InfoBurst Retail 3_Layout 1 28/01/2016 09:05 Page 2 www.europe.uli.org Eat, Drink, Dwell: New Concepts in Shopping and Leisure Introduction The retail and entertainment sector is one of the most dynamic in the real estate industry. From shopping centres, high street shops, and out-of-town retail parks to restaurants, cinemas, and concert venues, ULI Europe’s Retail and Entertainment Council examines all aspects of ownership and operation in this sector. Through a programme of events and original content, the council draws ideas from both established best practices and emerging trends to provide members with insights into the retail and entertainment market. De Heuvel in Eindhoven, The Netherlands. Source: CBRE Global Investors In recent years, many observers have noted retailers increasing their use of service and food and beverage offering as a way of enhancing their offering. In recognition of View from the top this trend and the impact it will have on ULI interviewed eight senior retail executives from various European real estate fund members’ business and investment management and investor companies in December 2015 and January 2016. These interviewees strategies, the council commissioned represented a cross section of retail investors, developers, researchers, landlords, and asset research into the growing role of leisure managers. Interviewees’ interests included both high street retail and shopping centres across and experience in shopping centres and the major markets in Europe. In addition to the interviews, select data analysis was conducted city centres around Europe. to supplement interview findings. This report presents the findings of this Three key findings emerged from the research: research. Drawing on in-depth interviews • While retail sales remain the primary source of revenue, retailers and investors are with leading practitioners in the retail sector, broadening the definition and array of activities on offer. Food and beverage is the primary this report explores changing trends in retail growth area, with additional expansion in services and leisure. concepts, in particular leisure and food and • Full integration between online and in-store retail has become a given, but it is a challenge beverage offerings, and their real estate to do it well. Offering both is crucial though, as it has a substantial impact on customer implications. It highlights what is working experience and satisfaction. well and how current changes are affecting • The rapid pace of change is exciting, but also risky. New concept stores, locations which the vibrancy and liveability of urban retail are repositioning, and brands which are succeeding and/or struggling require stronger developments. asset management, flexibility, and leadership. 1 InfoBurst Retail 3_Layout 1 28/01/2016 09:05 Page 3 The experience Owners are seeking new occupiers to attract to the store Feltrinelli RED, a new retail new customers. Brands are changing format dedicated to both reading, and food economy is driving in-store and window displays more often as culture. The 500 square metres of the in-place retail and expanding in-store activities. premises are divided into a bookstore and Consumers of all ages enjoy shopping as a restaurant serving traditional Italian food Customers of all ages enjoy being together. one of their principal leisure activities. In and wines, selected by Feltrinelli on the Even in the age of social media, the best the age of instant tweets and rapid-fire news, basis of principles such as quality, social experience is being face to face, retail must keep pace. sustainability, and accessibility. whether that involves sharing a meal, browsing stores, exercising, or simply The internet has not killed, nor will it kill The expansion of food offerings in every hanging out. The creation of memory— or replace, the enjoyment of personal form is playing out across European of experience together—is inspiring the interactions; millennials report that they shopping centres. Figure 1, excerpted from development of how shopping centres prefer experiences over “stuff”. In response CBRE’s research, shows that the majority of look and feel. to competition from online retail, bookstores respondents, and in particular younger are now offering more experiences and people, cite the food and beverage offerings By adding activities within shopping centres activities that cannot be found online. These as an important factor in deciding which or on high streets that encourage people to include book groups, children’s story hours, retail location to visit. stay longer, browse more, and engage more, and author-related and author-inspired travel retailers are finding the “dwell” time is excursions, as well as cafés and technology In response to this demand, traditional food increased. Customers return more often and allowing customers to publish their own courts have given way to ethnic restaurants the impetus for coming to the location is story. and gourmet shops. Interest