The digital revolution: Store-based retailing will survive if retailers and landlords “embrace multichannel” strategies, says panel at the ULI Europe Annual Conference in Paris.
“The future of retailing is M-commerce [mobile commerce], S-commerce [social commerce], and QR codes [quick response codes],” Jonathan De Mello, head of retail consultancy at CB Richard Ellis, told the audience at ULI Europe’s session on the impact of the digital revolution on real estate.
These concepts—the new language of shopping and consumerism—describe the powerful capabilities that technology offers to retail brands. The ability to buy and sell goods via mobile phones and tablets, and their existence, arguably represent one large step in the evolution of the threat to store-based retailing that has existed since the launch of the World Wide Web in the early 1990s.
But the message from the panel was not quite so downbeat: these new forms of commerce are changing the way consumers use stores, not negating the need for stores altogether.
The recent opening of a store in London’s West End by online auction house eBay, as well as plans by online retailer Amazon to install “click-and-collect” lockers in shopping centers, were cited by panelists as proof that there are opportunities for landlords to embrace these trends.
“Retail owners can capitalize on the moves by firms such as eBay. Some of these online companies want to invest in real estate. While House of Fraser has recently opened click-and-collect stores in Liverpool and Aberdeen,” said De Mello.
Panelist Nicolo Galante, director, head of the multichannel team at McKinsey, agreed that opportunities for landlords to “understand and play a key part” existed, but the store concept would survive only if retailers pursued multichannel strategies.
“Mobile internet shopping enables shoppers to undertake research and comparison during the shopping trip,” said Galante, using Amazon’s Price Check app—which allows consumers to scan bar codes in stores to compare prices with those offered by the online retailer—as an example.
“In a few weeks, we will have sales figures for 2011 and the picture will be bleak. Retailers need to embrace multichannel—and fast. Recognizing this difference will be key to success.”
Galante said options for both retailers and landlords to consider included installing kiosks in stores to buy products not available in store, click–and-collect facilities.
But it is also about capitalizing on what the internet cannot offer. “Stores can engage all five senses, unlike online stores,” he explained, adding that retailers haven’t been taking advantage of the attraction of shopping centers as meeting places.
“Wal-Mart is building Facebook pages by individual stores, providing a localized experience. De Mello agreed. “Retailers need to be on Facebook, but so do landlords; it is the way consumers get information about products.”
MEXX is one retailer whose strategy is focused on solving the multichannel conundrum, and Shawn Cox, senior vice president, global retail, presented the fashion retailer’s “omni-channel strategy” to delegates—an approach that includes targeting customers through all channels, and relocating its store portfolio.
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Cox predicted that e-shopping would account for “a third” of its business by 2013, adding: “E-mail is old. New technology is helping us to understand consumer demographics behind loyalty profiles, so we will be able to make segmented purchase suggestions online.
“My advice to landlords is to investigate the brands signing up to lease and check out how computer-savvy they are,” suggesting Luxury Lab’s list of the most digitally competent brands as a helpful starting point.
“Digital strategies are becoming increasingly important, and how Twitter, Facebook, and YouTube will change commerce is a question we think about all the time. For retailers, it is about having a product, brand, and location strategy, and for landlords, the challenge is turning locations into brands.”
One landlord already working on this is Altarea Cogedim, and deputy managing director Stephane Theuriau presented delegates with the rationale behind the French real estate investment trust’s recent takeover of online retailer Rue du Commerce.
The acquisition, which added a digital store to the bricks-and-mortar centers the firm already owns, created a multichannel property company, explained Theuriau. “We have a family village, regional shopping centers, and city stores. Now we have the e-commerce gallery and we are going to try to make this work together.
“We don’t know how the synergies will work but know that through our experience of buying this company, we are 100 percent sure that we will be better at managing our stores. E-commerce will force us to reinvent all distribution channels and there will certainly be implications [for] real estate.”
The panel consisted of:
- Shawn Cox, Senior Vice President, Global Retail, MEXX
- Jonathan de Mello, Head of Retail Consultancy, CB Richard Ellis
- Nicolo Galante, Director, Head of Multichannel Team, McKinsey
- Stephane Theuriau, Deputy Managing Director, Altarea Cogedim
- Moderator: Glenn Aaronson, Former CEO, Multi Corporation & Chairman, Forum Turkey Fund