IDENTIFYING HUMAN as a way to predict the future of retail How technology is reimagining the retail marketplace F&B is the Place To Be Elevate the ...
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JLL Polish Retail Magazine 2018 IDENTIFYING HUMAN as a way to predict the future of retail How technology is reimagining the retail marketplace F&B is the Place To Be Elevate the experience in shopping centres JLL’s Experience Walk The will show you the way
4 30
IDENTIFYING HUMAN NEEDS AS A WAY ENTERTAINMENT
TO PREDICT THE FUTURE OF RETAIL Elevate the Experience
Some say that retail is dying. Why? in Shopping Centres
10 33
I HAVE SEEN THE FUTURE JLL’S CUSTOMER
How technology is reimagining the EXPERIENCE WALK
retail marketplace
24 38
SHOP, EAT, REPEAT THE BLOGGER
F&B is the Place To Be WILL SHOW YOU THE WAY
CONTRIBUTORS:
Editor in Chief: Agnieszka Tarajko-Bąk
Content: Agnieszka Tarajko-Bąk, Joanna Tomczyk, Marta Czajkowska, Dagmara Filipiak, Virginie de-Baere, Jan Jakub Zombirt,
James Cook, Taylor Coyne
Designer: Piotr Łoś
Partners: Arnaud Burlin – Unibail-Rodamco, Chris Scurrah – Merlin Entertainments Group, Jakub Matuszewski – Wyjątkowy Prezent,
Patrycja Ogrodnik – MAM, Tamara Gonzalez Perea – Macademian Girl, Kasia Szymków – Jestem Kasia, Jaga Janik – Fashion50plus,
Michał Kędziora – Mr Vintage
How do we imagine the future of retail?
Is retail dying? Is it moving online? Or
is it reinventing into multifunctional
projects? So many questions and no
simple answer. In today’s fast changing
world we need to stay alert and ready
for each new trend in order to stay in
play. However, there is no one simple
solution for each and every one out
there in the retail universe. Today’s
consumers have been trained to expect
what they want, when and where they
want it. This newfound consumer
behavior and the increased appetite for
experience will continue to re-shape retail
destinations. From redefining the tenant
mix to implementing new technological
solutions, shopping centres and retailers
are becoming smarter to effectively cater
to consumer demand.
First and foremost we need to find
out what are the human needs. In this
paper we have identified the hierarchy
of human needs. Moreover, we have
collected and distilled the top 12
technological trends that will shape the
retail market in the coming 25 years.
Furthermore we have measured the
profound changes in gastronomy and
entertainment sectors. Lastly, we have
analysed customer experience walk in
shopping centres.
Also, we were curious how do Polish
fashion bloggers foresee the future of
retail. So, we asked them. As crème de la
crème on the last pages of this magazine
you will find out their opinions.
As technological advancements are sets them apart from digital channels:
being implemented, shopping centres experience. Shopping centres have long
need to ensure they don’t forget what been seamlessly intertwined with their
local communities. The balancing act
between maintaining that and catering
to an evolved consumer base will be
paramount in building out the shopping
centre of the future.
No doubt the retail industry is undergoing
a revolution. Innovations in retail and
technology are altering the customer
paradigm. Shopping centres and retailers
alike are exploring new ways to evolve
to meet demands that will significantly
change tomorrow’s shopping centres.
If you want to find out what shapes the
future of retail please read the magazine.
Anna Wysocka
Head of Retail Agency, JLL
3
Identifying human
as a way to predict
the future of retail
Some say that retail is dying. They say that
people will no longer shop in physical stores
since everything can be purchased online and
delivered straight to our doorsteps. They say that
the era of shopping centres is fading, giving way to
e-commerce. Is that so?
Well, no. Only about 5% of all Polish retail sales
are made online. The crowds we constantly see in
shopping centres seem as big as ever. And so is the
continuously growing number of new retail facilities
delivered to the market.
The retail market is rapidly evolving and dependent
on human needs. The big question is, what are
human needs?
4
5
MASLOW’S HIERARCHY OF NEEDS every grocery store. Retailers that meet Also, products and services that satisfy
those most basic needs face a more more advanced needs often require
Abraham Maslow is famous for his competitive market. On the other hand, higher levels of service, personalisation
hierarchy of needs. According to his goods intended to satisfy more advanced and customisation. These needs are
theory, basic human needs, such as food, needs are rarer and therefore more rarer and more complex, therefore the
water and sleep, must be satisfied in the difficult to obtain. value they have to the customer is higher.
first place in order to move on to higher Naturally, the higher the needs, the
necessities, such as safety, love and higher the value of goods and services
The higher the need that a product
health. that meet those needs, but the number of
meets, the bigger the profit
people requesting them is fewer.
margin is.
OK, but how does this correspond to
shopping behaviour? Every human
being needs food and water. Those In general, the profit margin goes in
are the most common goods sold in parallel with the hierarchy of needs.
Needs Types of retailers
that meet needs
Self- • Yoga, Tennis
actualization • Specialized book stores
(reaching • Educational centers
Se
one’s full • SPA
lf-f eeds
potential) • Plastic surgeries
ulf
n
Self-
ilm
Esteem • Premium fashion apparel
actualization (success, and accessories
en
respect) • Automotive
t
achieving one’s • Fitness clubs
full potential,
including creative • Fancy restaurants
activities • Perfumeries and cosmetics
• Electronic / sport equipment
Ps nee
Esteem needs
ych ds
Love and • Gift shops
Belonging • Casual dining, ice cream,
olo
prestige and feeling of accomplishment
(friendship, sweets
gic
love, family) • Toys
Belongingness and love needs
a
• Furniture
l
intimate relationships, friends • Cinema
Safety • Pharmacies, medical centers,
Safety needs (health, dentists, urgent care
Ba ds
security, • Natural foods
ne
security, safety
sic
stability)
e
Physiological needs Physiological • Grocers
(food, water, • Basic and discount apparel
food, water, warmth, rest sleep, warmth) • Quick service restaurants
6
WATER VS WATER
There are different kinds of goods as glass instead of plastic and foreign and accessories, cars, furniture,
there are different needs of human packaging and origin conveys status of houses, etc. On the market,
beings. Let’s take water as an example. exclusivity and meet the needs of esteem goods carrying little status (e.g.
