Developers must sell space based upon consumer data, not square footage says expert
Ibrahim Ibrahim, Managing Director at Portland Design Associates, the London based branding, retail strategy and design consultancy part of the Perkins+Will group of companies, believes that retail is changing, and there is a lot more that people need to think about when opening their business.
“For us, it’s consumer journeys and missions that drive the concept and should be the focus of developers and architects,” he states. He believes that the design process should be based on research and a rich understanding of markets, consumers, sectors, and technologies, with the need to understand the future behaviours and mindsets of consumers.
“It is this data capture ability which has led us to the realisation that the space race is over for retailers. For anchor stores or major space users, the idea they need more and more space is no longer the case. What has in fact happened is a percentage of sales has moved online and space is evolving from transactional use to experiential.”
The shift to digital
Roger Wilson, Managing Director at Perkins+Will’s Dubai studio, sets the scene: “Through the shift to online shopping, the e-commerce market is currently valued at $7 billion globally. The e-commerce market in the UAE is expected to reach $2 billion in 2018. Mastercard behavioural study in 2014 revealed nearly 35% of Middle East citizens had previously accessed the internet to shop online, 44% of whom made at least one online purchase in the previous three months. With a local internet penetration of over 90%, there is so much data available to us which we are in turn able to translate into a clear path developers should take. It’s imperative we take a look at the data made available to us by the likes of Portland if we are to stay ahead of the curve, boost the retail sector across the UAE and become the proposed fashion destination of the Middle East alongside the likes of Paris, London, and Milan.”
Ibrahim continues: “I am a firm believer the internet will not kill shops, it will liberate them. Increasingly we are looking at money not changing hands in-store. Retail is about three things: recruitment (sourcing customers), transaction (sales) and retention (loyalty). progressively we are looking at transactions happening online and physical stores being about recruitment and retention
“The space retailers do have will be used more and more for experiences rather than for transactions, much like the Apple store which is designed to be entertainment and leisure-driven. Retail will take on more of a hybrid role, for the most part, anchored by food and beverage whilst turning into more of a social destination. A good example of retailers turning experiential is beauty stores. Brands will create a hybrid of products and services, like makeup stores selling products as well as offering services like manicures and pedicures on site. But it isn’t just the retailers that need to take note of the shift in attitude. Developers need to be mindful of it all.
The issue for developers
“Tenants of shopping malls are changing, so developers have to change too. The issue for the developer is the changing net-to-gross ratio whereby there will be a convergence of the public and tenanted spaces. Sales-per-square-metre will no longer be how one values a piece of real estate, developers need new ways to show a tenant the value of taking space within a specific mall or destination. Developers are technologically able to capture granular data and hence charge based on the quality of audience. A developer’s asset is also its audience, not just its space and like it or not, this shifts developers from the property business into media business where they must begin to think and behave like a media brand that owns a media platform.”
Ibrahim concludes: “Let’s now look at the future planning of retail destinations. As designers who are looking to design a retail destination, we must understand the shopper. To ‘future proof’ a retail destination you need to understand how the aforementioned data will impact upon the design. If we say retail destinations are to become media platforms and brands need physical space to engage with customers, we are looking at very different designs. These are designs which will ultimately include hybrid, ‘soft’, programmable spaces acting as destinations which are not limited to transaction but engagement and experiential opportunities. Smart architecture will be designed with anthropology, not architecture at its core. It really is ‘people and places’ not ‘building and spaces’. We are working with Perkins+Will across EMEA to ensure we provide developers in the region with valuable insight and design, in order to keep us at the global forefront of retail.”