May 16, 2014

Shopping centres react to online challenge

Mfi shopping centre, in the Leipziger Höfen am Brühl (photo: Mfi)
Digitalisation: Mfi is offering customers more high-tech services in its shopping centres
If you build a big shopping centre of 20,000m² to 50,000² in Germany, it can cost you or your investors anywhere between €150m and €300m. Now that’s a lot of dough.

Once upon a time, before the age of the internet, there was a rule of thumb in the business: "Entertainment electronics retailer Media-Markt plus two other anchor tenants and investors will queue at your door!"

Those halcyon days, however, are fading fast, and for how long will today's consumers want to buy their TVs, washing machines or laptops in a shop?

Shopping centre operators such as Mfi are therefore revising their strategies in order to maintain customer frequency. They don’t really have a choice; otherwise their temples of consumption will turn into retail deserts.

No illusions

At least Essen-based Mfi, whose portfolio of 30-odd shopping malls makes it number two in the trade, is under no illusion. "We are working on the basis that 20 per cent of the assortments usually sold in shopping centres will be lost to online retailers over the coming ten years," says CEO Karl Reinitzhuber.

Meanwhile, many former must-have lessees are losing their attraction. “Not only anchor tenants are now the stars, but centres themselves must also become brands and offer a total customer experience,” Reinitzhuber emphasises.

In order to keep customers coming to shopping centres in an e-commerce age, Reinitzhuber intends to extend customer services and family-friendly recreation areas, add more premium brands, and improve the overall gastronomic offer.

Mfi is also offering more flexible rent contracts and smaller store sizes for food retailers, entertainment electronics specialists and booksellers etc.

Quality control

In order to systematise this new quality approach, Mfi now uses control instruments devised by parent company Unibail Rodamco. For instance, its new Pasing Arcades, completed this month in Munich, have now been certified as a "4.Star-Center".

To date, Unibail Rodamco has subjected 14 of its 85 sites to the new certification process which honours services such as loading bays for electric cars or signage systems. 

Clearly the whole industry is in transition, online is reshuffling the cards, commercial real estate will have to be revalued, and shopping malls must be planned in a fundamentally different way.

Related article in German: Lebensmittel Zeitung, Nr. 20, 16.05.2014, von Manuela Ohs, Roswitha Wesp & Jan Mende

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