Tap water meets our most basic need: and status. Higher demand for need own-label store brands) are sold
thirst. Bottled water, either plastic or fulfilment comes with higher cost. alongside nearly identical name-
glass, offers something more and is brand goods. Those who are able
marketed to meet both the basic need Almost every product is designed to will pay more for status.
(thirst) and also health, which is a higher meet a variety of needs on different
level in the hierarchy of needs. Moreover, level of the pyramid: fashion apparel
TAP WATER PLASTIC BOTTLED WATER GLASS BOTTLED WATER
Cost: 0.1 PLN / liter Cost: about 1 PLN / liter Cost: > 3.5 PLN / liter
Needs met: thirst Needs met: thirst, health Needs met: thirst, health, status
7
WHY DO PEOPLE STILL BUY their niche and offer products that meet Daily needs retailers are more likely to
VINYL RECORDS? shoppers’ desire to be cool. Fashion lower costs and increase efficiency and
retailer Urban Outfitters is said to be the customers are more likely to choose a
An understanding of the hierarchy of second largest seller of vinyl albums in high-tech experience over human service.
needs can help to explain a whole lot of the world. The fact that so many people We have already become accustomed
mysterious human behavior. Let’s take buy vinyl proves that it isn’t about utility to self-service check-outs in grocery
vinyl records as an example. The reason for them, it’s about a lifestyle. stores as well as digital self-order kiosks
for the resurgence of vinyl records is in McDonald’s restaurants. On top of
that they have moved up another level THE ROLE OF NEW TECHNOLOGY IN that, the ability to order and pay on
in the hierarchy of needs. Those who MEETING HUMAN NEEDS McDonald’s mobile app is being tested
collect vinyl albums are looking for now.
the experience of buying, owning, and Technology can help retailers and
playing a record, something no digital file shopping centre owners to create a Another fast food chain, KFC, is also
can replicate. more satisfying client experience. But in testing the Skip the Line mobile
order to be successful when introducing app which lets us order a meal via a
Although streaming is now established as technology one needs to maintain a keen smartphone and pick up the food at a
the most popular format in the modern awareness of human needs. After all, one restaurant without queuing. Carrefour
music industry worldwide, physical sales size does not fit all. is currently testing a SmartCart, an
continue to be a significant distribution intelligent shopping cart equipped with
channel in many countries, including self-service checkouts which will enable
Poland (where they account for 74% us to do our shopping even faster. And
Technology delivers efficiency and
of sales). According to ZPAV (Związek Tesco has introduced a Scan & Shop
low cost. Therefore, technological
Producentów Audio Video) vinyl records service offering similar solutions.
innovations will work perfectly for
saw the largest increase in sales year on
retailers that meet needs on the
year. In 2017 sale of those jumped by 63% However, for retailers eager to meet
basic level of the hierarchy.
(PLN 27 million) compared to 2016. higher human needs personal service is
This is where physical stores can find important, since consumers have highly
8
personal preferences and purchases successful retailers will have to operate in status and esteem which cannot
require extensive decision-making and all spaces in order to succeed. be felt in the online vacuum. Those
product interaction. For those retailers retailers who treasure physical human
there are other innovative ways to interaction open showrooms, flagships
employ technology, often behind the and pop-up stores, organise events,
We can use the hierarchy of needs
scenes and out of the customer’s sight. offer additional services, and expand
to predict which channels will be
These may include mobile applications from online to offline, because goods
most useful to which retailer.
designed to collect data about customers sold to meet higher order needs
that can mine data from their every require high-touch customer service
shopping move. Smart technology is one and human interaction.
of the most promising sources of data Retailers whose offering is based on
for retailers. They offer possibilities such meeting physiological needs, such As the penetration of e-commerce
as video and Wi-Fi tracking to follow a as grocers, are expected to continue increases, and the distinction between
customer’s paths through stores and to offer many locations in high-traffic basic and higher human needs
shelves to see what items he/she picks areas. Shoppers at those stores will becomes more pronounced, the key for
up and his/her move-around path. more willingly trade automation and retailers will be to tailor the appropriate
Such devices as beacons are also set to impersonal experience for savings and business model to the desired
transmit smartphone notifications to convenience. consumer need level, so as to optimise
passersby and to send them personalised costs and profitability. High-need
offers and promotions. Premium apparel retailers, on the other products will revolve around positive
hand, often meet higher needs, such personalised experiences, which
HIGHER NEEDS WILL TREND TOWARD as esteem, and those retailers serve an mean using relevant technologies and
PHYSICAL RETAIL audience that requires personal physical best-in-class employees. For low-need
interaction. They need to feel important, products, speed, efficiency and price
In the era of digitalisation we have seen exceptional even, they desire special will be of crucial importance, so there
that anything that can be digitalised will attention. That is why sellers of luxury will be a focus on more commoditised
be digitalised. But what has become clothes will not switch to clicks over management through automated
known as the war of clicks versus bricks bricks, as luxury shopping is a shared channels but also on speeding up the
is actually a false dichotomy. Nearly all experience that thrives on feelings of process of buying and paying.
9
10
I have
seen the
How technology is reimagining
the retail marketplace
The world of retail is changing. It evolves, transforms and adapts to human needs. Omnipresent
technology streamlines the retail development and reshapes the way we shop today and tomorrow.
I believe we all remember the cult visionary film “Back to the Future II” from 1989, which envisioned
that a bunch of futuristic new technologies and products would be in common use in our times.
But did you know that at least 10 predictions from that film came true? Flying drones, hands-free
gaming consoles, tablets and mobile payment technology, auto-lacing shoes, waste-fueled cars,
hover boards, flying cars, biometric devices, video glasses or video phones, to name but a few and
there is probably more to come.
