Shopping Centre Marketing-3

In 2003 I wrote a white paper on shopping centre marketing. I thought it might be interesting to see how how my 'vision' stacked up against the reality of the last 6 years. I am breaking it up into a series of posts - and for my RSS readers who may not be interested in this topic - just bear with me as normal programming will resume shortly - and there will be other posts in between. (Although I actually think it is worthwhile contemplating this particular variant of marketing which does not get a lot of air time.)


The challenges facing SC marketers

Some of the challenges SC marketers must face, are:

-          Finding a model that works for the unique operating environment of the modern shopping centre

-          Managing the diversity of products and markets

-          Affecting change without alienating all stakeholders

-          Managing large outcomes on very small budgets on a wide range of market segments and product categories

-          Dealing with increasingly apathetic and cynical retail client base

-          Dealing with the clutter of the traditional mall environment

Shopping centre marketers must learn how to position major regional centre(s) as a ‘third place’ – a place that meets consumers’ needs at the level of their value systems. The days of marketers trying to exploit consumers are rapidly fading away. Modern marketing efforts must have integrity, and it is even truer of the shopping centre environment where long term relationships must be forged.

The differences with FMCG Marketing

There are significant differences with traditional FMCG marketing techniques. These are:

-          Size and evolving nature of the product

-          Lack of direct control over certain key aspects of the product (Difficult to fulfil a brand promise)

-          A customer who is a consumer (purchases and owns the product) vs. the shopping centre customer who is a patron

-          The patron has a long and enduring relationship with the centre

-          Traditional marketing is focused on market segmentation, whereas the shopping centre marketer should focus on market aggregation

-          Difficulty in converting non-users (outside the trade area) into users – it is (generally) not sustainable to try and draw people from beyond the trade area

The problems and symptoms of the current SC Marketing model

There are a number of problems experienced by shopping centre marketers. Below are just a few:

-          The pool of money available is small as a percentage of sales. Retailers spend on average 2-3%, meaning that the combined spend in the average regional centre is approximately $6m per annum. The contributions to the centre fund is included in that figure which means the centre marketing fund is about 0.5%  - or about 10% of the total marketing spend. This portion often represents the large majority of specialties.

-          Retailer contributions are diminishing. As they consider the (total) occupancy cost of a particular location, the ‘soft’ costs of marketing is an early casualty.

-          Retailer attitudes are deteriorating. The mall is seen as a high cost environment overshadowing the benefits of being part of the collective system. This makes it difficult to gain participation in centre promotions.

-          Lack of creativity in centre promotions.

-          Lack of impact of tired centre campaigns. I have yet to come across a centre manager who fundamentally builds their marketing plan around retailer requirements as opposed to their own functional capabilities.

-          Consumer indifference to traditional marketing communications channels. Penetration of various media now below 5% with very low recall rates

-          The mall marketer has begun to trespass on the marketing space of the retailer

-          The job does not always attract high quality candidates because of perception that it is a ‘promo bimbo’ role, with limited strategic impact.

-          Limited success as a coordinator, disseminator of information and a market specialist

The KPIs of SC Marketing

The KPIs of the new model are not completely different to the traditional model. Success is still measured in the same way (the first three), but there are a few different measures of success (the last two) that must be added:

-          Sales and average spend

-          Average length of stay

-          Traffic

-          Product quality (Ambience, service interface, retail experience)

-         Customer satisfaction