Los Angeles — The old formula for shopping center success no longer applies today, thanks to the advent of mobile technology, ecommerce competition and changing consumer tastes.
This was the sentiment put forth by speakers and panelists at Shopping Center Business’s Entertainment Experience Evolution conference, held Feb. 24 and 25 at Regal Cinema House and the J.W. Marriott at L.A. Live in Los Angeles.
Jerry France, chairman and CEO of France Media, set the stage during his opening remarks where he noted how far the retail industry has come — and how much potential is still in store.
“We live and work in a very interesting country and are in a very exciting industry,” he said. “Having been in this industry for 50 years, I have seen a lot of change. Today we see a change in retail due to ecommerce versus bricks and mortar. We’re now seeing some ecommerce companies becoming bricks and mortar, so it goes both ways.”
“I would not write retail off,” France continued. “I see tremendous growth ahead of us, with lots of new projects.”
Indeed, there are many “new” projects on the horizon, though the meaning of this term has changed right alongside the retail industry. There are new, ground-up, never-before-seen projects like the 3 million-square-foot American Dream entertainment and retail complex ready to steal the spotlight in New Jersey. Then there are the existing shopping centers that are being reimagined, re-tenanted and redesigned to give the public what it wants: a novel, authentic, localized experience.
“The way consumers engage with food, retail and entertainment is evolving,” said Matt Billerbeck, senior vice president of CallisonRTKL and moderator of the “Creating the Retail Environment of the Future” panel. “Consumers demand their experiences be new, integrated and dynamic. The consumer of the next 20 years is actively shaping the retail environment.”
Billerbeck argued that today’s shopping center design is no longer based on science and formulas, but rather on art and the idea that a center must make you feel something. The old model, he asserted, was built on acquiring products. Developers were incentivized to squeeze as many retailers as possible into their four walls to provide the greatest array of products for sale.
Today’s model — and the model that is likely to take us into the foreseeable future — is based on acquiring experiences, telling stories or hitting a chord.
“Consumers are demanding a different typology,” said Billerbeck. “They want community-based retail, experience-based destinations, brands that push them to be better models of themselves. In this new model, consumers have all the power. They desire experience with purpose.”
This new shopping center experience tends to have four components, Billerbeck said. They include the obvious food and retail offerings that compose any shopping center, in addition to an emphasis on digital and design elements.
Craving an Experience
The food offerings of today are vastly different than the run-of-the-mill, dimly lit food courts of yesteryear. Communal spaces, healthy, locally sourced ingredients and a vested interest in the person making the food are now top priorities for today’s shopping center visitor.
Billerbeck pointed to three food concepts that have it right for different reasons. Eataly in New York has become a tourist attraction all its own because this food hall gives diners the ability to customize their Italian food experience. Shed in Healdsburg, Calif., offers farm-to-table fare in an intimate setting that invites diners into the shared experience of the wine country community surrounding them. Trinity Groves in Dallas provides up-and-coming chefs with small, low-cost spaces where they can make a name for themselves.
“The sense is you’re participating in the beginning of a chef’s career,” Billerbeck said. “The successful ones become part of your memory. You have a part in their success. Consumers co-create the success of chefs at Trinity Grove.”
Panelist Brian Jones, senior development advisor at ForestCity, has seen the food revolution take off firsthand at Victoria Gardens, a 147-acre, open-air, mixed-use shopping center in Rancho Cucamonga, Calif., that opened in 2004.
“Victoria Gardens is now 20 percent food,” he said. “It does more than $100 million in sales for food. We started with four restaurants. Today, we’re at 20. Food is huge.”
Trying On For Size
Though trends in Italian food may be different than those in swimwear, the overarching themes of customization, local sourcing and social consciousness resonate throughout both the food and retail worlds of the future.
Billerbeck once again pointed to three brands that are doing it well. Nike may be a globally recognized brand, but it’s localizing and customizing the customer experience through Salvation, a 4,000-square-foot store in Malibu, Calif., that lets shoppers craft footwear, apparel and accessories that are unique to them. Eyewear retailer Warby Parker not only offers designer glasses, but provides an opportunity for social good as the company donates a pair of glasses to a nonprofit partner each time a pair is purchased. Bikini Berlin provides temporary, small modules of flexible space that give local German brands and entrepreneurs a platform for success.
“It’s a dynamic shopping environment,” Billerbeck said of the shop space that now occupies a 1950s, Cold War-era structure in West Berlin. “Every time you go there, you see something new and different. It both surprises the consumers and responds to their ever-changing needs.”