In JLL we are visioners as well. A part of our job is future-proofing the business of retail. On the next
few pages we are about to envision what lies ahead, what the future brings in the real estate market
for the next 25 years. We have collected and distilled the top 12 trends that will shape the retail
market. Although some of these are not brand new ideas, the timescale set indicates more or less
the years we anticipate that these will be broadly used in the retail environment.
So, good luck, time traveler. The future is yours.
111
GEOFENCES – LASSO SHOPPERS FOR
RETAILERS AND OWNERS
Geofences are virtual geographic
boundaries, defined by GPS or RFID
technology, by retailers or shopping
centre owners. The technology enables
software to trigger a response when
a mobile device enters or leaves a
they visit a store? What places do they go
after stopping in at a certain shopping
centre? What neighborhoods do they live
and work in? Geofencing allows retailers
to understand shoppers’ behavior
profiles so they can tailor merchandise
and promotions for an exact fit. Apparel
retailer American Eagle Outfitters turned
to geofencing to boost both foot traffic
and revenue at its outlet stores by
Shopping centre owners can use the
technology smartly to create better
consumer loyalty programming, support
leasing efforts and learn more about
local competition. Knowing where
customers go before or after shopping at
their shopping centre provides valuable
insights. Using geofences as a tool for
market research and customer loyalty
will become even more common over the
particular area. Expect geofencing pinpointing shoppers who entered the next few years.
technology to become more widespread geofenced shopping centre parking
in the next five years. lot and offering them promotions. The
campaign resulted in tripled sales. But
Aggregated data can be quite useful in it’s not just retailers who benefit from
answering important questions: e.g. geofencing.
where do shoppers come from before
12It used to be that cash or check was the of smartphone users will have made
only way to pay. Now credit and debit a mobile payment. This capability has
MOBILE PAYMENT – SPENDING MADE cards are standard. But will plastic gone from a nice-to-have to a must-have.
SIMPLE WITH MOBILE someday become a quaint relic of the Retailers and major banking institutions
past? Probably so, as mobile payments are jumping onboard to create their own
are poised to go mainstream. Apple products to satisfy consumer demands,
Mobile payment options will become Pay and Google Pay are the major negate transaction fees and vie for their
nearly universal. This trend will have a digital wallet and payment systems in share of the mobile pie that Apple and
medium impact on physical retailers in the United States, but the landscape is Google have been gobbling.
the next five years. quickly evolving. By 2020, 90 percentRetail and Office
Combine
Geofencing Drones
5 10
YEARS YEARS
3D Printing
Mobile Payment
3
VR and AR
filed a patent involving the use of drones construction management, or help
4
for inventory management and product employees with the warehouse picking
delivery inside the big box. Flight paths and packing process.
would be coordinated using sensors
DRONES – PICKING AND PACKING. DO and 3D mapping to prevent drones from
WE STILL NEED PEOPLE? colliding with shelving displays. While
drones will likely hover over our heads
in stores before they deliver a package RETAIL AND OFFICE COMBINE – YOUR
Stores using drones will have a small to our doorsteps, neither concept has OFFICE LOBBY THE NEXT HAPPY HOUR
impact on efficiency and customer yet been profitably deployed. But there HOT SPOT
service in the next five to 10 years. The are more realistic uses. Retailers could
bigger impact will be on supply chain put them to work in warehouses and
logistics but it won’t be felt for 15 to 20 outside stores for security and to track The blurring of lines between where
years. shopper movement. Drones could circle we work and where we shop will have
store perimeters and parking lots while a medium impact on shopping centers,
The use of drones inside retail stores is transmitting video back to the store. restaurants, bars and office buildings
gathering momentum. One top retailer They also could aid site selection and over the next decade.
14Cashierless Stores
The Internet
of Things
15 20 25
YEARS YEARS YEARS
Artificial Intelligence Dynamic Pricing Driverless Cars
Climate Change Source: JLL
More companies are offering employees new opportunities for retailers to serve Westfield Bespoke, a co-working space
unique and comfortable workspaces that a consumer base that is by its nature for retail tech startups. The new tech hub
encourage collaboration, build morale a very captive audience. The reverse is features an event space as well as an
and draw talented people. Part of this also occurring, as underutilized retail area for pop-ups and demos. Westfield
strategy is to break down traditional space is being tested as a destination for estimates that in its first year, Bespoke
boundaries between life, work and more traditional office users. In 2015, the drove an additional 100,000 shoppers
play by adding retail- and hotel-style Macy’s in downtown Seattle sold its top through the doors of this popular urban
amenities to office spaces. Employers are four floors to Starwood Capital Group to mall.
mixing business with pleasure, adapting be converted into creative office space.
workspaces to include coffee shops with
professional baristas and beer taps with Not only does this deal offload the
bartenders. Entire office buildings are underutilized retail space, but also the
activating common spaces by bringing proximity to a new workforce is likely to
outside retailers in from the perimeter bring in more shoppers to the Macy’s just
and encouraging people to drink, dine a few floors below. At Westfield San
and socialize in office lobbies. Rooftops Francisco Centre, a portion of the
and interior office spaces are providing lonely fourth floor was transformed into
155
3D PRINTING – SHOPPERS TURN INTO
MANUFACTURERS WITH 3D DIY
3D printing technology could disrupt
faster, cheaper and more customized
goods. For retailers, it could offer on-
demand manufacturing and on-the-
spot personalization of products that
appeal to shoppers. But the promise of
3D printing is emerging slowly, and the
technology is still common only in the
create their own iPhone cases and
jewelry. Athletic apparel retailers Under
Armour, Adidas and Nike all have
released 3D-printed shoes in the past
year. The Adidas version is made from
recycled ocean waste. These retailers are
using 3D printing for its ability to translate
retail by turning the consumer into a realm of hobbyists and specialists. It customized measurements into bespoke
manufacturer. But while the impact will likely be another 10 years before the sneakers that perfectly fit a person’s foot.
