The last decade has seen many key changes in retail trends and the mindset towards physical shopping. And although the share of e-commerce in retail sales has stabilised at just over 8%, shopping centres that used to be a dominant retail market format encountered competition from retail parks, which forced them to redefine their use.
The retail sector has endured a period of sustained pressure, firstly through the growth of e-commerce and the rise of omnichannel retailing, and then came government-mandated lockdowns through 2020 and 2021. Although the sector demonstrated great resilience in adapting to new conditions, it is simultaneously facing cyclical headwinds of high inflation, interest rates and service charges, reveals "Retail Asset Optimisation for Tomorrow", a report from global real estate services firm Cushman & Wakefield. Other significant challenges include the need to boost customer loyalty in an increasingly competitive environment and mounting ESG pressure. Against this backdrop, experts of Cushman & Wakefield highlight strategic approaches for building owners to managing their assets so that they remain relevant and on course for success as the economy inevitably rebounds.
The last decade has seen many key changes in retail trends and the mindset towards physical shopping. And although the share of e-commerce in retail sales has stabilised at just over 8%, shopping centres that used to be a dominant retail market format encountered competition from retail parks, which forced them to redefine their use.
Cushman & Wakefield notes that more than 10 years ago, in 2010, retail growth centred around the expansion of e-commerce as out-of-town shopping centres and discount chains were booming and pop-up stores emerged on the market as a brand new format. Meanwhile, top trends in 2024 are that retail is more than ‘shops’ - it involves creating community destinations, health and wellbeing zones. At the same time, consumers’ attachment to physical shopping is shifting retailers’ focus towards new solutions to deliver a positive shopping experience to attract customers.
"Analysis of the first quarter of this year on the retail market has confirmed the strength of retail parks which dominate new supply, indicating that it is experiencing an increasingly sustainable and geographically diversified growth. There is 400,000 sq m under construction, of which only 18% is in shopping centres. It is worth noting that the beginning of the year brought a long-awaited rebound in retail sales which rose 3% in January and 6.1% in February and March amid higher shopping centre footfall levels,” explains Ewa Derlatka-Chilewicz, Head of Research, Cushman & Wakefield.
Cushman & Wakefield’s report "Retail UX in Poland. Polish People Talk About Building Retail Experiences" which presents the findings of its consumer attitudes survey, has revealed significant differences in reasons for visiting individual retail formats. Shopping centres should offer more than just points of sale. A diverse and broad tenant-mix and an appropriate food and entertainment offering and choice of other services are key to positioning centres as community destinations.
"Social shopping is a growing trend that is seeing shopping centres turn into places to meet and mingle. As well as looking for things to buy, customers are also seeking experiences and opportunities to connect and build relations with others. Shopping centres may serve as platforms for local entrepreneurs, artists and communities by offering showroom and retail floor space. In addition, by holding events and workshops they promote the integration of local communities. The market is on a path to building authenticity, transformation towards sustainability and building stronger customer relations - shopping centres that will address these challenges will enjoy a competitive advantage,” says Paulina Bauer, Head of Retail Asset Services, Cushman & Wakefield.
Addressing sustainability risks and opportunities
Against a backdrop of mounting ESG regulatory pressure across Europe, including in Poland, shopping centres are challenged not only to achieve environmental performance standards and to manage resources effectively but also to generate social value.
"We advise our clients to make an informed choice of sustainability programmes and to effectively communicate them. Similarly to other commercial real estate, retail properties are also facing challenges brought by the recent adoption of the recast EPBD, which mandates improving the energy performance of buildings and carbon assessment throughout the lifecycle of a building,” explains Katarzyna Lipka, Head of Strategic Consulting & ESG Advisory, Cushman & Wakefield Poland.
"All optimisation policies should be backed up by careful planning and be data-driven. Before implementing any changes, we recommend carrying out an energy audit and other analyses to assess current energy consumption levels, to identify possible savings areas and to recommend the most efficient solutions,” adds Katarzyna Lipka.
Although the retail sector is associated with consumerism, it is increasingly expected to be socially and environmentally responsible. Accordingly, tenants are likely to be drawn to shopping centres investing in reducing carbon emissions and green practices.
Building customer loyalty
"In the era of omnichannel, especially as consumers have a myriad ways to shop, customer loyalty is an increasing challenge for shopping centres. Building an authentic narrative around an asset that resonates with customers and differentiates it from its competition is essential.
Placemaking should be a core part of shopping centre management. In addition to a financial aspect, building an appropriate marketing strategy and communication with customers is one of key priorities. Shopping centres that create positive retail and leisure experiences and offer relaxation, entertainment, education and interaction zones will gain repeat customers,” comments Sylwia Wiszowata-Łazarz, Head of Marketing, Asset Services, Cushman & Wakefield.
In the era of automation, the implementation of Smart Data tools assists managers in the collection of information that reveals behavioural insights, which then allows for the customisation of offerings, communications and marketing strategies.
"It is, of course, essential to offer a vast array and the right mix of services that will allow for creating a consistent and compelling ecosystem for customers. This requires cooperation with brands that will match the values and the image of a shopping centre and offer unique products and services, ultimately translating into visitor engagement,” adds Paulina Bauer.
The Złote Tarasy retail complex, for which asset services are provided by Cushman & Wakefield, is an example of a successful repositioning. With a proactive marketing strategy, the use of technologies and an enhanced customer experience, the shopping centre has adapted to the era of omnichannel, with 173 new lease agreements signed over the last five years, which confirms its appeal to tenants and customers.
"We started with refreshing a marketing strategy and identifying our target audience. We focused on engaging younger customers (18-34-year-olds), fashion-conscious professionals as well as both domestic and international tourists on account of the location in the city centre, near Warsaw Central Station. We implemented marketing automation tools which leveraged mobile tracking and sophisticated customer loyalty programme, together with a digitally-enabled tenant relationship management programme. As it turned out, a tenancy clustering strategy creating specific precincts to help customers navigate the shopping centre intuitively was also key,” says Sylwia Wiszowata-Łazarz.