Written by Mark Dailey, Partner at Madano.
International Council of Shopping Centres (ICSC) is the global governing organisation dedicated to supporting the shopping centre industry – owners, operators and retailers. The latest conference was one of two Asia-Pacific conferences – held in Shanghai and Bangkok. The Americas conference takes place in Las Vegas; the Middle East in Dubai and the European event in Warsaw. Madano’s Mark Dailey facilitated 3 of 5.
They are interesting because they speak to future trends that effect many of our clients and companies in our space – from economic predictions, to drivers of customer engagement, real estate developments and sentiment etc. Following his travels, Mark provides a summary of key information that came out of the Bangkok conference.
Headlines
- U.S. industry suffering from over-capacity and outmoded stock (1970’s suburban malls); whereas Asia-Pacific leads in experiential shopping and food and beverage
- The perception that bricks and mortar retail is dead is wrong. Bricks and mortar shopping revenue is 10 times that of online: 2016 global figures: $43 trillion vs $472billion BUT growth rate is 1.7% vs 153.3% since 2013
- Healthcare is the fastest growing new segment in shopping centres. There is a direct correlation between time spent at a healthcare outlet and spend afterwards in the mall – top spend is in fashion items (reward for going to a healthcare outlet), pharmacy items and healthy food purchases
- Many of the typical anchors of a 1990’s mall have ceased to exist: supermarkets, department stores. Anchors now tend to be: one hypermarket; one Apple store (or equivalent); one leisure outlet (cinemas etc.)
- Most successful retailers now are comfortable with omni-channel, integrated approach: click and collect, integrated store to website, digital kiosks in-store etc.
- Pure online businesses will come under pressure soon from investors needing to see a profit – shakeout like dotcom bust is coming
- What customers value is surprising. The top 3 items are: ability to try product before buying (59%), direct contact with sales staff (43%) and product personalisation (40%). Least valuable are: news and data sharing with customer (22%), customer engagement communications (24%)
Importance of quality and excellence
- Power of being ‘intentional’ – what is your intent with customers and clients. This concept helps cut through the clutter to reveal what is really important
- Exceptional service is architected from the beginning – it has two components: a) credo/commitment/mind-set and b) systems/processes/measurement/continuous improvement
- Customer service levels have been in decline since 1970’s – it is the single best parameter on which to differentiate
- Most shopping relationships now are transactional – huge room to improve experience
- Creating emotional connection with customers/clients is more valuable than a rational one
Madano’s Mark Dailey moderating at ICSC Europe, earlier in 2017.
Rise of experiential retailing and food and beverage
- Experiential retailing really started to accelerate six or seven years ago when arcade quality games were able to be reproduced on the smartphone – meaning that the mall had to offer something that could not be had at home
- ‘Social’ rather than ‘shopping’ is the new buzzword
- Understanding what customers really want is the key to getting experiential shopping right
- Psychometrics and big data is critical – for instance analytics show that virtual reality (VR) is fantastic at enticing new customers into a mall but offers very poor dwell time and repeat business (been there, done that, got the VR t-shirt)
- Malls are increasingly transitioning from retail to food/beverage and experience. In Australia 53% of all sales revenue is generated by food and beverage
- Two big emerging issues as food and beverage outlets stay open later in malls and serve alcohol – a) what happens to the ambience/safety factor? b) What happens to the other stores? – pressure for them to stay open later
- Airports are the new food and beverage and experiential malls – ‘shopping centres with landing rights’ and again the U.S lags behind. Old style food courts are being phased out everywhere in favour of casual dining
Effect of millennials and Gen Z
- ½ of all millennials live in Asia-Pacific; however youngest regions are: Middle East (34.9% millennials) and Latin America (34.7%)
- Millennials care about: personalisation of product, authenticity of customer engagement and brands that overtly do good. By comparison Gen Z are sceptical of brands and are driven more by communities and brands that support communities not the brands themselves
- Gen Z first generation to be digital natives (Millennials were digital pioneers)
- Gen Z preferences: 58% would pay $5 for 1 hour delivery; 73% would pay for curated or personalised offers/subscription services; 60% prefer to buy in store than online
- Gen Z don’t have short attention spans but rather a ruthless 8 second filter. You have 8 seconds to persuade them they should listen
- 84% turn to YouTube before making a purchase
- 40% regularly provide online feedback to retailers
- Specialised influencers are their most important frame of reference
- Not brand but community loyal
| Gen Z | Millennials |
| First phone at 12 years old | First phone at 16-20 |
| Realistic | Optimistic |
| Independent | Collaborative |
| Digital natives | Digital pioneers |
| Private | Public |
| On-demand education | Formal education |
ICSC has been a Madano client since April 2017.