3. Create an ‘agile lease’
We don’t envisage that leases will disappear altogether. But what would introduce the necessary flexibility to empower retailer-driven innovation is the notion of an agile lease.
Innovation: Change the Standard Specialty Lease to an Agile Lease
This is a lease where the key commercial terms (duration, cost, usage clause etc) are contained on ONE sheet, which then can be changed by sitting down in a single meeting or phone call and counter-signed and legally take effect. If new concepts can grow and establish themselves without the constraints and costs of for instance trading hours and with the guaranteed ability to vary the usage to fine-tune the offer to see what works, their chances of success are greatly enhanced.
There are strong socio-cultural trends that suggest that the value of these legal agreements are being eroded significantly anyway. In fact, the recent Sumo Salad/ Scentre debacle points to the absolute necessity.
5 Every centre a mixed-use centre
Creating a TRUE mixed-use centre would mean incorporating many of the following uses - possibly even all of the areas below.
Innovation: Multiplicity of Use
Public Domain/ Community
This is in essence a risk diversification strategy.
Start by adding maximum residential living to the centre. That is, to use an Aussie social convention a matter of BYO Customers. This is obviously not necessarily easy or applicable in every instance, but on the whole, most retail centres are in prime real estate locations with excellent infrastructure as well as often with community facilities.
It may require serious, long-term lobbying to overcome zoning issues, height limits and what not, but political opinion aside, I find it difficult to visualise any shopping centre that could not accommodate hundreds, maybe thousands of living units above it.
Great use of space, roads/parking etc can be expanded (possibly going underground) more easily than entirely new land to be found somewhere else. The accommodation could be for residents, holiday or even student accommodation.
Alternative use could include spaces often found in event/convention spaces. I can imagine ‘Launchpads’ = space in the shopping centre for experiences. Shop selling yoga clothes can use this space to run a yoga class once a week and promote their clothes. These are spaces to learn, explore and meet.
Ensure some spaces are large, flexible and multi-purpose. For a shopping centre to be a true marketplace it will need to cater for a events (we lost our centre courts to kiosks).
These spaces should be accessible AFTER hours. The idea is to work towards a mix of activities and an offer that extends the trading period of a shopping centre. In a world of shift work, remote work, permanent casual work, the gig economy, the idea of a 9-5 centre will become a quaint relic. The town square is not only applicable to large regional centres with external space to use; it can be replicated in every centre, and it starts by reclaiming the old centre court.
Placemaking is gaining traction in shopping centres. The argument for this is easy; the payoff is a bit harder. But if shopping centres are to be function as public spaces, it has consider topics such as Biophilia . An environment devoid of Nature may have a negative effect, with a potentially undesirable impact on health or quality of life. Malls have the social obligation to manage these spaces differently.
Placemaking relies on high quality common areas, a blurred line between public and private spaces, and the integration of traditional and non-traditional retail uses like local government offices, community centres, medical, childcare and education services.
It is critical that malls be about much more than stores. We see the mix of tenant/public space shifting from the current 70/30 to a significantly different split. When this happens, these expanded public spaces will need to be planned and programed over the year much like an exhibition. They will be managed more like content and media, instead of real estate.
Mckinsey suggests that malls must become like retailers, isolate and quantify the consumer touch points that are most responsible for driving satisfaction.
This means applying recent retail innovations like customer journey mapping in the mall, tracking it and using the information to improve the experience.
6. Crack the Code
Any landlord of any material significance could create a crack team of retail professionals that can scour the world and create a new concept. Landlords have capital, data that will aide insight and decision-making and It will likely be a franchise concept, and as soon as it attains critical mass, it can be sold.
It is really Landlords adopting a BYO attitude to retail mix. Landlords should:
get better at judging a retail talent
have retail teams working on partnership with retailer
be willing to perhaps operate retail shops themselves
(When you are funding the retail concept through fitout contributions anyway, you might as well have more control.) Mckinsey says that malls (should) see themselves as customer-facing providers of shoppable entertainment. (For example, the Menaissance: men are taking the lead in spending.)
I borrowed this term from Liz Holland, even though our use is a bit different. It is about exploring the multi-channel crossover opportunities.
For example, provide space for customers/patrons to:
see and try the products for eCommerce retailers (shared space).
pick online orders up
provide showroom spaces
These types of opportunities are designed to make the shopping mall a place where non-traditional retailers (like eCommerce merchants) can get a micro-footprint (or a toeprint as Liz calls it) in an environment before they are ready to commit to bigger, longer-term arrangements.
These examples are not an exhaustive list - you will see that it involves all four elements of the shopping centre mix to some extent, so I believe it has the potential to be TRANSFORMATIVE.