The Future of… Shopping Centres

The Future of... Shopping Centres

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Post By Sigma -

Following our first part in our new series ‘The Future of’ we take a look at ‘Shopping Centres’. With the British high street in crisis it would be naive to think that other areas of retail are not affected. Retail centres too have seen a decline in footfall as weary shoppers show an appetite for more than just somewhere to complete a transactional purchase.
However, it’s also fair to reflect that on the whole, retail centres are actually fairing much better than the high street, largely due to their ability to change and transform more quickly in response to customer trends.

Designer malls

We all watched with interest when Westfield opened its doors in London back in 2008, a shining vision of what a ‘designer mall’ looked like. Ten years on, rather than showing signs of struggling, the shopping centre has attracted more than half a billion visitors and generated over £16.7bn in sales. More than £4bn has been invested in the site with another £2bn planned in the coming years. This is just one example of a shopping centre that is thriving despite the woes of the wider retail sector.

So what does the future look like for retail centres and can they continue to thrive in the face of such difficult conditions faced by the sector?


“Last year, almost 2,000 new independent stores opened in retail centres, an increase of 1.1%. The willingness from landlords to approach their available space a little more creatively, the flexibility of pop-up stands and the desire of shoppers to buy local and niche all mean it’s a great time to be an independent brand”

Looking beyond retail

The biggest differentiator for retail centres, and perhaps the key to their success, is the ability to dial up, and down, their mixed-use profile.  Food and drink, leisure and even residential and office space has been steadily increasing in its utilisation of space within retail centres, creating a unique eco-system of tenants and customers within a single space.

In the last seven years, the amount of space utilised by food, drink and leisure brands has increased by 12%, now standing at around 25% (according to research by Dennis Harper Hobbs).  This could realistically reach 35% in the next ten years.

With online sales continuing to hover around the 20% market share point, it’s clear that buying habits have fundamentally changed; shopping centre landlords have had to adapt to this by evolving their own models.  Many newer schemes are being designed as mixed-use, reflecting the approach that is most likely to be future-proof.

There’s also a shift from the big commercial landlords towards consolidating and restructuring their portfolio.  The focus is on closing down centres that cannot be transformed into something profitable and instead ploughing funds into those that can – the centres with opportunity to create more of an experience than something transactional.

Experiential retail

Building on the growing understanding of customer buying behaviours and the impact that omni-channel is having on purchasing journeys, retail centres are capitalising on the desire to create experiences.  Entire floors are being dedicated to food and beverage outlets, but nestled alongside some of the more familiar fast-food brands are newer, more high-end brands offering everything from organic world-foods to a high-end restaurant experience.  Alongside this are micro-breweries and wine bars as well as health-focused offerings and even market-hall spaces for fresh produce.

As well as traditional leisure offerings such as a cinema or bowling alley, centres are also dabbling with live music shows, pop-up events and even full centre takeovers from leading brands as they fight to attract more footfall and create somewhere that people want to visit for the day, rather than somewhere to just pop in and pick up an item or two.  Helping consumers make memories is the new goalpost.

Creating mixed-use neighbourhoods

Adopting the urban concept of ‘quarters’ seen in many cities across the globe (think the jewellery quarter, the business quarter, the student quarter etc), retail centres are increasingly compartmentalising their site, offering a neighbourhood feel with a commercial edge. This is bringing not just office and residential space into the mix but also hotels and event space, spreading out the appeal even further and adding to the reasons to get someone on site. For those who live or work there, they can now find everything they need within just a few minutes’ walk.

Filling the gap left by high-street brands

However, the failure of so many highstreets brands cannot be ignored and the department stores and large retail brands that were once the stalwart of many a shopping centre are no longer able to continue trading in this competitive environment.

Research shows that rather than having a raft of empty lots, independent brands are snapping up space as they look to broaden their brand appeal and reach a footfall that would otherwise be unachievable.   Last year, almost 2,000 new independent stores opened in retail centres, an increase of 1.1%.  The willingness from landlords to approach their available space a little more creatively, the flexibility of pop-up stands and the desire of shoppers to buy local and niche all mean it’s a great time to be an independent brand.

Some of the largest providers of retail centres are looking to a completely new vision for their centres of the future, creating statement flagship spaces from leading fashion brands and even co-working office space in the units that would have previously been taken up by department stores. It’s likely that more consumer brands outside of fashion will take up more space, with a real focus on technology, smart devices and luxury brands designed to make life a little easier; brands for whom creating experiences is second nature.  This will be complemented in some scenarios by neighbourhood facilities – medical centres, libraries and public spaces that bring communities together with a full range of amenities in one place.

It feels like shopping centres are here to stay and that they are likely to increase in their appeal as they turn themselves into full-scale destinations for a whole range of people, from shoppers to office workers, leisure guests to those wandering through because their apartment or hotel is within the complex.  As long as rents remain lower than in-city properties and investment is made in maintaining the pace of transformation, it feels like there’s not a lot that can go wrong.

That said, to see absolute success for retail centres at the expense of local high-streets feels disingenuous and so whilst it’s understandable that private landlords focus on their own commercial success, one would hope that a more inclusive approach to overall city planning to support retailers across the piece will be adopted to ensure the sector as a whole can recover.


The Future of… The High Street

In the first of our brand new series 'The Future of...', we take an indepth look at The High Street. With High Street retailers struggling due to changes in buying habits, increased rents & high business rates, it's clear the High Street must adapt to ensure it continues to have a role to play in the towns and cities across the UK.

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