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ICSC News

By Debra Hazel

Schmidt sees hurdles on way to European unity

BERLIN — The future of a unified Europe looks bright economically, though it will take decades for true political unity to take place, said former German Chancellor Helmut Schmidt, in a controversial speech at ICSC’s 25th Annual European Conference, held here in April.

The show, which drew more than 1,500 delegates and exhibitors from Europe and North America, consisted of panels on development, leasing and economics; the European Shopping Center and Jean-Louis Solal awards; and a leasing mall and trade fair. But the highlight and flash point of the meeting was the 82-year-old Schmidt’s no-holds-barred talk, which fascinated most attendees and angered others.

The differing cultures and economic statuses of the European nations now in the European Union (and those hoping to join it) will create bumps in the road to unification, said Schmidt, who served as the federal chancellor of the then-West Germany from 1974 to 1982. Since then, he has been a newspaper editor. What must be remembered, he stressed, is the unique situation of the European Union.

“There is no example in history in which sovereign nations have voluntarily decided to give up parts of their sovereignty to join a greater entity. Yet this is what European nations are doing,” said Schmidt, pointing out that comparing the European Union to the United States is less than accurate: Unlike the 13 original colonies, the European nations each were individual states with their own language, history and culture.

“Right now, we have 12 languages in the European Union, most of which go back at least one millennium. In the case of Italian and Greek, some are even older,” he said.

The current European Union consists of 15 nations totaling 375 million people. Poland, Hungary and the Czech Republic have applied for membership; should they join, the EU would total 430 million people, with a gross national product second only to that of the United States.

The value of the euro, the common currency adopted by the majority of the EU states, will eventually stabilize, Schmidt predicted, and Europe will enjoy the low inflation rate typical of the deutschemark. Foreign exchange rates also will stabilize, he said.

“It seems highly likely that we will see the harmonization of business cycles in Euroland. The banking system forbids the buying of loans from the governments, so the loans will have to be offered in the markets. Governments in extreme debt, of course, would have to offer higher interest rates,’’ Schmidt said.

The idea of unification began in 1946, when Winston Churchill suggested that the French and Germans reconcile post-World War II differences to contain Soviet expansionism and rebuild Germany. While the communist threat has gone, the economic advantage of continental integration is still valid, Schmidt said. But relatively small states will not be able to compete in a world with global information and financing.

“The principle of joint self-determination will soon acquire enormous weight,’’ he said. European nations will be compelled to join the EU in order to determine their own future. Yet dangers exist in the new century: The world’s population continues to explode, nearly quadrupling to 6 billion in the 20th century alone. By 2050, Schmidt said, the world population will total 9 billion, with India and China each having a population exceeding the worldwide count in 1900. Civil wars will result in mass migrations of refugees, many fleeing to Europe both legally and illegally. Climate changes due to global warming also pose a threat and will result in population shifts.

“While most of the current EU nations are members of NATO, future members likely will not be. In addition, the EU has no joint military force. As a result, the United States will lead NATO, and should be expected to use its position to its own advantage rather than to serve European interests. Therefore, diplomatic strife between the United States and Europe will happen more often,” Schmidt predicted. The United States, China and Russia will remain major powers both economically and militarily, with Japan a financial force. The European Union, too, he said, will become such a force over the next 20 years if France and Germany continue to cooperate.

The European Union will grow, though the entrance of the remaining 12 would-be member nations will take longer than some believe, Schmidt said. Poland, Hungary and the Czech Republic will likely be admitted sometime this decade, while others would take longer. Despite pressure from the United States, Turkey may not be admitted for a very long time for political and geographic reasons, according to Schmidt. “This would allow the free movement of the Kurds and up to 100 million Muslims. And the EU has no interest in having common borders with Syria, Iran and Iraq,” he said.

Not surprisingly, delegates from Turkey objected to those comments.

“Mr. Schmidt’s bigoted, one-sided and totally double-standard comments … are not in cohesion with the universal principles of contemporary globalization and international brotherhood,” said Avi Alkas, general manager of Istanbul-based Alkas Danismanlik, in a post-conference letter addressed to the conference leadership and copied to Shopping Centers Today. Turkey, a NATO member since the organization’s inception in 1959, has always sided with European interests, and has been a strong friend of Germany, the letter added.

E-commerce slower to catch on in Europe

BERLIN — For retailers around the globe, crisis may only be a click or two away.

With several sessions devoted to e-commerce at the ICSC 25th Annual European Conference, held here this past spring, it became clear that the World Wide Web rapidly is becoming a worldwide headache for retailers and their landlords.

“A lot of changes are going on, and this is a particularly difficult subject. No one knows what’s going on,” said Robert Lie, director of research of ING Real Estate, Amsterdam, speaking at the “E-Commerce in Europe” session.

As in the United States, European sales figures can be unclear because Internet sales figures may or may not include services, tickets and other items not added into retail sales totals.

While the entire region lags behind the United States in terms of Web-based selling, different parts of the Continent are in different stages of e-commerce development.

“The United Kingdom substantially lags behind the United States in the number of people online. In the rest of Europe, there is a clear divide between north and south,” with northern Europeans much more likely to have Internet access, said Carol Wright, a partner at Property Market Analysis, London, at the e-commerce session.

Europe is a three-tiered market, with Sweden, Finland and Norway comprising the top level, with 30% Internet penetration. The United Kingdom, Germany and the Benelux nations are next, with 12% market penetration, according to Steve Potts, head of digital media for Fitch plc, Boston, in a keynote speech on “The Changing Consumer Environment.” Spain, Italy and France are third, with 6% each.

Interestingly, U.S. sites dominate European Internet usage, he said.

