Key trends for the retail real estate industry in 2020

By João Correia de Sampaio

In an evolving retail universe, keeping on top of the trends will be crucial once again in 2020 for companies that want to stay ahead of the curve. As we look to 2020, we believe the following key trends will shape the world of retail still further.

A customer-centric universe: The retail world has shifted in a few short years from a supply-led model to a demand-led model, and this is set to continue in a big way in 2020. The customer is king, and meeting the desires of shoppers is absolutely crucial to stop them from walking away. Leasing is an issue which Sonae Sierra has taken very seriously. In today’s world, where footfall can no longer be taken for granted, finding tenants which delight, innovate and serve is crucial to reward the physical journey made by shoppers. A diverse occupier mix and compelling experiences in well equipped, vibrant venues are no longer optional extras. Accordingly, creating dynamic spaces which offer a full range of food and beverage (F&B) options with space for leisure will be more important than ever, such is the example of our most recent opening The Cook Book in NorteShopping (Portugal). Looking ahead to 2020, the fast-paced world of retail will look to new leasing models, as online-only retailers take their first steps in the physical world, and traditional retailers improve their online offering. 

Partnering with retailers more effectively: With the emergence of new, digitally-enabled consumption channels, shopping centre occupiers face increasing pressure to attract and retain customers. The best retail real estate protagonists will become synergistic partners with retailers in the omnichannel journey, deploying both technology and know-how to create a seamless customer experience. Shopping centers need to be increasingly designed with click and collect in mind, while individual units will often move further towards the “showroom” trend. As retailers become more relaxed about whether the sale takes place online or offline, physical spaces will increasingly become destinations that provide fun and fulfilment, places of entertainment and community. Sonae Sierra’s ambitious expansion works at NorteShopping (Portugal) will reach their conclusion in 2020. The €77 million investment, adding another 13,000 m sq m of GLA, will allow the centre to have, among others, a premium mall, a food market and a Primark store of more than 6,700 sq m.

Developing new concepts and destinations: Across this evolving world, it will be more important than ever to lead the way in the innovation race. this will mean pushing the envelope in terms of in-centre concepts, store layouts and smart systems for data collection and service provision. Looking at the bigger picture, this will involve integrating retail more effectively into urban areas, chiefly through mixed-use developments. By encouraging vertical development within more compact areas of land, mixed-used development meet city density goals, reducing traffic and pollution by allowing residents to use their cars less. Co-working spaces, medical centres and kindergartens will also increasingly find their way into shopping centres, shaking up the tenant mix. Outlet malls have proved one of retail’s most resilient concepts to date, and smart operators are likely to examine this space further in 2020.  Another component in the innovation race will be the use of PropTech solutions. Tenant experience has become a top priority for property owners, with the latest software facilitating direct feedback and allowing the investment community to make smarter, data-driven decisions.

So to create a competitive advantage today, retail real estate specialists have to morph into destination specialists, with a holistic understanding of this world’s interconnectedness. Retail in 2020 will not exactly resemble the world we have become used to in the last years, but it will represent a dynamic and exciting place to be.