By Peter Tonstad
At the time of writing this, we are still in the midst of closed and restricted shopping centers. Currently approximately 20 percent of our more than 1.000 shopping center clients globally are restricted to essential shopping only. In my home country Norway, we experienced closed shopping centers for the first time during the Pandemic now, in February 2021. It was the mutant versions of the virus that brought things to a new level of caution and restrictions in parts of the country. The short-term results have been that the centers located in neighboring towns to centers that have had to close have been flooded with visitors happily driving an extra hour to shop. You can take the shopping center away from the shopper, but not the desire or need to shop.
Looking into high level stats across our client databases comparing Q2 and Q4 2020 with the same quarters in 2019 we see the following changes in average monthly consumer activity levels (app or web) in some example markets:
Q2 2020 vs Q2 2019 Q4 2020 vs Q4 2019
USA -24 % (June +8 %) -29 %
Spain -54 % -13 % (December +6 %)
Sweden -27 % -57 %
Norway +8,2 % (March -29 %) +21 %
The use of client databases in recent months has been weighted more towards service information on opening hours and Covid-19 measures, against the more normal offers and benefits. Many have also been able to keep their shoppers engaged through periods of closures with digital activities like games and competitions.
Some closed centers have gone as far as to offer free home delivery of all orders from any of the stores in the center. We chose to see these kinds of offerings as further steps towards the evolving convergence between malls as physical and digital marketplaces.
As part of developing our marketplace offering, we have recently spent a lot of time talking to retailers about product feed integrations for our clients. The response has been overwhelmingly positive. Retailers on average seem very happy that shopping centers are going down the path of fully serving them in the digital channels as they are doing in the physical space. It adds a new dimension to the long-term perspective of the tenant and landlord relationship which has been sought after for some time. For some retailers we also see the new shopping center offering, potentially replacing other industry initiatives for vertical online marketplaces or direct retailer investments in their own platforms.
The overall reasons for tenants to be a part of shopping centers digital marketplaces are:
1) Provides very cost-effective product and offering visibility directly to the local catchment area in all relevant digital channels
2) Makes last mile delivery and new customer acquisition more cost efficient
3) Gives customers more fulfilment options and greater convenience
4) Improved BOPIS, BOPAC, and delivery experience–better than most retail tenants could provide individually
5) Sell more online and in store
In our marketplace discussions in general we also see a big difference in traction from owners and tenants if the shopping center already has a big consumer database.
The prospect of further capitalizing on an existing consumer database, by connecting it to a marketplace, is an easier next step than starting from scratch. This confirms the importance of a shopping center having a consumer database in the first place. It should be regarded as an asset that will allow the center to evolve and grow in different directions to the benefit of their tenants. We believe building the biggest possible consumer database should be a top strategic priority for any physical retail location. Launching a shopping center branded marketplace will benefit substantially from any existing consumer database, but it will also help build one for centers who yet haven`t gone down the digital offering path.
The pandemic continues to drive digital convergence in the industry at a faster phase than before, and we can`t wait to see all the long-lasting effects when we come out on the other end.