These shops and food outlets can offer consumers a wonderful experience, but consumers need to know the businesses exist. The change in shopping center formats has led to a disruption in retail marketing.
“The focus of the shopping center has expanded beyond actual currency to social currency,” said Billerbeck. “Today’s digital platforms and displays are extremely provocative. They’re the opposite of mass marketing. Rather, technology deepens and enriches the conversation retail can have with consumers.”
Though Billerbeck believes both Burberry and the Cosmopolitan hotel in Las Vegas had mastered the art of digitized marketing, he saw one standout above the rest — Rebecca Minkoff’s New York store. The retailer offers digital changing rooms, mirrored video displays and customized lighting, among other features.
“You can order drinks,” he said of the dressing rooms and their digital display offerings. “You can enter a large, communal dressing room with your girlfriends for events. It’s more like a salon than a typical changing room. It creates an information-rich environment for the consumer.”
It is the act of marrying products to consumers (and ultimately where they go for these products) that will be the future of retail, asserted panelist Derek Coss, senior vice president of design for Ivanhoe Cambridge. Many shopping centers have offered fun, compelling events in the past, such as food and wine festivals and fashion shows. What was missing, however, was how that product would literally connect with the consumer.
“We understand the integration of digital must be done at a fundamental level,” he said. “It must be integrated as digital architecture. We have the ability to capture information and actually connect those people with the products they’re seeing or experiencing on display.”
Mike Sheldon, CEO of North America for Deutsch, pointed to Target as one company seamless integrating technology. The company created a pop-up dorm room on the UCLA campus in Westwood, Calif., for four days that featured some of 2013’s biggest YouTube stars. Locals could enter the dorm, interact with the internet celebrities and purchase items for their own dorm rooms.
If the campaign ended there, it would only reach a small, local population. Instead, Target created a first-of-its kind, interactive digital experience that was broadcast live for four days on BullseyeUniversity.com. Viewers could interact with the YouTube stars and purchase all the items they saw in the dorm rooms, much like a fashion show viewer can now purchase the dress she sees on the runway or the wine she sampled at a festival.
“Target commands a premium over Walmart,” Sheldon explained. “Part of that is what they do to make you feel like the brand loves you. Target does these things not only because it’s great for retail and they can sell some stuff, but because it says something about their brand. Properties are all brands and brands all have personalities and body language. Target is being future-forward, innovative, inventive.”
Designing on a Dime
It’s difficult to put a price tag on experiences — both figuratively and literally, as shopping center owners are now figuring out.
“To fully integrate digital into a retail center, it has to become part of that space,” said Coss. “This means the experience has to be first and the money second. Digital is important, but you have to be subtle. The second digital becomes non-experiential and you’re trying to drive dollars with it, you’ve gone too far.”
Coss believes the onus was on shopping center owners to prevent technology — and the retailers utilizing it — from completely running the game. This is done by developing a closer relationship with tenants, opening the lines of communication and ensuring that the landlord understands the brand, marketing campaigns and story they’re trying to tell.
“I’m talking to a lot of retailers who are looking to add more digital to their storefront,” he said. “You have to be careful with that experience, because if everybody is screaming then nobody hears anything. You have to be judicious with digital. You certainly don’t want to get to a point where everything is just noise and we’ve really lost the impact of these digital ideas.”
So what, exactly, is a developer’s role when it is simply supplying the bones of a shopping center’s space and not creating these elaborate campaigns to woo customers? And how do developers incorporate their own programming and digitized marketing into centers in a way that neither detracts from tenants nor overstimulates consumers?
Panelist Bill Fritsch, CEO of Digital Kitchen, believes success could be achieved by creating a harmonious synergy within a given, shared space. This synergy must multiple stimuli and either be be useful or entertaining — or both, if the developer is lucky.
“Shopping center developers are creating a palette by which tenants can paint,” he said. “You don’t create a stupid, artificial experience for the sake of creating one.”
“Digital doesn’t always mean garish, with huge displays and huge money investments,” continued Fritsch. “It can be as simple as ‘wherever you are, you can find me.’ If it doesn’t make your life easier, if it’s not super useful to you, or if it doesn’t entertain the heck out of you, then don’t do it because there’s just too much useless clutter out there.”
Sheldon said the next iteration of shopping centers and the tenants that occupy them will be the ultimate example of commercial real estate evolution through technology.
“The question we should be asking is ‘what are you doing that’s never been done before?’ If we innovate, we live. If we don’t, we die. It’s as simple as that.”
— Nellie Day