Page 40 - July 2020

SPECIAL FEATURE: TECHNOLOGY IN RETAIL

Adapt and Evolve Quickly

Continuing on from last month, Gary Burrows, Managing Director & Rupert Wood,
Executive Advisor, Malls and Meeting Places at FitForCommerce, a global strategy
& advisory company conclude their discussion on how companies must adapt to the
merging of the digital and the physical customer journey, experience and the growth of
online as a result of Covid-19 and its effect on retail, landlords, malls and meeting places.

uturist William Gibson said: “The future is already store to door, last mile delivery, curb side pick-up or click
here, it’s just unevenly distributed.” The same can and collect. Many retailers and operators have already fallen
be applied to the current situation in real estate, by the wayside, and many more will do so over the short-
F as traditional retailers like Alshaya, with 100 brands term. The prolonged closure of physical assets has exposed
under management, build and operate malls & meeting the fragile online business models of retailers, resulting in the
places, such as The Avenues in Kuwait. This has worked so bankruptcy of household name brands. We could highlight
well for them, that they are building a massive new mixed use fashion trends, poor inventory buying and inability to adapt
project in KSA. This truly merges the retailer and mall owner/ to or adequately predict consumer behaviour. Whilst these
operator into one seamless model that allows transparent are all contributory factors, one of the fundamental flaws of
dataflow on both sides, resulting in an improved personalised those failing brands is that they did not invest in digital and
customer journey and experience. Due to the current retail e-commerce when the times were good.
crisis, Brookfield Asset Management, the mall and meeting This point is starkly made when we highlight retailers
place developer, owner and operator, have recently rescued like Nike, who did invest in strong and robust e-commerce
Forever 21. They have also just announced a $5bn dollar platforms. Fortunately they have mitigated their losses during
rescue fund for other retailers and tenants of their malls. This Covid-19 and managed to make up much of its lost physical
will enable a breakdown of barriers and create a singular store sales via online orders. Due to the growth in online
business model of retailer and mall owner. Is this the unevenly sales, in a country where physical store sales have dropped:
distributed future that William Gibson was talking about? “We now have a playbook that we can use elsewhere,”
Retailers are struggling to adapt and evolve to the breath- stated Nike CEO John Donahoe.
taking pace of change, created by this new reality that has The debate highlighted by Property Week (Growing retail crisis
condensed a slow decline into a matter of months. With a reignites debate over turnover leases 07/05/20), regarding the
scramble for e-commerce platforms, new logistics processes, growing retailer requirement for turnover rents is a valid one and

demonstrates the case for shared risk and a partnership approach. that the digital or online world has just received a significant
As a new merged physical and digital (or phygital) ecosystem evolutionary boost. Whilst we can expect some bounce
becomes the norm in our malls and meeting places, then so too back, or revenge spending, as it has been called. Some of
should the relationship between the landlord and tenant. The the behavioural change will stick and certain categories of
sharing of transactional data, based on a turnover only rent has consumer spending will follow a new trajectory.
to be fair and reasonable, if the landlord is sharing in that risk. If the unevenly distributed future is showing us a glimpse
Equally the significant amount of data that the landlord collects on of the new consumer spending model, then malls & meeting
visitors, cars, pedestrian flows, hot spots, events, Wi-Fi and more places will have to adapt and evolve current business formats.
should also be shared with their tenants (their ‘customers’). This This is in order to re-shape a merged online and offline income
will support a big data flow that needs to be managed and shaped stream and ultimately allows realistic valuations of our assets.
into meaningful and intelligent, actionable information. It is only This will be driven by ‘Digital Transformation Strategies’ that
when we have this open and transparent relationship, that malls identify, qualify, quantify and realise the new revenue streams
and meeting places, retailers and operators will be able to provide that can be driven from the physical and digital world of retail. It
a personalised customer journey and experience. After all, the is only by understanding, adapting and evolving quickly, we can
new normal no longer requires physical location for a customer properly shape an aligned lease structure between landlords
to be a customer, as they can be sat at home watching TV, or on and operators, even if this is initially category specific. By using
a beach in Dubai, and they are still your customer. That will only enhanced data analytics from an e-commerce ecosystem,
be true, if they resonate with your meeting place and it is their trusted by all parties, we will be able to capture the true turnover
primary hub in which to socialise, culturally enrich themselves and income from a merged digital and physical retail singularity.
adopt as the heart of their community. The retail singularity is a model that adapts and evolves
A customer who patronises your meeting place no longer to allow accuracy of income that will drive performance
needs to ‘actually’ be at your mall or meeting place; they just and deliver the capital valuation structure for the future of
have to emotionally connect with it. They will purchase from the real estate industry. It is only by merging the digital and
your stores, order food from your restaurants and regularly physical, aligning owners and tenants and allowing big data
visit your smart, digitally enabled space. to drive solutions, that we can deliver a true personalised
This brings us back to the lease structure required to customer journey and experience.
meet the bright new, post-Covid-19 future. We all have to Part One of this article was featured
accept that we will never go back to how we were and in the June edition of RLI.

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