will be large, it will be at least a decade retail realm feels its impact. Retailers are
before the technology is prevalent and experimenting with the technology, using There will be less need for manufacturing
affordable. 3D printing to improve the shopping facilities and logistics suppliers as more
experience and the quality of products. consumer goods are made on-demand
3D printing could be the third industrial Part of Macy’s $400 million renovation of using local printers.
revolution, allowing regular people to its Herald Square store in 2015 was One
fabricate three-dimensional objects Below, a 5,000 m2 space dedicated to
on-demand at home or in a store. For teens. A 3D printing shop lets customers
the consumer, 3D printing promises
16of employing VR devices, to transport homes, and Sephora’s Virtual Artist allows
customers to virtual malls. They can walk shoppers to virtually apply makeup
through virtual stores, examine virtual without ever stepping into a store. Other
AR VS VR – WHICH WILL WIN versions of real-life products and make retailers are adapting this emerging
THE IN-STORE SHOPPING purchases just as they would in the real technology to increase convenience
TRANSFORMATION world. and personalization for consumers.
Lowe’s is employing a hybrid strategy
Despite VR’s expected growth as an when it comes to AR and VR by focusing
Virtual reality devices will have a industry consumers are reluctant to wear on in-store technology. The home
medium impact on the e-commerce VR devices, even in their own homes. improvement retailer is rolling out an AR
shopper experience and may help Although this may gradually app that tells shoppers the fastest way to
to decrease retail space demands in change over time, the immediate future find items in the store.
the next 10 to 20 years. Augmented of online retail seems to be
reality will have a big impact on the the domain of AR. Virtual reality devices will have a medium
in-store shopping experience over the impact on the e-commerce shopper
next 10 years. AR, at its most basic level, overlays experience and may help to decrease
aspects of the virtual world with real-life retail space demands in the next 10 to
The potential value of a tailored objects and locations, using devices 20 years. Augmented reality will have
customer experience through such as smartphones and tablets. The a big impact on the in-store shopping
augmented reality (AR) and virtual most notable example is Pokémon Go. experience over the next 10 years.
reality (VR) technology is not to be In the world of retail, AR technology may According to Harvard Business Review,
underestimated. According to the revolutionize the shopping experience retailers’ investments in AR and VR could
Harvard Business Review, retailers’ for apparel, cosmetic and home goods be high transforming the way consumers
investments in AR and VR could by helping shoppers visualize products interact with retail brands.
be as high as $30 billion by 2020, either on themselves on in their homes.
transforming the way consumers IKEA Place enables customers to visualize
interact with retail brands. VR and its rugs, lamps or couches in their own
sister technology, AR, offer distinct
opportunities for retailers and their
customers. VR technology immerses
the user in an entirely simulated world,
and requires stand-alone devices
such as headsets and controllers.
This makes VR the ideal platform for
gaming and other experiential uses
tied to movies and TV shows. Location-
based VR experience companies
- Nomadic, founded by veterans of
Disney, EA and other media giants, are
snapping up vacant mall spaces and
cinemas across the United
States and equipping them with
VR experiences like Ghostbusters:
Dimension, a story-driven virtual
playground created by The Void.
VR is not only transporting users
to fantastical worlds, but also
occasionally serving a practical retail
purpose by allowing them to visit
malls from the comfort of their sofas.
Startups like London-based Trillenium
have experimented with the possibility
17ARTIFICIAL INTELLIGENCE – CUSTOMER
SERVICE WITHOUT HASSLE OR HUSTLE
As artificial intelligence (AI) and
machine learning become increasingly
sophisticated, retailers will use it to
enhance customer experiences. Expect
AI to have a big impact in retail in the
next 10 years as it becomes common in
everyday activities.
With the help of AI software, retailers are
capitalizing on advances in cognitive
computing. In other words, software that
can learn. Several retailers have teamed
up with IBM to use its Watson technology
to power an AI assistant that operates in
select stores across the United States.
“Macy’s On Call” answers questions and
guides shoppers to their destinations.
Customers simply open the site on any
smartphone and type in their question
– no human interaction needed. “Macy’s
On Call” is a novel way for the store to
interact with consumers on a personal
level, boosting customer engagement.
Machine learning allows computers to
become more intelligent without being
explicitly programmed. AI software can
process massive amounts of data quickly
to create endless opportunities for
innovation. Under Armour teamed with
IBM’s Watson to buff out its health and
fitness app, UA Record, giving users real-
time information about their personal
health and fitness program. Watson
monitors and analyzes daily exercise,
sleep habits and food intake (manually
entered by the human), and provides
personalized insights based on the data.
North Face launched an app to help
shoppers find the right coat depending
on where the shopper is going, what
time of year it is and what activities are
planned.
AI not only supplies companies with
more information than ever before,
but also gives customers personalized
experiences that enhance day-to-day
activities. Technology like Watson
will transform the retail industry by
changing the way consumers interact
with products and brands. But more
importantly, retailers will be able to
digest and comprehend unprecedented
amounts of data. As AI becomes more
sophisticated, it will tackle even more
complicated tasks. There’s no telling
how much more work artificial intelligent
software may take on.
188
demand, competitor prices and any accordingly to beat the competition.
number of other influential factors. It’s In the physical world, one new bookstore
a perfect market in real time and has doesn’t even place printed price tags on
the potential to change how retailers products, allowing the retailer to charge
DYNAMIC PRICING – SETTING THE price goods, both online and in stores. different prices for different customers.
