added ‘‘in an industry becoming increasingly homogenised with similar tenant mix everywhere, enlightened mall operators should be striving for a different practice. Differentiation of offering is the key challenge for shopping centres future’. Sharing and analysing data allows shopping centre management teams to work with retailers to strategise new ways to ensure tenants have high footfall and ultimately, make their lease sustainable.
Shopping centres have become experiential destinations, with constant events; media; promotions; competitions; the list goes on, organised by shopping centre management teams to drive footfall. With the developments in technology and the detail of data which is available creating so many opportunities – it needs to be shared! This will ensure schemes are successful and are utilising the budget in the most effective way possible.
Alex Baumgardt, Head of Competence Centre has said ‘creating an omni-channel environment, enabling retailers to combine forces will be a big focus for 2017’, Rima Itani, Deputy Mall Manager at Villaggio Mall has also said ‘the biggest challenge will be to keep up to date with the technology matching the malls’. Technology is constantly evolving and offering retailers the opportunity to create unique, innovative experiences for their consumers – this isn’t a new challenge, but is a big challenge which is here to stay and with the heightened competition between centres, management teams need to be constantly researching and strategising new ways to differentiate themselves.
Centres need a strong tenant mix to entice consumers to visit, and retailers need a steady stream of footfall with spending power in order to reap success. After the response from the market, it appears 2017 will see a big focus on tenant and shopping centre management teams joining forces to ensure tenants can continue leasing successfully. The developments in technology have created an ongoing chase for retailers to keep up with the latest offerings and are now expected to utilise opportunities to create innovative experiences for consumers. This is a great opportunity, but a big challenge for budget allocation and time, but if centres and tenants share data and work together, the success will be more than noticeable.
Kat Whitehead, Marketing Executive, Foundation Recruitment