Physical retail must evolve in order to retain relevance and maintain steady footfall.
That’s according to Denz Ibrahim, head of retail and futuring for global asset manager Legal & General Investment Management, or LGIM. Based in London, Ibrahim is working to transform shopping centers and high streets in the city and suburbs to meet the changing needs of today’s consumer. Malls and corridors known for retail must diversify their offerings to boost engagement, not unlike the wealth of content found on online platforms, he said.
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Property owners have a bigger role to play than simply leasing out space and collecting rent, Ibrahim said. Instead, they must take a holistic view of their properties and use consumer data to curate tenants that serve consumers in different ways. Developing an antidote to shrinking footfall is about more than “creating cookie-cutter environments” populated by the same familiar brands, or even large anchor department stores. Instead, LGIM aims to “reinvent how we do retail — both spatially through our assets, but also culturally in business,” Ibrahim said.
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Brick-and-mortar retail faces an uphill battle. Global retail property group Westfield recently announced plans to shutter its San Francisco Centre mall in the city’s popular Union Square neighborhood due to declining foot traffic, the latest commerce player to leave the once-bustling destination.
As stories like this become more common, the role of the landlord must shift “from librarian to editor,” meaning that property owners are responsible for the “content,” or businesses, that they put in front of their consumer base, Ibrahim said. That means going beyond stores where transactions take place. “It has to be more than that,” he said, pointing to experiential retail, inviting environments, and mixed-use spaces for work, living and wellness. “How do you begin to reposition the town center? Is it putting [residences] on top, building a school next door, developing a health village nearby?”
For LGIM, it’s all of the above. It recently piloted two shopping center ventures in British seaside towns, repurposing old retail spaces to include a breadth of products and services. “We took those centers from 80 percent retail with a bit of vacancy to 50 percent retail and 50 percent coworking, health care, food and beverage and leisure,” he said. A chiropractor, a yoga studio, a hearing aid developer, an adult education provider and a counseling service are among the new tenants. Alongside retail shops selling fashion and other products, they’ve given consumers more reasons to visit the center.
Another LGIM development, launched on a vacant office block this spring, has been populated by 70 percent small-and-medium-sized businesses, as well as a beauty school and a health clinic. “You’ve got all this cool stuff happening on the ground floor, and this service-driven offering on the top floor,” he said. LGIM calculated that 57 percent of the health clinic patients have also visited the retail stores. “So you can really begin to see the domino effect of how you diversify [real estate] assets,” he said.
The company has developed a back-end data dashboard to monitor real estate productivity and consumer behavior in real time. In planning the curation for new shopping centers, Ibrahim looks at local demographics, social media activity and even travel sites to see what a town or neighborhood is known for, and what it’s lacking. He believes landlords or property owners should work with businesses, especially SMBs and start-ups, on flexible leasing agreements in order to bring the right goods and services to the locations where they could see success.
“It’s basically throwing in the bin the old retail zoning — everyone used to just zone all fashion together, all accessories together and all technology together,” he said. “That’s not how people operate, customers don’t live and breathe like that.” There’s no one-size-fits-all template for a retail center, shopping mall or high street — the mix of business should reflect an area’s consumer base, and its wants and needs. “It’s really important that components within the environment are ever-evolving, because that refreshes the experience,” he added.