PERFECT PRICE EVERY TIME Retailers use dynamic pricing to price A digital price tag lets any retailer quickly
goods based on different variables, such change prices based on the time of day,
Dynamic pricing depends on real-time as time of day and demand. During competitors’ prices, proximity to a major
data to perfect the supply and demand happy hour, for example, a bar drops holiday and countless other variables.
model. Online stores have already drink prices to encourage consumers to One obstacle to this practice may be the
embraced it, so further impacts in that come during slow times. universal dislike of “price gouging”.
arena will be minimal. Expect bigger It seems unfair to some shoppers that
impacts for physical stores in 10 to 15 E-tailers have led the way in dynamic different groups would pay different prices.
years, when the technology is broadly pricing, thanks to their access to data and As more retailers roll out dynamic pricing
available and affordable. technology. Dynamic pricing succeeds online, they’ll need to develop transparent
when retailers have immediate access pricing policies to make the practice
Imagine a world where supply and to all the variables and components successful in physical store.
demand are in perfect harmony. that go into correctly pricing goods. Just
Goods are sold at prices that factor as important is a system that correctly
in available supply, current customer interprets that data and sets prices
199
INTERNET OF THINGS – A NETWORK
OF EVERYTHING
Expect that in the next 10 to 15 years
IoT will have an even bigger impact on
with store aisles and shelves, and even
individual products, and then relay
information to a retail distribution
system. This IoT platform can contain
information that could be used to make
decisions about what to sell, for how
much, to whom and when. The transition
to an IoT world has already begun, albeit
areas and give the retailer a deeper
understanding of customers’ paths to
purchase. Many retailers rely on IoT
technology to use weather patterns to
forecast grocery sales and stock certain
products accordingly. BI Intelligence
predicts that by 2020, there will be more
than 24 billion IoT devices on earth. The
physical shopping and e-commerce as modestly. Considering the complexity of potential totaleconomic impact of IoT will
retailers get more in tune with buyer working with huge volumes of data and range from $410 billion to more than $1
preferences and real time trends. interactivity among countless devices, trillion per year by 2025, according to
as well as issues around security and McKinsey & Company. But because of
Imagine the world as a galaxy. Each privacy, it will be 10 to 15 years before the the complexity of the systems involved
person is a sun with planets revolving retail industry feels the biggest impact. and the level of investment needed, this
around. Those planets are sensors and is a long-term development. Already,
devices that communicate to bridge The system reports on which items have 21 percent of retailers surveyed in a
information seamlessly in orbit around been touched or tried on so retailers can recent study by Zebra Technologies have
each person. This is the Internet of Things optimize merchandising and store layout. implemented IoT, and another 27 percent
(IoT). The growing IoT will affect city Hugo Boss has deployed heat sensors are deploying in the next year. By 2021,
planning, security, medicine, logistics and in its clothing stores to track customer 70 percent of retailers surveyed plan to
shopping. Sensors in homes, clothing, movements. This allows managers to invest in IoT.
cars and phones will communicate place premium products in high-traffic
20CASHIERLESS STORES – GRAB-AND-GO,
AND GET CHARGED LATER
Walking out of the store without having the anticipation. Amazon opened a can stroll in and out freely while an all-
to stop and pay sounds great, but in the 170 m2 retail beta store for employees seeing technology keeps perfect tally. And
short-term, the technology will be too in Seattle that has no checkout. Using even when that ideal is perfected, it will
expensive to see widespread adoption. computer vision, sensor fusion and deep be costly to implement this technology
Expect a moderate impact on physical learning, the store tracks what customers on a large scale across a chain of stores.
stores and a full landing for payment carry from the store and charges their It’s likely that when cashierless stores do
systems in 20 years. accounts the appropriate amount. In make the scene, rollouts will be limited.
major airports across the globe, travelers
What if you never had to wait in line sit down at a restaurant table and are
again? Or if you could complete your greeted with a touch-screen tablet that
purchase without ever pulling out your allows them to view the menu, order and
credit card? A cashierless shopping pay. Self-checkout technology has been
experience has seemed just around the around for many years and seems to be
corner for quite some time, and recent getting better, but no retailer has created
moves by major retailers have fanned a truly cashierless store, where shoppers
2111
CLIMATE CHANGE – SUNNY WEATHER IS
A STRUGGLE FOR RETAILERS
The impact of climate change on global
weather patterns will affect consumer
behavior as seasonal needs shift with
extreme weather. Expect a moderate
impact in about 20 years. In short term,
to severe weather events and changes
in consumer behavior. Severe weather
that affects power lines, roads and other
infrastructure hinders retail activity.
and shorts earlier in the season instead
of jackets and gloves. Fear of climate
change also has reshaped consumer
preferences. According to a 2015 Nielsen
study, 66 percent of global respondents
environmental awareness will become As extreme weather events become more claimed they are willing to spend extra
more prevalent among retailers. common, they can only hurt businesses money on products from businesses that
and the everyday lives of millions of are committed to positive social and
The world is getting warmer, weather people who have to shop for clothes, environmental impact. This figure is 11
patterns are becoming more severe and food, supplies and household items. percent higher than the previous year and
sea levels are rising. Climate change Retailers and property owners must 16 percent higher than in 2013. Retailers
is a global phenomenon with local adapt to meet new demands created are responding by advertising their
impacts on retailers. Given current by climate change. In some regions, environmental and sustainability efforts.
projections, climate change will impact longer summers and shorter winters Starbucks, for example, has publicized its
retail in several ways in the next 20 will force retailers to adjust the type of commitment to use more recycled and
years. There will be disruptions to apparel they sell and when it’s available. reusable cups.
supply chains, property damage due Consumers may demand more sandals
22MADE SHORTER
12
DRIVELESS CARS – LONG DISTANCES
Autonomous vehicles will cause a
huge shift in how physical spaces
are planned, making some retailers
obsolete and giving rise to new ones.
Expect a large impact on physical stores
The way our mobility changes as a result
will have substantial effects in many
business sectors, including retail.
Autonomous vehicles will alter the way
humans organize themselves spatially
shoppers may take excursions to top
city centers. With fewer cars on the road,
fewer expansive parking structures in
central locations will be needed.
