Omni-channel retail is changing how shopping centers operate, panel says
Publish Date: March 14, 2014
Uncertainty about how rising Internet sales will affect percentage rent, store footprints, teen shoppers and other retail fundamentals dominated SCT Live’s “Facing the Omni-channel Challenge” event, in Atlanta. Nonetheless, panelists were unanimous on at least one point—the need to keep shoppers engaged by ramping up the customer experience.
The panel included Daphne Carmeli, founder and CEO of same-day delivery tech startup Deliv; Lewis J. Kornberg, executive VP and national practice lead for Jones Lang LaSalle; Jane Lisy, senior vice president of marketing for Forest City Enterprises; David Lobaugh, president of Marietta, Ga.-based consultancy August Partners; and Matthew J. McClintock, VP and senior retail analyst for Barclays Equity Research, New York.
The discussion began with a clear-eyed look at the jitters stirred by strong Internet sales over the holidays. “Online buying exceeded all projections, and it is a growing concern for us,” Lisy said. “We need to figure out how shopping centers can redefine their role.” Lobaugh then recited statistics he described as a wakeup call. “We need to face up to the real numbers,” he said. “In 2014, consumers are going to spend about $65 billion on apparel, shoes and accessories online. That’s a lot of money. It could impact a lot of square footage of retail.” Online sales now account for an eye-popping proportion of the total at major chains such as Best Buy and Staples, panelists noted. “Urban Outfitters has announced that in five years 50 percent of its sales will be online,” McClintock said. Moreover, studies show teenage shoppers, once synonymous with the mall, are spending far less time there, Lisy said.
And yet bemoaning these trends will get the industry nowhere, Kornberg noted. “You can either embrace what is happening or you can bury your head in the sand and hope it goes away,” he said. He and the other panelists quizzed Carmeli about her efforts to help Simon, GGP, Macerich and Westfield offer their customers same-day delivery through Deliv, which uses a small army of cellphone-wielding, freelance drivers to get the goods to shoppers, pronto. “If you take a look at the top 100 omni-channel retailers, they probably have a footprint of 100,000 stores,” Carmeli said. “What if you could take those stores and have them become customer-facing distribution points?”
Services such as Deliv hint at the kinds of creative solutions that could help malls transform themselves into wired, service-oriented fulfillment centers, Lobaugh noted. But as the consultant queried Carmeli about Deliv’s business model, he hit on a critical issue for the panel: When online shoppers buy something from a mall retailer, will the landlord get the percentage rent? “That is the $64,000 question,” Lisy said. “All of us in the industry, we are asking every retailer we work with to give us that answer. Everyone gives you a different answer.”
But five years down the road, Lisy, for one, envisions a new class of shopping centers designed specifically for easy pickup and other satisfying customer experiences. Kornberg, too, is optimistic about the positive role of technology. “That’s the wonderful thing about the world in which we live today,” he said. “It is changing so rapidly and retail really is on the pointy end of that spear.”