Shopping malls as new office locations

Retailers want to turn the page on the disruption of 2020, and I always hear how many customers are back in shopping malls, meaning “don´t you worry” it´s not as bad as everybody wants to make you believe and everything will be back to the old normal soon.

Is it really as simple as that?

Of course, after a lockdown people are suffering from less social contacts and want to go out for shopping, visiting restaurants and to enjoy normality.

But what comes after that? What exactly will the future bring?

The reality is that many of the changes brought on by the COVID-19 pandemic – be it buying behaviors, workforce models, channel mixes and business models – all were underway long before the pandemic. 

COVID-19 only accelerated these trends (in some cases by 5-10 years), driving an unprecedented level of urgency to retailers’ actions.

As a result, the retail real estate industry is set to be transformed. In fact, we are witnessing the start of a revolution that will utterly transform the dynamics of the industry.

According to KPMG´s latest Report “The Future of Retail” from January 2021 these trends evolve, the links between physical locations and the ability to sell products and services are fraying quickly. And, as they unravel, the shift from ‘retailing’ to ‘consumer commerce’ is picking up speed. Indeed, the entire definition of what it means to be a retailer is changing.

We need to ask:

• why the market is changing. 

• what the winning business models of the future will look like. 

• how we can achieve this transformation, 

outlining the key capabilities and strategies we will need to move our organizations into the future.

When it comes to shopping malls the number one duty of every Center Manager is to increase attractivity for customers.

Every leasing Manager will start to attract anchor tenants, which provide desired products, affordable on a large scale, to generate traffic. Those are accomplished with an individual tenant mix to improve the attractivity of the center and to create a unique shopping experience.

But as 80 % of the tenants in shopping malls appear to be the same in each mall it´s getting hard to make the difference due to the retail tenant mix. 

While in the old days a safe and clean environment with services and some top brand shops was enough to attract clients, nowadays the Marketing & Management Department of the center is facing different challenges to improve foodfall and increase conversion rates per customer.

During the pandemic the foot retailers and the “click-and-collect” concept may have created some traffic, but in Post COVID-19 it is time to re-think on how to organize the mall as a work-life-entertainment hub.

If we investigate the latest trends, even before the pandemic, more and more additional services and entertainment opportunities have been offered.

According to a report from the German Council of Shopping Centers “Center Management in Focus” from 2019, out of 140 centers in Germany we would have found already:

• 35 % accommodating cinemas,

• 41 % accommodating Health Services and in 

• 45 % of the shopping malls where offices as tenants.

Further over 70 % of the shopping Center Managers expected that in these segments will be the biggest growth in the future (including restaurants).

Well, this was before the pandemic, and I think it´s safe to say that the accelerator function of COVID – 19 works here as well. 

Some could argue that those tenants don´t increase the footfall significantly, which might be true as most health services have an own entrance (for good reasons) and cinemas also don´t help during the daytime to attract customers.

KPMG sees 6 drivers for consumer purchase decisions, while #1 is value and #2 is convenience Customers count experience as reason #3.

When it comes to the choice where to go and consume, we don´t talk about Wi-Fi Hot Spots and pop-up stores here. We talk about pro-actively establishing an eco-system that attracts the customer and extends their time, they spent in the mall.

If we provide an incentive to the customer to stay longer and not only to shop and enjoy entertainment options, but to work in a community, the intergroup behavior will lead to a social identity.

Such identity makes the customer come again and again, while the word of mouth will lead to increasing traffic bringing in more active customers over passive ones.

As a result, the Center Management becomes the opportunity to build up a Community Hub where events and business mixers will be held.

And giving the customers the opportunity to check in on a coworking space via an app helps also to track and trace customers behavior and habits and to learn more about their needs and consequently build up attractive services to increase customer experience.

A coworking concept for Retail Properties and shopping malls attracts clients and increases the average stay per customer. Convention areas are not only used for promotion campaigns anymore, but for coworking events, business mixers, accelerators and pitch shows.

Implementing a coworking space means implementing a community which creates a very high identification with the place and attracts the family and friends of the coworkers to visit the place and stay.

Hubert Abt, the Autor is Founder & CEO of New Work Offices and workcloud24.

While New Work is specialized in flex office concepts and Space as a Service consultancy workcloud24 provides digital products to manage space and hybrid workforce.

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