Shopping Centres
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MARKET REPORT NORWAY 2019 ISSUE 2019 OCTOBER | 4 VOL. RETAIL MARKET NORWAY 2018 RETAILRETAIL FOOD & BEVERAGESHOPPING TRENDS MALLS Veganism, social resposibilityWhat and food quality do the - What will the future of Foodconsumer & Beverage look like? need them for? FROM LEASING TO WHAT’S DEVELOPMENT How to understand the new SHAPING shifts in consumer’s demand COMMERCETHE HOTTESTNOW We have interviewed Bror William Stende from Virke PROJECT IN OSLO We spoke with Olav Line at Mustad Eiendom about his new project, Lilleakerbyen PROP TECH Summary “Today’s implementation of new Please enjoy our fresh and newly produced Retail This created an even more demanding customer report covering the Norwegian Retail Market. In this and changes the shopping pattern and expectations report we say something about trends and market towards the experience of purchasing. Shopping technology involves the shoppers in development within general retail and F&B, rent Centre industry faces the same challenges and levels in Norway and also the Shopping centre sector. we ask; how is the way forward. Never before has We hope this report will give you and your company a insight, the ability to look ahead into the future and a very different way than earlier, and valuable insight of the Norwegian Retail Market. think new been more important in order to take part in these enormous developments and changes. That In short, the challenging part is that Retail meets is why Colliers now steps up and increase their digital solutions changes customer enormous changes in the way and speed it is focus on Retail covering services as Leasing, Brand developing. Today’s implementation of new technology representation and Shopping Centre Management. involves the shoppers in a very different way than patterns.” earlier and digital solutions changes customer Our Retail team in Norway are here to secure your patterns. Consumers are more knowledgeable and decision making and accelerating success. can at any time and place seek vital and accurate product information and easily decide from whom and Enjoy your reading! which channel they chose to buy the products from. Sørenga and Havnepromenaden - one of the newest retail/office/residential areas in Oslo 2 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 3 In this issue: The retail trade is changing 6 Food & Beverage trends 10 Lilleakerbyen - Interview with Olav Linne 14 From leasing to development 20 The shopping centres; What do the consumer need them for? 24 Why should new chains (Brands) set up business in Norway 28 Report highlights 32 Macroeconomics 34 LILLEAKERBYEN OSLO We interviewed the man behind the curtain at Oslo’s Key areas Oslo 36 hottest real estate project in Lilleaker, Olav Line. 14 Key areas Bergen, Trondheim, Stavanger 42 Shopping centers 44 20 10 24 Investments 48 Data & figures 50 Retail clients Norway 52 Retail contacts Norway 56 FROM LEASING TO FOOD AND BEVERAGE THE SHOPPING CENTRE: DEVELOPMENT TRENDS WHAT DO THE CONSUMER About Colliers 57 NEED THEM FOR? Our Director Leasing, Our Food & Beverage Specialist, Shopping Centre Specialist, Stian Charlotte Christensen, explains the Design by Colliers International AS Photo credit: iStock, Patricks Dronetjenester, Nyebilder, and Colliers International AS Jørn Andersen, comments upon Kjellhov, investigates whether the I new shifts in consumer’s buying the most important trends for the danger is really over for shopping pattern and new demand. industry. centres. 4 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 5 “The stores need to meet the customers on their terms and be present” PROFILE In many branches the ‘market is saturated’. When NAME: supply exceeds demand, the result is often a price war. Three areas that are experiencing this are groceries, HAAKON REED-LARSEN sport and electronics. The same applies to the textile WORKS AS industry, with many struggling with stagnating sales and weakened profitability. HEAD OF RETAIL TENANT REPRESENTATION When there is a price war and margin pressure, we will see winners and losers. The winners will be those ABOUT who are able to create volume, improve margins and 25 YEARS OF EXPERIENCE FROM thus divide the costs over several units. THE RETAIL INDUSTRY In the competition for winning customers’ attention, it will become ever more important to expand service and product knowledge. By this, we mean giving the customer that special experience apart from the goods themselves – something that the customer will appreciate and that will strengthen the customer relationship. Another approach is to invest in innovation: to come up with something new that the customer needs and is willing to pay for. The number of stores in some branches of the trade will fall. This is due to weak profitability and the increase The retail trade in online trading. Entire branches of the trade may be The retail trade is changing. Digital development in danger of disappearing because of convergence. means that