In typical suburban malls, more space
to be fully felt in 25 years. around urban centers. Fairly rapid is taken up by surface parking lots than
deurbanization could result once the use by the mall itself. These spaces could be
While companies like Google and Uber of driverless cars becomes widespread. repurposed for retail, housing or office
are testing driverless cars in real-world Many will no longer want to pay the uses, and new developments would be
settings, and Tesla has offered autopilot higher costs of living in dense urban cores more feasible. Removing or reducing the
functionality to owners of its electric when commuting becomes a hassle-free parking requirement for projects would
vehicles, cars that drive themselves experience. Yet it also could mean an reduce the barrier of entry for certain
are still not a regular part of our lives. It increased importance for prime urban retailers and developers.
will be decades until the technology is corridors.
widespread enough that nearly every car
on the road is autonomous. But as that The cost and inconvenience of parking
change happens, we will see widespread are common reasons to avoid the city.
impacts on the physical environment. Without those obstacles, even more
2324
F&B IS THE PLACE TO BE
The amount of space dedicated to the food
& beverage (F&B) sector in retail projects
across the world is increasing each year,
and changing the global retail landscape.
Demographic trends, technological
innovations and growing customer
expectations are the key factors behind
shifts in consumer spending patterns
and the resulting changes to retail space
allocation. People are no longer happy with
merely material items: customers expect
memorable experiences, which they can
share. For an increasing number of clients,
dining experiences and time are becoming
commodities of greater values than things.
This trend is particularly visible with the
millennial generation; however, people of
all ages are realising that experiences often
make us happier and are as important as
buying material things.
25TYPICAL GASTRONOMY SHARE OF TOTAL GLA IN EU SHOPPING CENTRES
Tomorrow
20+%
25%
Today
20% 15-16%
15% Yesterday
7-10%
10%
Then
3-5%
5%
0%
Source: JLL
1995 2000 2005 2010 2015 2020 2025
The perception of gastronomy has THE FOODSERVICE (R)EVOLUTION The F&B sector in Poland now takes up
undergone profound changes in recent to 12.5% of space in top-notch shopping
years. The range of food available is no The F&B sector is gaining in importance centres. Interestingly, Warsaw is only in
longer an addition to a pure shopping to retail schemes, as foodservice drives fifth place among major agglomerations
experience, but now also provides additional footfall and thus increases in terms of the share of gastronomy in
reasons why customers continue to visit overall spend when visiting a mall. Of GLA, which gives potential for further
shopping centres. One of the recent course, the proportion of foodservice growth. The share of gastronomy
examples is the new Grand Kitchen space in shopping centres varies between calculated as a percentage of units in the
concept introduced by Unibail-Rodamco regions, and is driven by factors such total number of units and sales points in
in its shopping centres in Warsaw as cultural nuances, market maturity, a given scheme is often even higher than
(Arkadia) and in Wrocław (Wroclavia). the relative wealth of customers, and the figure which results from occupied
foodservice competition at the micro space, which is mainly due to the rather
level. small size of these units as compared to
other categories of tenants.
We have been experiencing in recent unique food market presenting local fresh including the recently opened “Grand
years a significant increase in consumer food champions and awarded experts. Kitchen” in our shopping center in Prague
spending on foodservices caused Our customers have a year-long access to (Chodov) and another delivered in October
by macro demographic changes, seasonal products and cooked meals. The 2017 - Wroclavia (Poland). These areas
technological advancements and first market “El Marcat” was introduced provide different innovations such as
consumers’ desire to experience rather in Glories (Barcelona) in 2014 and the Click&Eat service, where customers can
than to have. This increase prompts us second one is planned to open in 2018 in order on line dishes from one or more
to allocate more space in our shopping our new project Mall of the Netherlands restaurants and pick up the whole order
centers for desired F&B. It is, however, (The Hague). The Dining ExperienceTM in one place. We also guarantee events
crucial to understand that it is not only is an area providing the best local and like concerts, cooking classes, meetings
about quantity but also about quality of international restaurants bringing social with well-known chefs, etc. It is all about
the offer provided. Our main goal is to and differentiating experiences to our experience!
create a unique, unexpected ambience visitors. We are proud of our long-lasting
and we are working on delivering exciting cooperation with premium restaurant Arnaud Burlin
areas within our assets, which we call concepts such as Wagamama, Vapiano, Managing Director
“destinations”. When it comes to F&B, Five Guys or Starbucks, as well as large Central Europe & Austria
there are two main concepts we are international players such as Amrest. By Unibail-Rodamco SE
introducing within our portfolio: Fresh! the end of 2017 we will have delivered
and The Dining ExperienceTM. Fresh! is a about 15 dining areas within our portfolio
26The number of restaurants, bars, and DIVERSITY Koszyki, Soho Factory, EC Powiśle, Art N
dining points in Poland is growing and Koneser), followed by other major
constantly. Between 2006 and 2016 The surrounding infrastructure and cities (e.g. Off Piotrkowska and Monopolis
the number of gastronomy units in catchment determine the types of in Łódź). The surrounding catchment
Poland increased by more than 61%. foodservice operators. The growth and and infrastructure naturally defines their
The Mazovian voivodeship has more popularity of street food, upmarket characteristics and local strategy. Some
foodservice points than any other region fast casual and more diverse casual foodservice operators will perform best
(5,277). The regions of Świętokrzyskie, dining have triggered a marked in office buildings, others in market halls.
Pomorskie, and Dolnośląskie more than “casualisation” of food and service. With Operators need to tailor their formats:
doubled the number of their gastronomy a substantial amount of office space one size no longer fits all.
units between 2006 and 2016. in a given immediate catchment area
the foodservice units should be rather Changing consumer habits and
concentrated on weekday lunchtime expectations will also affect the
Polish customers are spending as well as cafés that offer convenient drinks sector. Craft beer multitap bars,
more on eating out, both in workspaces for freelance clientele. If a champagne bars, bread & wine concepts,
relative and absolute terms. shopping centre is located in or near and sales points with fresh juices, which
a transportation hub, which feature are all sprouting across Poland’s cities,
high levels of pedestrian traffic, speed are a tangible response to changing
According to the Central Statistical and impulse offerings will benefit the drinking habits. While this trend is
Office of Poland, the restaurant & hotel most from that. Footfall quality and the observed globally, Poles seem to be also
sector has now a share of 4.4% in total presence of leisure facilities within a attracted by concepts referring to local
household expenditures, compared to shopping centre and in the immediate assortments, such as “Wódka & Zakąska”
just 1.8% in 2005. In that timeframe the vicinity drive demand for different format. However, as associated mainly
country has recorded an increase of 71% foodservice categories. New dining with nightlife, such concepts work best in
in average wages. Oxford Economics destinations with unique shopping downtown areas and not necessarily in
predicts for Poland retail sales growth of and gastronomy projects are opening, typical shopping malls.
