As life returns to ‘normal’ the scars left by the coronavirus months will be fully exposed. Retail landlords such as Intu, Westfield, Lendlease, Hammerson and British Land are shaping up to be amongst the worst affected and it’s opened the door to a new wave of experiential retailing.
In the short term, financial arrangements with existing retailers, including deferred rents, incentives to move in and downsizing, combined with a concerted (and perhaps co-ordinated) effort to bring shoppers back may steady the ship, but with online sales surging, big brands restructuring and empty space bad for business, the balance of power has shifted in favour of retailers.
So what’s next? With lower rents, infrastructure cost-sharing, longer opening hours and more flexible terms likely to become the norm, immersive experiences, entertainment venues and pop-ups are set to take centre stage. And with today’s consumers looking for something authentic and unique, a bowling alley next to a cinema is no longer good enough.
Clever concepts like Kidzania have led the way, generating loyal communities and giving shopping centres greater purpose, but there’s so much more room for great ideas. By combining multiple lifestyle, entertainment and leisure experiences in one place, landlords can establish the kind of multi-demographic, long term traffic necessary for physical retailers to thrive.
So the opportunity for creative thinking has arrived. Competitive socialising venues, themed attractions and entertainment minded retailers all have a place, but there is no one-size-fits-all solution. Understanding consumer demand drivers, identifying a role in the tenant mix and developing a long-term strategy to stay interesting are all mandatories. Without a purpose, a useful place in the consumer’s life and a strong brand promise, shiny looking venues become yesterday’s news overnight.
There will be winner’s and losers in the race to fill the experiential retail space. Strong brands with long term creative thinking built into a robust operational model have the best chance of success, but a lot will depend on the relationship between landlords and retailers. However one thing’s for sure, in the future, the world will be more entertaining.