Mapic review: stores finding their future place
Although bricks and mortar stores remain very much under pressure they are far from dead as the industry works hard to reimagine the physical space and move it on from being purely about flogging goods to over-burdened shoppers.
Speaking at the retail property industry event MAPIC in Cannes, Dario Morin, real estate development manager at Benetton, suggested: “I can find the same goods in a lot of stores so there is a closing down of stores due to the pressure of there being too many similar shops. There is also a change in purchase behaviour from product, price and promotion to emotion, experience, ecological and e-commerce.”
Appraising the portfolio
To this end Morin says Benetton is undertaking a sustainability appraisal and upgrading of its store portfolio. This includes a focus on smaller outlets. “In Germany we have a 400 sq m family store but now we are after only 150 sq m for our specialised stores and pop-ups as well as opening partnerships with the likes of Selfridges. It’s not just about our standalone stores anymore,” he explains.
There is a similar level of change taking place within Levi’s where the company is making a major shift away from selling via wholesale to instead focusing on company-operated stores, which unlike at Benetton, is leading to the opening of more stores as Levi’s looks to drive up direct-to-customer (DTC) sales.
Stefan Otte, VP of global partner retail & real estate at Levi’s, says: “Eight years ago 50% of our sales were from wholesale but now it is 30%. We know retail is challenged but we see opportunities. The number of retailers will shrink but the market will grow,” he suggests.
Direct-to-consumer focus
The Levi’s strategy has involved opening a store a week for the past five years, which Otte calls “curated expansion”. He adds: “It’s easy to open a store but a sustainable, profitable store is difficult. We’re having to open and close stores. All brands have to do this. They have to constantly be on top of this.”
The company is also testing the opportunities for rental growth through a collaboration with Rent The Runway in the US as well as opening Tailor Shops that enable shoppers to customise the products and have items repaired, which Otte says are all important components towards sustainability and bringing an experience to the stores.
The latter is certainly of paramount importance to George Gottl, founder of design business Futurebrand UXUS, who says he is now increasingly approached with “requests for [store] designs to be experiences”. With clients like L’Occitane en Provence he says he has individualised the experience whereby hand bars (for massages and moisturising) and a macaron counter have been introduced.
Basing the experience on services
“In its Regent Street store in London a new food and beverage concept is going in. It’s very smart of them and provides constant entertainment. We’re designing with multi-functional use in mind,” says Gottl, who adds that much of what is being introducing today into stores is around services rather than being based around directly driving sales of products.
What such changes mean is that the old metrics such as sales-per-square foot become less meaningful. This is proving a major issue for retail landlords and managers of shopping centres and other retail space who have based rentals on such numbers.
Reappraising rentals
Martin Summerscale, director of advisory & transaction services at CBRE, recognises the problem and has been exploring potential solutions. Through the company’s annual Proptech Challenge initiative it has been working with Spain-based Urban Data Eye that uses existing CCTV cameras in shopping centres to analyse customer flows.
By using this data CBRE is investigating how it can potentially calculate rentals for retail tenants on the basis of how many people have passed within a specified distance of their stores.
“The landlord could say we can deliver a certain amount of people to the front of your store and the rental can then be based on this number. It’s the same as Facebook delivering impressions and Google delivering clicks online. We’re looking into this and in three to five years we could see a time when retailers would be willing to work on this basis,” he explains.
Words by Glynn Davis
Photo by Georgia Hawkins