more or less all branches of the trade The future of trading will be a combination of physical will need to make use of new channels. The retail stores and online shopping. The stores need to meet trade needs to think innovatively, change its business the customers on their terms and be present and is changing! models and adjust its communications and customer represented on the digital platforms and channels experience. Time after time, online shopping is shown used by the customers. In the competition for winning customers’ attention, it will become ever more to be growing much faster than the physical store. important to expand service and product knowledge. By this, we mean giving the Nonetheless, we are seeing an overall marginal High levels of value added tax and other special customer that special experience apart from the goods themselves. Our Head of growth in the retail and shopping centre sector. charges, such as the sugar tax, weigh heavy on trade. Tenant Represenation Haakon Reed-Larsen explains why and how. The Norwegian krone is weak, which is one factor The retail trade is an important industry, accounting that is making many vital aspects of trading activities for ten per cent of Norway’s economic growth and demanding. And, when changes occur unpredictably, providing employment to 360,000 people in over it is difficult to pass the costs on to the customers. 40 branches of the trade. The retail trade will soon This rapidly leads to poorer margins and weakens the amount to NOK 500 billion, of which NOK 50 billion is ability to compete and survive. 6 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 7 Norwegian shopping centres are now growing marginally. Unsurprisingly, online shopping has been identified as one of many challenges faced “Many shopping centres have to invest by shopping centres. The framework conditions for running a physical store have deteriorated. One trend that has long been evident in a number of countries is the death of the shopping centre and the significant amounts resultant empty premises. We have not reached that stage in Norway, but we are seeing a shifting trend where shopping centres are experiencing margin pressure, decreasing profitability and stores that are having to renegotiate rental rates. This could be the start of a trend that will last for a number of years. Many rental contracts are in the middle of their terms, which are often five years or more. In many to attract cases, these represent a higher rental rate per square metre than the actual current market would the same customers as they did before” warrant. Any market adjustment to rental prices throughout Norway will therefore take some time and will happen gradually as existing rental contracts expire/are renewed. The exceptions are where tenants are obliged to renegotiate before the expiry of their contracts as a result of failing earnings. The property investors behind the shopping centres have been forced to change the way they think. Many shopping centres have to invest significant amounts to attract the same customers as they did before. They need to invest in experiences to keep customers at the centre for a longer period of time than previously. This kind of investment – for the same earnings as before – is not necessarily a model that appeals to the finance market. For many tenants, increasing online trade may lead to a reduction in the space they require. On average, no fewer than 80 per cent of physical clothing, sport and electronics stores in Norway also offer online shopping. Online shopping will be at the expense of – not in addition to – sales from physical stores. Previously, it was relatively simple for shopping centre businesses to fill these superfluous areas with new tenants. The major players need not necessarily go bankrupt; they could simply ‘downsize’ before things become more drastic for the shopping centres. The shopping centres are being forced to become more innovative in their communication with the customers. Businesses need to be willing to change and adaptable, and to help create good new business models with a fresh, profitable and sustainable growth. With their strong purchasing power, Norwegian consumers are capable of contributing to such growth. 8 VOL. 4 | OCTOBER 2019 ISSUE VOL. 4 | OCTOBER 2019 ISSUE 9 “We will eat more food that does not contain PROFILE meat” NAME: JØRN ANDERSEN WORKS AS SENIOR ADVISOR FOOD & BEVERAGE ABOUT SPECIALIZED WITHIN THE FOOD AND BEVERAGE SEGMENT In the USA, over 50% of the population eat their meals outside the home. Here in the Nordic countries, around 30% of all food is consumed outside the home. This figure is expected to rise but, with many new establishments opening, competition is tough. So, what distinguishes the ones that will survive and are ‘geared’ for the future? Here in Norway and the other Nordic countries, all indications show that the biggest trend from 2018 will only be reinforced further in the years to come: namely, that we will eat more food that does not contain meat.