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Cannes, France—— After two years of on-and-off closures and restrictions, brick-and-mortar stores are back as the retail industry looks to reconnect with consumers.
This is one of the key conclusions drawn from MAPIC The Retail Real Estate Conference, returns with the full program for this year’s edition.
While pre-pandemic “normal” will not return anytime soon in the face of ongoing global economic and political challenges, retailers and mall developers alike are responding to new consumption patterns and The increasingly fierce competitive landscape embraces omni-channel integration.
Opening the conference with the theme ‘People, Planet and Profit’, attendees sought to come up with a positive vision for the future of retail with a focus on sustainability – not just buzzwords that encompass all things green, but keeping retail malls alive and well. Vitality is long-term viable.
The two floors of the Palais des Festivals were full again, and there was a lot of space for leisure and dining concepts. Organizers cited 5,000 participants from 75 countries, down from a high of 8,500 in 2019 but demonstrating the industry’s resilience. The tally included 1,600 exhibitors and brands were back, and while many were invited as guests or paid heavily discounted prices this year, new organizer RX France moved to secure attendance.
The Middle East and Asia showcased their growing retail ambitions with some of the biggest stands on site. Saudi Arabia’s Diriyah Square made its biggest announcement of the week: It will partner with Time Out Market to offer a 1,650-seat dining, events, exhibition and performance space, scheduled to open in 2025 in its posh village.
On the ground, participants are energized and optimistic about the future of retail centers, even as consumers change the way they shop. Developers are doubling down on expanding as entertainment destinations and accelerating the development of new event concepts that were popular before the pandemic, while finding new ways to grab the attention of busy consumers.
“Hundreds of shopping centers around the world are struggling with identity,” said Thomas Cartledge, chief executive of consultancy Benoy. “We’re exhausted. [food and beverage], we have run out of leisure. What’s next? Is it art or culture? “
At the troubled American Dream mall in East Rutherford, New Jersey, which already includes DreamWorks Water Park, Legoland and Nickelodeon Universe theme park, next steps in entertainment development include building a giant e-sports arena.
The new space will be more than 40,000 square feet over 2.5 floors and can host events for up to 2,000 spectators per month. The space will attract not only esports stars, but also musicians and professional athletes, as well as people who monetize their games through Twitch and other streaming services. The space will also include a social media lounge where influencers can live stream and create content.
Before that, American Dream teamed up with Mr. Beast, who was there in September, where thousands of fans lined up, and even camped out, just to catch a glimpse of the YouTube star. The events are all part of American Dream’s efforts to increase traffic to the project, which has struggled to attract shoppers in the wake of the pandemic and has defaulted on several debts.
During a €17.5 million expansion of its center in Seville, Spain, Via Outlets created a “Pink-Tok” room as a dedicated space for guests to shoot photos and film content for social media, adding art to the interior The installation is located in Lisbon, Portugal and its central property near Davos, Switzerland. “It’s a ‘wow factor’ that adds something unexpected for guests,” says CEO Otto Ambagtsheer. “It’s part of placemaking, creating something that people will remember.”
Other developers mentioned adding social services, including city libraries or medical centers. “It’s an amenity that a town center should have, a retail center that can be consolidated into a longer-term, more sustainable place,” Cartledge said. Generating foot traffic is actually worth it.”
“Shopping is becoming like the Roman Forum,” said Peter Wilhelm, chairman of the European Council of Shopping Places. “We’re going back to the origins of retail, when people went to markets not just to shop, but because it’s a place where you meet people.” Their critical role as community centers.
New amenities are key to boosting foot traffic post-pandemic, which has so far been elusive. A study by Procos-Eurelia, the European business federation, shows that despite a slight uptick since 2021, traffic across the continent is still around 10% lower than in 2019, with Germany, France and the Nordic countries particularly hard hit Seriously, a drop of more than 20%.
Despite the decline, some landlords say internal data pointing to an increase in personal spending is helping to calm the ongoing debate over online versus brick-and-mortar listings. While online sales are still higher than in 2019, they are contracting, according to Procos. Brands, especially luxury brands, have realized that the costs of selling online — including shipping, logistics and returns — are cutting into their margins.
