Differentiation in REMs – Why & How?
‘Innovation’ and ‘differentiation’ are interrelated keywords synonymous to the ‘success’ of any business, retail entertainment malls being no exception. With online sales predicted to touch 12% of total retail transactions in 2018, brick-and-mortar retail may not look attractive with so many look-alike malls; people will only get drawn to a centre that offers an experience, with a difference.
The Homo Economicus species of shoppers that defined itself by ‘shop till you drop’ consumerism is becoming extinct. Grounded consumers … place a higher value on family and community, shifting from an egocentric ‘Me Economy’ to a socially conscious ‘We Economy’. The social and emotional bonds in peoples’ lives now have far greater importance than in the recent past as the needs of family, community, society and the Earth weigh heavily in peoples’ lives and in their purchasing decisions – says a recent Study1 reported by Randy White on consumer spending behaviour.
It is in this backdrop that we need to devise a mall strategy that keeps aligned to consumption pattern and also keeps it differentiated from the competition.
We have a McKinsey Report2 entitled “The future of the shopping mall” (November 2014) that describes retail malls as “the heart and soul of communities, the foundation of retail economies, and a social sanctuary for teenagers everywhere.” In an attempt to differentiate the consumers offerings, malls are now recast as the new downtown, which includes concerts, arts centres, spas, fitness clubs, and farmer’s markets, the report says, and adds: “These services provide a level of leisure and entertainment that can never be satisfied online.”
“It’s a rule of nature – one needs to evolve to stay afloat; same is with the malls. Merely a decade ago we were unaware of providing any additional support service to visitors apart from parking and a few basic amenities; today things are different, we need to observe their shopping behaviour and accordingly adapt to the changes at our end,” says Sunil Shroff, CEO – Malls, Sheth Developers & Realtors (India) Ltd.
The process of differentiation of a mall starts from the drawing board, be it a fresh project or a re-development exercise. Mall positioning dictates who ought to be the anchors, and this in turn influences the retail-mix and the mall design. Flexibility and adaptability are key elements and having large atriums and empty spaces allows room for frequent themed events, pop-up stores, kiosks, etc that not only keep the excitement on, but also have great utility value.
Mixed-use development is an emerging concept, which offers consumers an attractive, integrated community in which to live, work and shop. It also serves to generate additional traffic for the malls while maximizing returns on invested capital. Large office complexes, hotels, airports and metro stations readily provide this retail combo opportunities.
An AT Kearney Report entitled Future of Shopping Centers says “With swift and aggressive innovation and a customer focus, shopping centers can transform into ‘consumer engagement spaces’.” The study classifies such mixed-use centres into 4 basic archetypes:
Destination Centres – large spaces centred around a large attraction. Instead of a retailer, the anchor here is a compelling social experience – could be an indoor ski slope, roller coaster, concert space, or museum providing immersive, experience-based entertainment. It could also be home to specialty anchors where discovery, education, and experience are key components of the brand experience.
Innovation Centres – ‘smart’ spaces where pooled tenant data is used to create targeted offerings. The centre will be run by people like anthropologists, cultural psychologists, mall ethnographers who will constantly observe, record, and analyse shoppers and provide tenants with real-time feedback. In this format, beta testing becomes a business. Consumers will have the opportunity to test new technologies, access experts, and perhaps trade personal shopping and product evaluation data for discounts on new items or new products.
Value Centres – spaces that draw their identity and tenants from consumers’ shared values. These centres are anchored by an idea, not a retail nameplate. It could be around animal rights or an ethnic or community identity, and all tenants could provide an experience that ties into this. It could be showcasing local fashion designers, restaurateurs, craft brewers and distillers and artists at dynamic pop-up locations on a rotating basis, thereby providing tenants the opportunity to interact with customers, co-design products, and manufacture them in real time. International examples of this format include the Great Food Hall in China, the Market Hall in Portland, and the Markthal in the Netherlands.