5.9% between the years 2018 and 2020. predominantly in Warsaw (e.g. Hala
Some of that growth will certainly be seen
in the gastronomy sector.
27DIGITALISATION Importantly, this trend should be seen day, so as to better prepare their strategy
in parallel with the increasing desire for the entire retail schemes. They need
The growth of digitalisation is setting a to eat out, which offers a much larger to know where gastronomy units should
new scene. We chat, shop, meet and play experience and caters for our social be located and in what configuration,
online. Online sales are rising year by needs. how units should be designed, how to
year. However, as we cannot eat online, create points of difference and which
gastronomy is becoming a unique selling tenants would be the best fit for their
point. Technology can be harnessed As food becomes an expression strategies.
though, by, for example, online orders of lifestyle, identification and
and payments, which are increasing, status, creating an attractive Foodservice is undoubtedly changing
and social media platforms, which setting in restaurants is of greater the retail landscape. Navigating the
are becoming more sophisticated. We importance, especially in order opportunities, identifying the risks,
are witnesses of a delivery revolution: to compete with the home- tracking the trends and understanding
popular apps simplify online and mobile eating trend. Restaurants can the habits of local customers are
ordering, making “dining in” even establish themselves as a place of essential for achieving success and
easier. Foodservice has become an “on- inspiration and knowledge, a place boosting the performance of a retail
demand” industry, as consumers have of social interaction and lifestyle. project. Noticeable growth in the quantity
come to expect to be able to obtain food and quality of foodservice in shopping
whenever and wherever they are. This centres has a positive impact on the
has led to an increase in mobile apps THE MAGIC TRIANGLE entire retail sector. The appetite for new
which enable ordering and a huge growth and different is strong. We believe that
in third-party delivery (e.g. UberEATS). Despite the massive opportunities, the gastronomy sector will continue to
Growth in digitalisation and convenience foodservice needs special examination, play an important role in the creation of
also means that eating at home is on the as it requires a coherent strategy within retail places, and shopping centres may
increase again, with consumers using the “Magic Triangle” which includes soon change their names to “experience
new delivery services and technologies. gastronomy, leisure and the overall centres”.
As the methods for ordering become retail offer available in a given scheme.
more varied and accessible, there will be Landlords have to understand what F&B
an expansion in food delivery services. operators sell and at what times of the
2829
Elevate the Experience in Shopping Centres Changes in shopping behaviour have revolutionised the retail industry, which has led to the integration of new trends and the adjustment of traditional offerings. Nowadays shopping centres are becoming less shopping and more centres with multiple functions. They have become an integral part of the city and a common meeting place for its inhabitants. Although shopping still dominates the brick-and-mortar businesses, it is more common to see other uses being introduced to the shopping arena, uses focused on elevating the experience of the shoppers. 30
Increasing shopping centres competition, The leisure sector in Poland may not
new technological solutions, growing be that spectacular when compared to
e-commerce, and changing customer Western Europe or the United States of Chris Scurrah, New Business
shopping behaviour and needs are America, but, as the role of the family and Development Director EMEA at
pushing developers to construct schemes out-of-home activities gain importance, Merlin Entertainments Group,
which offer additional attractions rather there is a growing demand for shopping comments:
than just pure retailing. They create malls to deliver a real sensory experience There will be a greater focus on
places which become destinations where including family-based leisure amenities. creating the leisure destination in the
people can spend even an entire day. The Initially, the entertainment offerings next 10 to 15 years’ time. Where there
natural tendency is to turn to an offering of Polish shopping & leisure centres is over-provision and competition
focused on providing services which are were based on multiplexes and food the quality leisure destinations will
not available online. Incorporating leisure courts. Currently it additionally includes succeed. Merlin Entertainments Group
facilities is a good way of differentiating bowling alleys, kids’ playgrounds, fitness is the world’s second largest visitor
one’s centre from competing retail clubs, dance and music schools, music attraction operator, currently opening
schemes and of providing customers with clubs, museums, theatres, libraries, approximately eight new indoor visitor
a unique and sensory experience. exhibitions, escape rooms, trampoline attractions around the globe each
parks, climbing walls, etc. and the year, with brands including Madame
As Poles continue to become wealthier list of attractions is expected to grow Tussauds, LEGOLAND Discovery
and their socio-cultural attitudes change, further. Among the firms searching for Centres and SEA LIFE Centres. The
it is expected that the amounts of time retail opportunities in Poland is Merlin Merlin Creative team is constantly
and money spent on leisure attractions Entertainments Group. looking at new ideas and concepts
will grow. This was especially visible in for the market – ideas with global
2016, after the government’s “Family 500 Also, the kind of offering of tenants roll-out potential. Merlin develops
plus” program was put into operation. already present on the market is unique, location-based, themed
According to the Central Statistical Office, changing as well. Kids’ playrooms are visitor attractions with strong brands;
in 2016 the average monthly expenditure not a typical rooms with slides into balls, the quality and investment levels
amounted to PLN 1,132 per capita (up by but places where kids can learn and allow Merlin to appeal to visitors from
3.7% since 2015 and by 61% since 2005). play during workshops and educational up to two hours’ travel time from the
The average citizen spent PLN 690 on shows. A typical kids’ playroom has experience, even further for Merlin’s
recreation and culture in 2016. That is grown from 200–250 m2 to 500–1,000 Resort Theme Parks and LEGOLAND
6.2% more than in 2015 and 65% than in m2, depending on the given centre and Parks.