“The five top sites in Germany are Yahoo, Alta Vista, Netscape, Web.de and Lycos. Four of those five are U.S. companies,” Potts said.

The Net is still largely used for e-mail and research, not shopping. While British grocer Tesco has established an e-commerce site, sales still total only about £125 million, the equivalent of one superstore. J. Sainsbury and Somerfield also have e-commerce sites. “Online grocers will be restricted to big cities or affluent people. I don’t believe that in five years there will be a significant proportion of online sales for groceries,” Wright said.

Still, any expansion should be of concern in the relatively small U.K. market.

“Small percentages do matter. Only 2.5% of retail sales diverted to e-commerce would be equal to seven regional centers,” Wright said.

The percentages are even smaller in Germany, where only 3 billion deutschemarks of a total DM720 billion retail market are spent online, she added. Not surprisingly, books, computers and software are the most important purchases. The future is less than clear: Experts’ predictions on e-commerce’s share of the German retail market by 2010 range from 2% to 10%.

Regardless of the degree of penetration now, all speakers noted that Europeans will increase their usage of the Internet, and that retailers and developers will have to learn how to compete with their Web-based brethren, as U.S. merchants are doing.

“U.S. data show us what to expect in Europe very soon. Some 50% of Americans soon will have Internet access, and total e-commerce revenue totaled $105.7 billion in 1999. It will total $1,442.8 billion by 2003. But most revenues are not consumer, they are business-to-business,” Lie observed.

The vast majority of e-commerce dollars are cannibalizing sales from elsewhere, he said. Only 6% of online dollars in the United States are added sales. Airline tickets are the major item being bought, followed by books and music. But apparel should take more than a 20% share of online sales by 2004, he said.

The segments most affected, according to Andrea Back-Ihrig, Münchener Institut, Bulwein & Partner, Berlin, will be bookstores and other commodities.

As in the United States, industry experts agree that European shopping centers will have to add experience to retail to compete.

Bluewater, Vasco da Gama share top European Award

Centro Vasco da Gama in Lisbon, Portugal, won in the Large Centres category.

BERLIN — For the first time in memory, two centres shared top honors at the European Shopping Centre Awards, presented in April at the 25th annual ICSC European Conference here.

Bluewater in Kent, England, and Centro Vasco da Gama, Lisbon, Portugal, shared the top prize in the Large Centres category. The 150,000-square-meter Bluewater was developed by Lend Lease Corp., Sydney, Australia; the 40,000-square-meter Vasco da Gama is a joint venture of Sonae Imobiliaria, Lisbon, and Netherlands-based ING Corp. A commendation was awarded to West End City Center, Budapest, Hungary, developed by TriGranit Corp.

Armazéns do Chiado, Lisbon, Portugal, was the winner in the Small Centre category. The 10,300-square-meter project was developed by Multi Development Corp. Commendations were given to: Kämp Galleria, Helsinki, Finland (Aleksia plc) and Plaza de Armas, Seville, Spain (Grupo RioFisa).

Bluewater in Kent, England, shared the prize for Large Centres.

Top honors in the Refurbished Centre category were awarded to Churchill Square, Brighton, England (Standard Life Investments, London). Donau Einkaufs Zentrum, Regensburg, Germany, redeveloped by KG fur Vermögensverwaltung and Ute Vielberth Interior Design, was given a commendation.

The European Shopping Centre Awards are designed to honor the most innovative retail projects in Europe in three categories: large, small and refurbished shopping centres. A seven-person jury selected from projects opened or reopened between June 1, 1998 and Nov. 30, 1999.

More than 1,500 industry professionals attended the conference, which combined presentations and panel discussions of current issues and trends; tours of nearby shopping centres; and a Leasing Mall and Trade Fair that were twice as big as last year’s conference in Madrid.

Ward takes over as ICSC’s 41st chairman

Robert L. Ward

LAS VEGAS — The ICSC Board of Trustees elected Robert L. Ward, president and CEO of Phoenix-based Westcor Partners, as chairman for the 2000-01 term. Ward, 59, who joined Westcor in 1974, becomes ICSC’s 41st chairman since the organization was founded in 1957. He was elected during the Spring Convention here.

He succeeds William H. McCabe Jr. of New England Development Co., Newton, Mass.

In other action at the board’s annual meeting at the Las Vegas Hilton, the following members were elected to initial three-year terms as trustees: John Bucksbaum, General Growth; Paul Carter, Wal-Mart; David Contis, The Macerich Co.; Ron Douglass, Sears Roebuck and Co; Bryan Fields, The Home Depot; Kathleen Nelson, Teachers Insurance & Annuity (she returns to the board after having served previously); and Robert Welanetz, SCSM, Jones Lang LaSalle.

Re-elected to three-year terms were the following trustees: A. Larry Chapman; Stanley L. Eichelbaum, SCMD; Christopher A. Fox; Julian Markham; James E. Maurin; Richard T. O’Connell Jr.; Thomas Purcell; and Donald P. Wright.

The Executive Committee for the new term will consist of: Ward; Christopher Fox, vice president for committees; Christopher Niehaus, treasurer; Gary Rappaport, SCSM, SCMD, CLS, vice president for the Eastern Division; Norris Eber, SCSM, CLS, vice president for the Central Division; Purcell, vice president for the Western Division; Maurin, vice president for the Southern Division; Seymore Obront, vice president for Canada; and two chairman’s appointees, Nelson and Michael Lowenkron.

Also serving on the Executive Committee are Leonard Farber, ICSC’s first chairman and Trustee for Life; and the five immediate past chairmen: McCabe, Richard Sokolov, Drew Alexander, Charles Lebovitz and J. Lorne Braithwaite.