Retaildential Spaces – highly curated ‘lifestyle centers’ that target specific demographics, say, young urban hipsters, or retirees, and so on, offering a demographic-specific and appropriate set of retail, restaurants, entertainment, and services. For example, in a senior-focused mall, senior housing would be augmented by medical services, pharmacies, exercise facilities, lawyers and accountants specializing in age-specific law, etc.
A differentiated design and structure is increasingly important. Malls are now incorporating more of natural ambiance into their design, installing plants and trees, wood walls and floors, waterfalls, and lots of glass to let in natural lighting; such elements help malls better blend in with their surroundings, says the McKinsey2 report and adds: “We see the mix of tenant/public space moving from the current 70/30 to 60/40, or even 50/50. When this happens, the expanded public spaces will need to be planned and programmed much like an exhibition; they will be managed more like content and media, instead of real estate.”
Successful cases of using of design to differentiate include Triple Five Worldwide’s 53 lakh sq.ft West Edmonton Mall in Canada, which recently added world’s largest 1.5 lak sq.ft indoor waterpark with a wave pool featuring 17 waterslides.
Selection of retailers should take into consideration the quality and freshness of offerings alongside their ability to constantly infuse some innovative experiential elements in customer engagement. There are traditional ways too to manage this aspect: one example is the Oberon Chanta at the Cochin Oberon mall, which is a collection of 20 small retailers offering exclusive local products that help differentiate the mall from 15 lakh sq.ft Lulu mall in the neighbourhood; then we have the Dubai Mall with a special zone “Fashion Avenue”, a separate entrance and parking slot, which is dedicated to luxury brands and services tailored to the upscale consumer. Scientific zoning also helps in differentiating.
Water Park at WEM, Canada
“To maintain an element of freshness, we may be relocating stores, changing look and feel of the mall, having better brand mix, bringing in new and trending brands, etc.,” says Sunil Shroff, and adds: “We need to position ourselves depending on the target customers in the vicinity – some may opt to be a value store mall, while others may decide for a lifestyle mall. We need to add the new age technologies. It’s a digital age, and our malls are also adopting mobile marketing techniques, engaging consumers over social media platforms.”
The term is gaining wide popularity in global retail since the past couple of years; it is basically the art of creating a combo that multiplies the pleasures of individually availing of the same products/services. Like for example, retailers and mall managers have successfully tried out coffee-sandwich- counters alongside a beauty salon, or a big-box retailer like we have in Big Bazar. This presents immense options for differentiating the centre.
Access and approach to the mall should be smooth and this needs to be planned with the cooperation of local civic authorities. Once inside the mall premises, vehicle parking becomes the first point of interaction with customer; the convenience and warmth at reception and exit will determine whether the visitors would love to come back to the mall again and again. The developer has to combine the elements of design-technology-hospitality to provide ample parking space, easy approach to whichever section of the mall the customer wants to visit, and an equally smooth exit. Small things matter: “Our travel arrangements is unique, we have separate rickshaw stand for women and incentivize the rickshaw drivers to be doubly sure that our customers are not inconvenienced,” says Sunil of Viviana mall.
Once inside the mall, it is a mx of innovatively conceptualised events and games all across – in the mall atrium and common area, specific locations, in the food court, by anchors and also by individual stores – that will finally keep the customer engaged and exited, prolong his/her stay, promote more shopping and spending. Leisure, which includes both F&B and entertainment, is a significant factor to attract and retain visitors for longer duration. It aids the creation of an emotional connect with the customer.
“With a view to differentiating from the competition, we at Viviana Mall have taken a tag line of ‘Celebrate Everyday’; we try to give new experiences to our patrons every day, doing something or the other to engage with them, on the special days or on festivals it’s a different atmosphere all together,” says Sunil Shroff.
Marketing of a retail store and mall is now gone way beyond the traditional discounting practices, it involves constant interaction with customers through smart technology platforms like AI, VR, AR, IoT, Chatbots and the like, and adopting multichannel strategies.