2005. the size of the city. New technological
31developments have changed the entire shopping centres offer entertainment
character of cinemas and the experience Jakub Matuszewski from amenities and 30% of new projects that
of watching movies. Fitness clubs now Wyjątkowy Prezent explains, are currently being constructed will have
make you feel more at home by providing “It’s all thanks to the simulator – some kind of leisure element. Depending
a homely, friendly environment and the main attraction of our store. on the type and scale of a shopping
interior finishing. Moreover, some fitness Placing one of our “experiences” centre, as well as the size of the city it is
clubs offer child-care, personal trainers in the store serves not only located in, the entertainment component
and diet coaches, as well as healthy marketing functions but also basically accounts for 5% to 10% of a
catering and even 24-hour opening. makes the image of our brand project’s space.
more attractive and improves
What is more, non-leisure retailers its functionality. Thanks to this, From cinemas to trampoline
also see the potential in delivering we have the opportunity to both parks, shopping centres across the
experiences to their customers. The sell and deliver services, which whole country are offering various
Hamleys in Galeria Północna in Warsaw translates into a greater number entertainment options which are blended
is not just a toy store: it’s a place to have of visitors to our stores.” together with brand retailers. Recently
fun, thanks to such attractions as a mirror developed and future schemes prove
maze, a car racetrack, water games, a that target consumers demand both
talking tree, creative workshops and a Galeria Północna). The greatest attraction high quality merchandise as well as high
Nerf shooting range. And this store will in their store is the opportunity to fly in quality entertainment, all within the
soon start to organise birthday parties the iconic F-16 fighter while in the store. same venue. Nevertheless, everything
for kids. Wyjątkowy Prezent, a firm selling depends on what the target market is
gift cards with vouchers for different kinds The proportion of shopping centres able to support. This creates a challenge
of attractions, previously only on stands in Poland with incorporated leisure that has to be faced by shopping mall
at shopping centres, opened their first components is constantly growing. developers and owners across the whole
regular store at the end 2017 (also in Currently, 99 of the country’s 412 of Poland.
32The digital landscape is constantly expanding and
offering new ways to connect with customers. As
shopping centre managers, we have to react rapidly
and accordingly, making sure that our attention and
budgets are focused in the right directions.
33Customer experience has become Business Review found that 86% of PUT YOURSELF IN THE CUSTOMER’S
a critical differentiator in today’s business leaders agree that customer SHOES
hyper-competitive-connected global experience is vital for success, and 75%
marketplace. Shopping centre owners believe that social media will be an JLL’s Customer Experience Walk is our
and managers can no longer afford to “extremely important” part of successful property management approach for
look at each customer touchpoint in customer experiences in the future. reviewing the cumulative impact of
isolation or solely focus their attention multiple touchpoints in shopping centres
on customer acquisition. They need FINDING THE CUSTOMER and the aim to removing friction and
to understand the entire customer TOUCHPOINTS enhancing the experience for every
experience. customer regardless of where they are
Customer touchpoints are the points of in the journey (online or offline). In fact,
Many experts believe that customer contacts between the customer and the we step into the customers’ shoes from
experience will become the main area brand, from start to finish. For example, the moment they arrive at the shopping
where a brand can have a competitive a customer may find a business online centre, through to how they find their way
advantage in the next few years. In 2016 or in an advert, see ratings and reviews, around, how they shop, rest, dine and
Forbes listed customer experience as one visit the website of that brand, shop at go online to the moment they leave the
of the top digital transformation trends its retail store or contact its customer centre.
in 2017. The Gartner Institute has stated service. Identifying these touchpoints for
that by 2020 89% of the companies will each business is the first and crucial step When identifying a shopping centre’s
compete with each other mainly in this toward creating a customer journey map touchpoints we become the customer.
field. This is further supported by the and making sure that the customers are We are in the customer’s mindset. We
Walker study which found that in the next satisfied every step of the way. walk ourselves through the customer’s
two years customer experience, rather journey step-by-step, from start to finish.
than price and product features, will There are three main touchpoints We take into account the big picture: the
become the main differentiator between that must be taken into account when overall customer journey through the
brands. analysing the process of customer shopping environment.
experience: before the purchase, during
There are at least three reasons for the the purchase and after the purchase. Identifying the customer journey helps
growing popularity and importance Each main touchpoint is then followed by us understand how those touchpoints
of activities in the area of customer a number of specific touchpoints relevant create the experience. After we have
experience: macroeconomic change to a particular brand. We have drawn created a map of the touchpoints in
(approximately 64% of global GDP up a list of the most common examples the customer journey we can see how
currently comes from the services of touchpoints, but it can vary a lot they all fit together and ask where
sector); digitalisation and the advanced depending on the brand or business. are the obstacles the customer might
technology that surrounds us and that experience along the way? Are any of
exerts an increasing influence on the The list below is a good starting point, the touchpoints missing or neglected? Is
everyday lives of all of us; and increasing as each of these touchpoints can it clear for the customer how to resolve
customer expectations – as our have a number of underlying pieces, potential issues during or after the
consciousness grows, as customers we for example “advertising” can include transaction? Once we have drawn that
expect more. touchpoints across many channels, while map of the customer journey, we are able
physical stores in shopping centres have to evaluate the experience and to make
However, still not so many companies touchpoints such as signage to help improvements where necessary. Based
see the real business value that is behind customers find the store, the parking lot, on that knowledge we are able to prepare
measuring and managing the customer and the many different interactions that and implement a customer experience
experience, which is clearly a mistake. take place inside the centre. strategy.
A survey conducted by the Harvard
BEFORE PURCHASE DURING PURCHASE AFTER PURCHASE
Advertising Physical store Billing
Marketing / PR Website Customer service and support teams
(questions and returns)
Social media Catalogue Transactional emails
Word of mouth Phone system Marketing emails / newsletters
Geofencing Social Wi-Fi Customer satisfaction questions
Ratings and reviews Point of sale Online support centre
Testimonials In-store promotions / discounts Surveys
Mobile apps Staff or sales persons Social media
Promotions and sales Upselling Loyalty programs
Emailing Fairgrounds Thank you cards
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