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Retail Insight – Bart Dohmen – TDAC

Is it Customers or Guests?

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In our first Retail Insight feature of the year, Bart Dohmen, Managing Partner of TDAC takes some time out of his day job to discuss with us the importance of an audience and how they are treated, with lessons learned from theme parks.

It is somewhat the story of the chicken and the egg that many mall owners face: Tenants are interested in malls with decent footfall and people only like to come to a mall where there is plenty of interesting shopping. So what do you do when one of these two fails?

During the period when online shopping was on the rise, many mall owners claimed that increasing vacancy rates and declining visitor numbers were leveraging the increase in unleased space and sought alternatives. To increase visitor numbers, mall owners tried to fill the unrented spaces with entertainment, but they now realise that this only partially helps. The number of visitors could increase by adding entertainment, but entertainment often attracts an audience with other intentions than shopping; whilst the opening hours of the entertainment companies are often out of sync with the opening hours of the stores. On top of that, leisure tenants are asking for lower rents per square metre compared to retail tenants. Since this is not the Holy Grail, what can you do to increase your visitor numbers? You look at other similar industries that are successful in attracting guests; one of these is theme parks.

The Situation Turned Around
The funny thing is that the success of the theme park industry today is partly based on research the attraction industry did in the retail world. I remember a few decades ago at the first themed attraction conferences, retail and shopping mall designers and operators were telling people how they were attraction buyers and theme park operators and designers were trying to find answers to questions like: Why is IKEA set up the way it is? How do retailers set up their stores to sell as much as possible? How do you price efficiently? How do customer programs work and why do we have anchor stores in malls?

Applying the wise lessons from the retail world to theme park models has contributed to the success of theme parks today. The most obvious proof of this is the large increase in the number of retail stores in theme parks since then and more importantly, the revenue streams on merchandise sales increasing from only around two to three per cent two decades ago to eight to ten per cent now.

Earth-Shattering Change
So what can be learned from the world of theme parks? The best lessons to learn from the theme park industry may sound simple, but at its core it is an earth-shattering change in the thinking of many mall operators. This lesson is: Realise that you are not dealing with customers, but with guests. A customer you sell something to, a guest you treat in a way that they feel comfortable and respected. When you treat a guest really well, you might even create a memory with this guest. With a guest you build a relationship. People with whom you have a relationship trust you and tend to come back.

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The (Better) Theme Park Way
At the more successful theme parks, customers are treated like guests. This starts from the moment (or often even before) they pull into the parking lot until they leave. The most successful theme parks invest a lot in creating many memorable moments and by doing that are boosting their revenues.

What is the difference in treating your visitors like guests or customers? Let me give a simple example: If the theme park industry thought in terms of customers, they would offer them what the theme park customer expects: a few attraction rides and some F&B. But by thinking of them as guests, theme parks offer them much more. Beautiful scenery, clean parks, live entertainment, surprise acts, very friendly staff who have the mandate to exceed guests’ expectations and many more items that are exceeding the guest’s expectation level all the time.

No Excuses
With every mall project we work on, there is always the same excuse: Theme parks can charge admission tickets to cover these costs and in our malls people walk in for free. In principle, this is true, but if you think of it that way, you have missed the essence of the effect of creating guests in malls: If you manage to turn your vision around and start approaching your customers as guests, you will recognise that they become more connected to your mall, increasing the number of visitors and making your guests willing to spend more. A logical consequence is that your tenants will be satisfied and rental income will increase.

Is this really earth-shattering? Yes! Implementing this approach requires a long-term vision. It requires management willing to invest time and money. If you start with this, some small changes may yield immediate results. But most changes take a long time, because you have to change both the physical items and the behaviour of the people working in the mall. This starts with your own staff, followed by the tenants’ staff. This will not be easy because your influence on tenant staff is limited, but it is possible.

The good news is that the difference in treating visitors as clients or guests is measurable. Let’s go back to the world of theme parks, at Tripadvisor and Google the more successful theme parks, which treat their visitors as guests, rank in general higher compared to parks that treats their guests as customers. By offering them only the expected attractions and some F&B, customers would probably rate their visit to the park a six or a seven. In the more successful parks, however, guests rate their visit an eight or nine. This is by thinking differently and going the extra mile. All these extra efforts cost a lot of money and are not immediately visible in your Excel sheets. But in the long run, these investments will pay off as your guests are happy to spend more and come back more often and value the park higher.#