“We have special trained staff to assist our visually-impaired or specially-abled customers through various initiatives so as to make their experience truly pleasant in our mall, and we are proud to be India’s only ’Visually-impaired-friendly mall’,” says Sunil and adds, “We need to be a retailer-friendly and shopper-friendly destination with better brand-mix, providing good facilities to tenants and superior ambience to customers, this will make the difference.
Sound strategies, if followed and tweaked for effectiveness, will adequately differentiate a mall from the competitors. We present below an Design-Architect’s perspective on differentiating a mall:
Canal Walk, Cape Town, SA. Courtesy Bentel Associates International
Differentiation through Design-Décor-Tenants
Vrinda has over two decades of experience in the industry with 12 years at Bentel Associates. As a core member of Bentel’s management team, she handles the planning and operations of projects. She has led projects like DB City Bhopal; DB Mall Gwalior; Vega City Bengaluru and is currently engaged with more than a million sq.ft of projects in Delhi, Bengaluru and Calicut. In her previous roles she has been a part of residential, hospital and commercial projects. Vrinda has a Bachelor of Architecture degree from Manipal Institute of Technology, and PGPCMWE in Construction Management from NICMAR.
Malls are primarily designed considering three main aspects: tenants, shoppers and freeloaders. While effort is to give comfort and variety of experience to the shoppers, tenant requirements are also taken care of while designing a mall.
During the design process top emphasis is given to positioning of anchor tenants and then the vertical circulation cores, in a way that footfall is ensured in each corner of the shopping centre. This would evolve into certain type of circulation passageways appreciated by atriums at key junctions.
Since most of the malls are designed with similar functional principles they may appear to be homogeneous. Factors of undifferentiation in mall designs also include tenant positioning, shop display, décor, etc. While this may not impact the performance of the mall initially, it will create boredom for shoppers and freeloaders soon enough. The common spaces would start to look tired and outdated.
Here is where architects step in, and we at Bentel try to identify each aspect or space and how they can be treated differently to create souvenir in the minds of visitors.
One such aspect may be introducing unique elements of entertainment or a unique experience of food and beverage which would generally attract visitors. Creating impactful décor, canopy design in some key areas like entrances atrium, food court and entertainment zone would also contribute in creating eccentricity. Design alone cannot make this effect and identity lasting; what is required is the right amalgamation of design, tenant-mix, operations and maintenance.
Innovative discount schemes and attractive loyalty programs are common in all shopping centres and do fetch good seasonal revenue, but they do not help in making a differential experience. Infusion of modern technology could help in evolving the unique engaging experiences.
LED technology has revolutionized marketing strategies and if its implementing be driven by demographical strength of mall visitors through use of interactive screens and play areas, it can help charm the young visitors. Proper selection and designing of promotion spaces and visual merchandising is a responsibility of the operations/marketing team and requires frequent upgradation based on consumer feedback – this would help enhance differentiated character of the mall.
Utilities like valet parking, paraplegic service, special facilities for child care, etc do help in creating a comfortable environment, but they have become essential facilities rather than a specialty. A long term strategy would envisage linking of spaces like food court, interiors, and atrium to the culture and lifestyle of mall catchment. One such attempt by Bentel was incorporating a Chaat Street concept within the food court with the feel of local street vendors. Success of such themes requires support from the right tenants. This strategy would create uniqueness in the food court for a few years, but longevity will be limited because offerings may lead to boredom over a period. To avoid this, the offerings or tenants can be changed periodically, and the theme and décor is also required to be upgraded so as to create noticeable difference in the long term.
Interior rejuvenation is happening in most of the malls in India and the target areas are usually façades, food court, atriums and over-all lighting. While doing so, introducing new tenants with unique offering will also prove beneficial – it could be some new gaming activity that could become an identifier for the said mall.
Introducing a distinct element in each mall is thus crucial. Interactive spaces, clever planning, a well-established maintenance strategy, along with innovative events, constant upgrades in the tenant-mix, ensuring that they come with fetching and vibrant set designs – all of this can help in bringing freshness and differentiate the centre.