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EUROPE ADDS FOOD COURTS TO LEASING MENU

By Barbara Hogan Galvin

This Costa Cuore D’Italia coffee shop in London is a prime example of the type of food retailers now locating in European shopping centers.

As Europe’s retail developers and leasing professionals work to satisfy customers’ increasing appetite for leisure attractions and amenities, they are finding that food tenants are a vital ingredient in a mall’s tenant mix.

Unlike in the United States, where vast food courts have been a staple in most centers for decades, in-mall restaurants, cafes and fast-food outlets — collectively referred to as consumer catering — have only now become a standard offering in retail environments across Europe. Changing customer lifestyles, extended shopping hours and a strong trend toward entertainment-based anchor tenants have all made customers hungry for food at the mall, experts say.

England’s suburban malls have had food retailers on the leasing menu for about eight years now, and the country’s urban centers are rolling out the concept, albeit slowly. Plus, habits are slowly changing in Western European countries such as Italy As Europe’s retail developers and leasing professionals work to satisfy customers’ increasing appetite for leisure attractions and amenities, they are finding that food tenants are a vital ingredient in a mall’s tenant mix.

Unlike in the United States, where vast food courts have been a staple in most centers for decades, in-mall restaurants, cafes and fast-food outlets — collectively referred to as consumer catering — have only now become a standard offering in retail environments across Europe. Changing customer lifestyles, extended shopping hours and a strong trend toward entertainment-based anchor tenants have all made customers hungry for food at the mall, experts say.

England’s suburban malls have had food retailers on the leasing menu for about eight years now, and the country’s urban centers are rolling out the concept, albeit slowly. Plus, habits are slowly changing in Western European countries such as Italy and France, where cultural trends typically did not support the combination of shopping and eating.

What’s more, as Europe’s shopping center market becomes more competitive, developers and owners now see a mall’s food offerings as a way to spice up a center and set it apart from the pack, said Yvonne Court, partner at London-based commercial property firm Healey & Baker.

"It’s typically been a neglected area in many respects, but now [the industry] is recognizing that catering can play a very important part in keeping people at the center longer, and hopefully spending more money. And from the customer’s point of view, it’s now almost an expected part of the offer."

Longer retail trading hours in countries such as England and Sweden — especially in suburban shopping centers — are influencing the growth of in-mall consumer catering, as are cultural changes — such as more working women who have less time to cook — taking root in places like Italy and Portugal, she said.

In the United Kingdom, consumer catering has matured to the point where it is now a part of a centers’ initial leasing and design plans, according to Sheila Sullivan, leasing director for Hammerson UK Properties, London, which has developed some of England’s largest regional and urban centers.

"In the last two to three years, catering has become much more important, and it’s discussed early on in the development process. If you can get the catering environment right, it makes the shopping experience much more exciting," Sullivan said.

As Hammerson begins the leasing and design plans for a new center, a team typically scouts out the consumer catering offerings within its city or town to determine any trends or spot opportunities to fill a void, Sullivan said. Then, they look to attract caterers that will complement the retail mix within the mall and "raise the center’s profile." Hammerson’s newest mall, West Quay, which opened last September in Southampton, England, targets middle-market customers with its offering of five fast-food kiosks, such as McDonald’s and Pizza Hut, and eight additional cafes and restaurants.

Food offerings in urban European malls are typically more limited, and usually include coffee shops, juice bars or small bakeries where customers can get a quick snack; and takeout and sandwich vendors that attract downtown office workers. For the most part, food retailers are not emphasized at these malls since often there are many choices for eating in cities, said Gontran Thüring, corporate leasing director for Paris-based mall developer and owner Ségécé. Shoppers at these downtown retail centers typically do not make the trip to the mall a "destination," so they are not apt to stay and eat; and even if they are hungry, they are likely to eat at a local cafe or restaurant instead of at the mall, he added. "Especially in France, typically a shopper will shop at the mall, then eat elsewhere. There’s not a lot of combination." ThŸring will be moderating a panel on consumer catering at the 26th Annual ICSC European Conference and Exhibition, later this month in Turin, Italy.

A typical food lineup at a Ségécé urban center would include a locally run bar, a bakery cafe such as French operators Paul and Brioche D’Oree, and possibly a HŠagen-Dazs or Ben & Jerry’s ice cream outlet, he said.

Even within centers that do not offer a gluttony of gastronomical choices, the selection of vendors is now carefully tailored to the customer base, and the quality of the food retailers is being emphasized, Court said. In addition, "developers are looking to provide a range of caterers in recognition of the fact that shoppers have different catering needs. A mother wants food that’s fast, of good quality and a good value. But a couple out shopping for a day may want a nice sit-down restaurant and enjoy a more leisurely experience."

It is this growing emphasis on leisure that has significantly changed the face of consumer catering across Europe and made it such a vital part of the leasing pie, experts said.

"Food acts as the key component, the link, between shopping and leisure," Court said. "Our research shows that customers will combine shopping and eating out, and they’ll combine leisure activities — like going to the cinema or a health club — and eating out, but they typically don’t combine shopping and leisure. So at a center that has retail, leisure and food, food acts like the component that holds the rest together — like the jam in the middle."

Last fall, Healey & Baker published "Where People Play," a study of the leisure habits of more than 9,000 Europeans across 12 countries. The survey revealed that European consumers are moving away from "commodity and needs-satisfying" experiences to that of "concept and leisure-driven" activities, including entertainment, shopping and eating out.

According to the study, about 36% of those polled combine shopping and eating out, with consumers from Portugal, Sweden, Britain, Germany and France, most apt to do so. Throughout Europe, the age group most likely to combine these activities are 15- to 34-year-olds; those aged 55 and older are least likely to make a shopping trip an eating one as well, the report stated.

"The emergence of entertainment complexes with restaurants is challenging the dining, shopping and entertainment experience and coming together as a total experience," the study said.

Thüring agrees. As leisure anchors such as multiplex cinemas and ice-skating rinks are being added to hypermarket-based big-box centers throughout France, he sees food playing a vital role in attracting customers to the center for a full night out. Just as importantly, the entertainment offerings boost customer traffic at a center’s restaurant or bar.

But he stressed that the addition of food tenants, no matter how popular, will not be successful at a center which maintains traditional early closing hours, he said. "A big restaurant can work well at night combined with other leisure activities, but there is no way for a group of caterers to be economically successful if they cannot work at night [in France]." ThŸring knows from experience. About 15 years ago, Ségécé experimented with a food court at an urban center in Bordeaux. The experiment was "a big flop," he said. Several factors contributed to the failure, but primarily, French customers were not comfortable with the concept of a mass of fast-food vendors. Also, unlike shoppers in the States who tend to eat at all times of a day, the French typically eat only from noon until 2 p.m. and from 7 p.m. through 9 p.m. The food-court vendors were completely overwhelmed by the rush at these times, and underwhelmed at the lack of traffic during off-hours. What’s more, at that time, there was not a diverse enough selection of food vendors in France to offer a good variety — the company found each vendor offering similar selections, ThŸring said.

These days, leasing professionals have a variety of food tenants from which to choose, and can swiftly tailor a selection to the malls’ market.

"There are a lot of really interesting operators available now which offer a lot of catering options," Sullivan said. And while she agrees that the food offerings alone would probably not lure customers to a mall, their attitudes about the "shopping experience" are changing, and food is part of the response to these new expectations. The proof is in the profit, she said. Hammerson centers that serve up a healthy portion of food outlets post longer customer visits plus higher sales, and, subsequently, generate higher overall rent than those that leave customers hungry for more food choices, she said.

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