“We’ve seen the tipping point,” said Patrick Del Cole, head of European retail at BNP Paribas Real Estate. “Our digital-only online channel is basically in decline. It’s not one versus the other — it doesn’t matter to the customer. In fact, physical stores are critical to supporting the digital channel.”
Rising interest rates and the end of the free flow of money have put pressure on online retailers to show gains, rather than just grab market share, he added.
Digitally native, direct-to-consumer brands, especially in the beauty space, are looking to open or experiment with brick-and-mortar stores. Online returns also benefit outlet malls, which are dealing with excess inventory and the spaces are expanding as inflation hits households and consumers become more cost-conscious.
“This year has been one of our highest volume years in terms of new leases, and we’ve been expanding brands that are doing very well,” with Armani, Gucci, Karl Lagerfeld and Nike. “We talk a lot about going big. We do a lot with luxury brands. They want to bring newer concepts into physical and digital retail channels.”
With the expansion of luxury and discount stores, many executives predict a wave of consolidation in mid-tier malls in the U.S. and Europe. The UK is particularly ripe for acquisitions, as property values have lost as much as 70 per cent as investors reprice assets.
Still, BNP Paribas’ Delcol said the market remains reluctant to commit money to mid-sized centres. “Many investors are waiting for more clarity and for rates to stabilize before eventually returning to the market,” he said.
With increasingly cost-conscious consumers and expectations that the world is headed toward a recession, shopping could plummet. This could drive consolidation in the mall market, with some big players snapping up smaller, older centers with an eye toward redevelopment.
“I think you’re going to see more Asian market activity coming into European markets and buying some of these malls because they think they can bring some Asian retailers into them and that might bring them back to life. We haven’t seen it in a while. ,” says Benoy’s Cartledge.
Europe’s energy crisis is at the center of the conversation as developers assess a combination of geopolitical headwinds and the economy, with outward optimism in the market overshadowing an undercurrent of caution. One landlord said their energy bills had jumped 600 per cent in the last year, causing it to put any capital investment and expansion plans on hold.
Via Outlets’ Ambagtsheer said they were developing solar projects in Spain, Portugal and Norway to create their own energy supply, which could then be delivered to tenants to keep costs down.
The need to control energy costs has led to a skyrocket of sustainable planning, and everyone from developers to brands under pressure is talking about the word.
“We definitely see sustainability as a key issue [in financing]said Giles Membly, general manager of Rioja Winery.[Investor funds] Come to you and say, ‘We’re not even going to look at anything unless it meets our specific criteria in terms of sustainability and ESG checks. ’” It was a balancing act to value engineer the upscale feel of the space in order to work with high-end and luxury brands.
“We’re seeing more and more regulations coming up in ESG standards and we need to implement them. But brands are also asking us for a lot of information and detailing what we’re doing to save energy and what materials we’re using,” Annette Lund, chief executive of Promenaden Management, said the company has partnered with Balenciaga and Valentino and will open a dior Doors this summer. “It kind of comes from both sides.”
“Brands won’t want to be associated with a development that doesn’t have a strong sustainability agenda. If your corporate strategy doesn’t deliver on goals that align with their corporate strategy, there’s a risk that certain brands won’t be able to occupy the space,” says Business Strategy Firm Pragma CEO Alex Avery said.
From a brand perspective, sustainability is key to engaging consumers as consumption patterns change. “The pandemic, the environmental crisis and now affordable prices have accelerated the need for a shift towards more responsible consumption. Clearly our customers have demand,” said Alexandra von der Grün, Vice President of Retail Expansion at adidas.
While a brand representative said “some tough conversations need to be had,” von der Grün remained positive. “We’ve reached out to all of our big landlords and I can tell you there are doors open everywhere. But I think at the moment both sides are building [standards] stage. That will accelerate next year, but there’s a lot of speed on both sides. “
Ingka Centres, which operates 49 centers mainly in Europe, China and India, launched a 700-square-foot circular fashion concept space in Sweden in June and hopes to expand to other locations soon.
“Clients say they want a more sustainable lifestyle, but sometimes they don’t know how to do it,” said Vasco Santos, global director of sales and leasing at Ingka Centres. “So they expect companies to inspire them, and it’s our responsibility to lead the way.”
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