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 Feature Industry Articles 
Friday, March 14 2014
Progressing and Utilizing New Technologies for the Retail Industry

As 2014 is now underway, and the economy is seeing sustained improvements, the retail industry is looking optimistic, and there are three trends that are driving change and dramatically re-shaping the industry by shifting demographics, globalization and technology. Each one, by itself is a powerful force. Collectively, they present opportunities, and challenges.

The worldwide growth of the middle class, most notably in emerging markets, offers tremendous business opportunities for developers and retailers to expand overseas, as new developments have flattened in mature markets over the last few years. Ernst & Young, back in 2011, forecasted that global middle class would reach five billion by 2030, with an increased spending power of U.S. $56 trillion, enough to match those of developed nations.

Demographic imperatives are drawing out different responses in different parts of the world. In emerging markets, wherever there is a growing middle class, stable governments and low levels of existing shopping supply, the pace of new development continues impressively, particularly in Asia and Latin America.

Many retailers are looking to tap into the developing world, where there is a surge of new construction, driven by enormous demand for new space. To provide some perspective, shopping center GLA per 100 people in the United States is currently around 220 square meters, while in China, the GLA per 100 people is just 0.5 square meters. When you put it that way, it's easy to see that there is real growth potential for new development in markets like China, where the growing middle class with increased purchasing power  will continue to create demand for more retail options.

India, in the areas around New Delhi, Mumbai, Bangalore, and Chennai, is experiencing strong development growth, driven by demand for space by expanding domestic and international retailers.

Latin America offers retailers and developers a new landscape to thrive with its expanding and dynamic retail sector, a strong and growing middle class, controlled inflation, sustained economic growth and stability, have created a favorable environment with Brazil, Chile, and Uruguay, leading the list of top developing countries for retail investment.

At the same time, development has slowed in mature markets in the U.S.

and Western Europe. In these markets, the retail industry has had to redefine the meaning of success - it can no longer be measured by new developments. With the opportunities presented in emerging markets, retail chains that once focused on expansion in the U.S. and Europe particularly, have paused and rethought their growth strategies. They slowed the opening of new domestic stores, closed unprofitable ones and refocused their capital expenditures on remodeling and refreshing the remaining stores. Meanwhile, they are setting up shop in China, Japan, India, the Middle East and South America.

Today, success is more about delivering outstanding shopping and recreational experiences that drives foot traffic and productivity at existing centers, creating a 'third place', where people want to connect, experience and buy. In other words, the retail real-estate industry has entered into a period where economic value flows increasingly from the social value, and not just from merchandising.

How is social value created in what was originally thought of as being an efficient distribution channel for goods and services? It is a combination of tangible and intangible features. Tangible ones include the expansion of high-quality dining experiences, green space, and a general upgrading of amenities and the introduction of non-retail uses. For retailers, especially in the U.S. and in Europe, it's about maximizing their existing real estate, and eliminating unnecessary floor-space where they can. Many have become more flexible with their store formats in order to take advantage of more diverse real estate opportunities and tap into new customers.

Using new market research tools, retailers are able to edit their merchandising mix to suit local tastes. And just as merchandising is becoming more location-specific, marketing is becoming more personalized with new mobile technology. Today, retailers have so many more options at their disposal to test new markets without making the commitment of a full-size store. Pop-up shops, vending machines, own-branded websites, third-party sites and kiosks are making it possible for retailers to understand where a new store will work best for them.

Despite the many challenges, or perhaps because of them, the industry continues to progress and utilize new technology in innovative ways.

Good retailers are key to a great shopping center, and their ability to generate sales from e-commerce demonstrates that the traditional patterns of store growth are over, and stores are becoming multi-functional in ways that we thought were not possible ten years ago.

Today, brick-and-mortar shops have become an extension of the shopping experience, where the store is a brand statement that helps to drive sales across all channels. Customers research and price-match online prior to the point of purchase, creating a more knowledgeable, informed consumer with much higher expectations. Retailers have to rework their strategies to match the paradigm shift in consumer demands, and that means reaching across all channels, simultaneously and seamlessly. Omni-channel retail lets consumer experience a brand as a whole, beyond just e-commerce.

While traditional computer sales decline, global tablet and smart phone sales are soaring as consumers shift their social networking, email, shopping, gaming and other activities to their mobile devices.

Sales of smart phones and tablets are rising by more than 50% annually, so we, in the shopping center industry, need to provide as good an experience on mobiles as we do on computers, and in stores.

More than e-commerce capabilities, retailers are managing and integrating their data to provide customers with a complete, immersive experience across multiple platforms, fostering strong brand loyalty, something that has become increasingly important to consumers.

But it takes mores than just a mobile-friendly website to meet the power shift toward consumers as information is at their fingertips while their shopping, allowing them to "show-room". And retailers are finding new ways to combat that, either through premium services, price-matching or by taking advantage of new technology that enables them to set and change prices dramatically. As a result, consumers now have greatly elevated expectations of price, value and services.

Retailers are harnessing new technologies in many ways in order to cut expenses, improve efficiency and enhance the in-store shopping experience. Location-based services like geo-fencing works for shopping centers, and for retailers. Shopping center marketing managers have a revolutionary tool to talk to customers, on-on-one, and bring them into the store. And with the enormous amount of data available, retail marketing is now more efficient, with the capability to track purchase patterns, website visits, social network affinities, loyalty programs and data mining. Retailers and shopping center operators have a deeper understanding of the consumer, and can configure retail space appropriately and provide the necessary infrastructure.

Posted by: AT 12:06 pm   |  Permalink   |  Email
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