Future belongs to innovative landlords, retailers, report says

“Today, many business journals are obsessed with the so-called ‘retail apocalypse,’ ‘the death of the mall,’ or ‘the death of retail,’ ” notes the report, titled The Future of Shopping Centers. “Ironically, retailing is standing on the edge of a renaissance, substantially different from the era that preceded it, but with an even greater possibility for success.”

Shopping centers in the future should be thought of as “consumer engagement spaces [CES],” the report says, offering not just stores, but entertainment, services, pop-up shops and showrooms for merchandise and new concepts.

To be successful, retailers and landlords will need to master two sets of technology: that which consumers employ to shop, communicate and “order their lives” — think WeChat and Amazon’s Alexa — and technology used by businesses to identify and track shoppers’ purchases, tastes and behaviors in order to effectively market and sell to them. The latter will involve “big-data collection, algorithms, AI programs, and perhaps even quantum computing,” the report says.

Some of the changes predicted in the report are under way. Physical retailers are offering multiple channels for shopping, enabling shoppers to buy online for pickup in stores, for instance, or, conversely, to order in stores and have products shipped home.

Shopping centers themselves will change as they cater to specific demographics, needs and tastes. “Destination centers” that feature large anchors and attractions such as theme parks will continue to play an important role for shoppers seeking experiences. “Turning travel time and distance into an advantage, destination centers will offer visitors total weekend experiences, including bookings at surrounding hotels, in-center or remote entertainment, and expanded food-service offerings,” the report says.

“Values centers” will be smaller and built around a theme or idea. These could offer merchandise, food and services linked to a particular ethnic group or interest.

The report also envisages “retaildential” space — mixed-use developments where the housing and retail cater to particular age groups. Another category — “innovation centers” — would serve as retail laboratories, with tenants sharing data on shoppers, and landlords employing “center anthropologists, retail cultural psychologists and mall ethnographers to constantly observe, record and analyze shoppers as they move from space to space.”

The industry will see much change, but it will be change for the good, the report says. “The future of retail real estate is as robust as the industry’s imagination,” it argues. “Innovative retailers, center operators and technologists are already redefining the ‘art of the possible’ on a daily basis across the world. … Tomorrow’s success will belong to those operators and tenants willing to break from yesterday’s patterns and practices and fully embrace a consumer-driven future.”