in how food is multiplied. In a recent survey of 22,000 prepared, where it comes from, and how it consumers across Europe, South Africa, In the US, Nike and Nordstrom offer a shoe is grown has spurred an increase in the and the UAE, CBRE found that 80 per cent of service through which the consumer can number of specialty restaurants as well as consumers visit a shopping centre at least design a shoe to his or her specification, shops selling gourmet oils and vinegar, once a month, with 42 per cent visiting at choosing colour, heel height, fabric or custom-made pasta, and specialty sauces. least weekly.1 leather, and any ornamentation. This Cooking classes have expanded as a customisation and individual service is popular way for young people to meet new increasingly available to online and friends and couples to enjoy common in-store shoppers. interests on a date night. “Customers are The square Gae Aulenti, part of the recently 1 finished major urban regeneration project CBRE, “Food & Beverage in a Shopping seeking novelty, Centre”, 2015, p. 5. inspiration and Porta Nuova in the centre of Milan, is home curiosity.” Altmarkt Galerie, Dresden - Andrew Vaughan, Redevco 2 InfoBurst Retail 3_Layout 1 28/01/2016 09:05 Page 4 % by Country 75% 72.2% Turkey % by Age “Real estate is where 66.1% 50% we conduct our lives UAE 61.5% South Africa and we like to be 16-24 44.8% y.o. together”. Romania 52.8% 52% Spain 41.4% 25-34 y.o. - Brian Klinksiek, Heitman 46.2% 37.1% 35-44 Greece y.o. 36.3% Female Italy 42.9% 35.7% Average Male 35.4% 37% Ireland 29.2% 45-54 y.o. Hungary 31.6% 30.2% 55-65 26% Russia y.o. lighting, and furniture, and increased UK 29.3% landscaping. Increasingly, retailers are 28.6% Sweden 27.8% Netherlands rethinking the role of the shop—that it is 27.5% Czech Republic 20% 26.9% Belgium 26.2% not just a place to purchase things, but also Germany Austria 25.6% Poland 24.8% an important part of community life. As Swiss 22.1% France districts in many cities become more Norway 17.7% 15.5% Latvia diverse and multifunctional, changes to 15% real estate—such as Regus opening offices in shopping centres—reflect the fact that Figure 1: The importance of food and beverage in retail. Source: CBRE, the distinction between work and leisure “Food and Beverage in Shopping Centres”, 2015. is blurring. While food and beverage is a major customers new ways to enjoy leisure- As ULI’s recent work on good density component of the experience economy, it is oriented outlets. Traditional shops offer illustrates, a lively mix of uses, income not the only element. The turn away from additional services such as salon and fitness groups, and populations, and attractive purchasing more “stuff” to experiencing facilities; in some cases adding climbing green spaces create a mix of places to live, meals, music, travel, and adventure with walls and spin cycle studios. Increasingly, work, shop, and relax.2 Retail can play an family and friends has crossed cultures and both occupiers and landlords are able to important role in enhancing the vibrancy of age groups. track dwell time and hot spots within both an area, as well as drawing a more active stores and the shopping centre. mixture of uses. It can attract people to an Demographic studies have shown that men area and increase the length of their stay. have become more interested in the CBRE’s 2015 survey found that one-third of Retail is often coming to the customer rather experience economy. The Man Cave in Hoog shopping centre visitors initially came for than vice-versa. Good places attract people, Catharijne in the Netherlands aims to attract the food and beverage offering rather than to and retail follows, even to non-traditional young men by creating a place where men shop. By surrounding consumers with more locations. can hang out and drink alongside the colour, sound, and choice, retailers have the consumer electronic store Media Markt. hope and expectation that the footfall will One example is Shoreditch, a vibrant Open Friday through Sunday, the Man Cave increase and that customers will linger and neighbourhood on the edge of the financial aims to be an alternative to traditional “boy’s spend more per visit. In addition, they hope centre of London that is renowned as a hub night out” venues, as well as a place where that customers will visit retail outlets and for technology and creative enterprises, as men can wait while their female friends and centres for a more diverse range of activities companions shop nearby. than simply shopping. 2 Greg Clark and Emily Moir, Density: drivers, dividends and debates (London: Urban Land The Man Cave is just one example of how Several interviewees reported that they are Institute, 2015); Greg Clark and Tim Moonen, landlords and occupiers are seeking to improving the physical amenities within The Density Dividend: solutions for growing increase dwell time within shopping centres, their offerings and upgrading common and shrinking cities (London: Urban Land Institute, 2015).