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Ward to ICSC/MAPIC: Adapt to survive

By Barbara Hogan Galvin

CANNES, France — It's not often that a conference begins with a speaker comparing his audience of retail professionals to a group of rodents, but as it turns out, the meeting's very core was all about fresh beginnings.

Addressing an international audience at the ICSC/MAPIC Conference 2000, Robert L. Ward, ICSC chairman, referred to the best-selling book "Who Moved my Cheese?" and likened the global retail community to its main characters: A group of mice living in a maze, fervently trying to locate a piece of cheese that has been moved from its usual site. Like the mice, Ward said, shopping center professionals must learn to adapt to changes occurring around them in order to survive.

"We have all experienced changes on national and industry levels. The question is: How do you adapt to it? How do we prepare ourselves for what is next and adapt our retail formats to it?"

The multinational meeting—which included retailers, shopping center developers and suppliers, and industry academics—was the second joint conference organized by ICSC and MAPIC (The International Market for Retail Real Estate). The gathering was held here on the French Riviera in mid-November. More than 200 people attended the one-day ICSC portion of the conference, and approximately 2,000 industry professionals turned out for the three-day exhibition that followed.

Ward and a number of speakers touched on several significant changes taking place in the retailing industry, and encouraged participants to "think out of the box" when faced with a challenge to the traditional way of doing business.

For example, the Internet, which many in the industry had initially perceived as a threat, has changed but not eliminated the way people shop, said Ward, chairman of Westcor Partners, a U.S. mall development firm.

"A year ago, some thought that e-commerce would almost put us out of business—our cheese was moved. Today, we know it's important, but e-commerce has taken a different avenue," Ward said.

Retailers that have embraced the technology as an additional method of distribution have best adapted to the Internet, according to a European-based panel of experts who held a lively debate about the medium's role in retailing.

By using the Web's power as an interactive tool, retailers can lure shoppers into their stores with personalized promotions, said Jacques Sinke, senior marketing manager, retail and leisure group, at MAB B.V., a leasing company headquartered in The Hague.

"The Internet gives retailers an excellent opportunity for interactivity. The customer is knocking at the door—why not make use of it?"

E-commerce start-ups must create brand identities through costly marketing campaigns in order to lure Net browsers and convert them into paying customers. This is where physical, familiar retail stores have an edge, the panel agreed.

"The Internet is a new beginning for multichannel retailers—it's the convergence of real estate and cyberspace, creating a new distribution channel," said Jill McArdle, strategic development director of BDG McCall, a London-based retail consulting firm. The Internet is also changing the way developers do business. While the World Wide Web has not replaced face-to-face dealmaking sessions between landlords and tenants, it does provide a forum by which a developer can begin promoting a project, and offer basic demographic and marketing information to potential tenants. But in the end, retailers want to talk to a landlord in person before they take a chance on a new site, countered Helmut Koprian, managing director of Hamburg, Germany-based ECE Projektmanagement GmbH & Co. KG.

This is especially true when new retail environments are being developed in unorthodox sites. Throughout Europe, retailers and developers are adapting to the schedules of time-crunched shoppers by providing stores in convenient locations, such as train stations and airports.

"By exploring new types of locations, we are well positioned to be able to serve the 21st Century customer—one who has less time for shopping," said Jean-Christophe Quiot, manager of Pause Cafe S.A., a chain of coffee shops based in Fribourg, Switzerland.

However, along with the fresh retail opportunities commuter stations present, challenges also abound, and retailers and developers must adapt to the new shopping format.

For example, Europe's railway stations were not designed to be shopping centers, so retail spaces must be adapted to architectural constraints. Also, they must be designed so customers are able to get in and out of stores quickly, and not feel "imprisoned," Quiot said.

What's more, landlords must be flexible with leases and tailor them to the nature of the business in each location, said Pierre Talandier, managing director of the Paris-based commercial real estate firm A2C.

Flexibility is also in order from retailers who wish to expand beyond their home market into new regions and countries.

One the most significant challenges retailers face in growing their market is to be able to adapt to a new region and customer, but maintain their brand identity and reputation, said Sarah O'Rorke, senior creative director of Fitch, a London-based brand consulting firm.

"[A retailer] must decide whether it will simply change its language, or alter its behavior, message, product and service." Of the world's Top 10 retailers, nine of them have taken the leap into new countries, and "retained their strength while adapting to a new market," she said.

For example, NikeTown stores are consistent in their format as large, interactive retail environments, but where the emphasis is on single-person athletics in the United States—like running—its message changes to address Europe's team-sport mentality, and includes sounds of cheering crowds and large football (soccer) or rugby displays.

And as retailers grow in terms of number of stores and countries in which they operate, must they also grow in store size? A panel of retailers, which operates both large and small shops, agreed that bigger is not necessarily better, but that there is an "optimum size," determined by store concept, product assortment and value offered.

While big retail formats may currently be "fashionable," smaller tenants often offer a shopping center a chance for originality in style and product offerings, said Thierry Lacaze, director of mall management company, Société des Centres Commerciaux, Paris.

"Small or big, doesn't matter—owners want the best of new and innovative retailers," Lacaze said.

Global marketplace
Shopping center developers and retailers looking for the best in each other's industry drove thousands of people to MAPIC's exhibition following the conference.

More than 620 companies exhibited at the show—now in its sixth year—including developers, leasing agents, retailers and products and service providers. The international crowd of attendees represented 48 different countries—mainly European—but also included visitors from the United States, Asia and the Middle East, according to Paul Hayes, vice president of sales at Reed Midem Organization, New York City, which managed the exhibition.

Shary Thur, vice president, regional director of leasing for CNM Associates, McLean Va., attended the conference and exhibition in order to pick up on new European trends and concepts, and to meet with new retailers looking to make the jump to the U.S. retail market. She was seeking "really unique retailers—fresh faces," for her company's upcoming mixed-use entertainment center, Sportivo, to be built in Charleston, S.C., in approximately two years. It is hoped that U.S. retail success stories of H&M, Sephora and Zara will "pique the interest" of other European chains, she said.

International project developers seeking retailers also were on hand, such as Heron International, a London-based firm scheduled to roll out four "entertainment lifestyle" centers in Stockholm, Sweden; Barcelona, Spain; Lille, France; and Valencia, Spain, next year. The company is seeking big-box tenants, entertainment components, "American-style" eateries and entertainment-based, impulse retailers, said marketing director Lisa Ronson.

Although each project is branded with the "Heron City" name, each will reflect the cultural traits of the market in which it operates, she said. "We realize that we must not ignore how different each market is, and we address that by using local managers and [leasing representatives] who are familiar with the culture and with what the customers want."

Networking in order to forge professional cross-border relationships was the main goal of many people at the exhibition.

Turkish shopping center developer Mehmet Bayraktar, chairman of Istanbul-based Bayraktar Group, was interested in meeting retail representatives and leasing professionals who could partner with him to bring Western retailers to Turkey. In addition, he is interested in investing in U.S. shopping centers, and was planning to speak with U.S. developers exhibiting at the show.

"This type of show is beneficial for everyone. It's a global marketplace now. The mosaic of cultures comes together and makes a great colorful retail picture," he said.

 

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