ACROSS: You were recently appointed as the new Managing Director of IKEA Centres. How many countries are now under your management? And which former shopping center companies are now under the roof of IKEA Centres?
Gerard Groener: IKEA Centres was formed by combining three independent companies. One was Inter IKEA Centre Group, which held assets in Europe and China. Another was a company called IKEA Shopping Centres Russia, which ran the shopping center portfolio in Russia. The third was Ikano, which ran a portfolio of centers in Scandinavia, which was then Finland, Sweden, and Norway. We don’t have assets in Denmark. Those three companies merged and are now called IKEA Centres. We run 41 centers and 25 retail parks across the globe. The retail parks are all in Europe. That all adds up to 3.3 million square meters of retail space, excluding the IKEA stores that anchor all of them. That’s what we are. The IKEA Centres head office is based in Leiden in the Netherlands together with the IKEA Group head office.
ACROSS: In which countries or markets do you see the most growth potential concerning shopping malls?
Groener: If you look at the way we operate, we normally follow the market penetration plan of the retailer, the IKEA store. Wherever IKEA stores see new opportunities to open, we analyze the site next to them. If we believe the site is suitable for a shopping center, we try to achieve that. We are currently in Germany, one of the biggest markets in Europe. We are in Poland, the Czech Republic, Slovakia, Switzerland, Italy, Spain, Portugal, France, Sweden, Norway, Finland, and of course Russia and China. We recently opened a center in Umeå, Sweden. In September, we will open our second shopping center in Italy, in Brescia. In October, we have an opening in Bayonne, France. In the spring of next year, we open a center in the Algarve in Portugal. In 2017, 2018, and 2019 we will continue to open centers.
ACROSS: Do you have any refurbishment projects in your pipeline?
Groener: Yes, we do, but not under development yet. There are plans in Sweden and Poland for refurbishment and extensions that are still in the early stage.
ACROSS: What does IKEA Centers stand for? What kind of shopping world or malls do you want to create? What’s IKEA Centres’ philosophy?
Groener: What we started to do while still under John Tegnér’s leadership was to integrate the three companies and make sure that we have common systems and one organization. The three companies have developed independently, so you can imagine that things have spread a little bit. That’s what we are doing currently and we should be able finalize this fiscal year, which ends on August 31st. Parallel to that, we have started building our strategy. We need a new and refined strategy for the company. We have taken the first steps and already recognize that the many changes that are expected in the retail landscape and in consumer behavior are important. We will move towards creating real meeting places—places where people like to go for much more than only buying stuff that they need. The times when you could develop sizable monoculture shopping malls are probably over. So we need to take a very careful look at the mix we offer and this should go beyond just retail. That naturally led in the first instance to the conclusion: Many of our centers will be able to adapt to that new profile. A number of them, however, will not be able to do that and we have identified them: They are mainly retail parks. That’s why we are now preparing to sell our retail parks. We are in the preparation phase and expect to start the marketing this spring to a limited number of potential buyers.
ACROSS: How many retail parks do you want to sell?
Groener: We haven’t finalized the complete list, but approximately 25.
ACROSS: But you do not plan to sell any shopping centers?
ACROSS: Entertainment and leisure are becoming more and more important for the shopping center industry. How does IKEA Centres approach this?
Groener: If we take a step back and look at consumer behavior, it is influenced by a number of effects. One is the enormous urbanization that is taking place. More than half of the people in the world live in cities and it is expected that, in 20 years’ time, the number will be more than 70%. 50% will live in megacities, really big metropolitan areas. That tells you something about the location to pick. The composition of the population will be different. We have an aging population and a growing number of single households and that will also determine how people consume, shop, and design their homes. The whole influence of technology, whereby people are able to obtain anything from anywhere also has an impact. At the same time, old social institutions are meeting their demise. Churches are emptying, the number of members in sports clubs is falling. Nevertheless, we can also see new social combinations rising on the internet, and also offline in the form of festivals, concerts, and entertainment places. These are what people need more and more. These are the trends to which we have to adapt.
ACROSS: What does this mean for your centers?
Groener: In one of our future centers—which I think we should not be calling a shopping center because that would point to monoculture—we will see a growing portion dedicated to food and beverage. Food and beverage can be anything from a supermarket, to fresh food, to a farmers’ market, or restaurants, cafés and other dining activities. These services will grow to take up to 20 or 25% of the total floor area. We will also see the usual cinema, live entertainment, art, culture, and music, with the overall mix being strengthened with the addition of education and medical care. What we are basically trying to do is to create a heart of the community where people find anything they need and also a lot of things that bring them together. When you start developing a center, the importance is to really research the authenticity of the place and the people who live there. What’s makes them tick? What gets them out of bed in the morning? What brings them together? We constantly try to translate that into our offers and services in the centers. Only if you do this right, will you be able to create that kind of meeting place. This calls for demand-driven development instead of the supply-driven development that the property business has been used to for many years. We will also introduce a lot of social functions. Preferably, the center will be linked to a park with open-air activities and amusements. Another trend is the growing importance of sustainability. More and more people care about how sustainable your center is. They ask how it was constructed and how much energy was used doing it. You also need to build a relationship with all the social institutions around the center, with local authorities, schools, sport clubs, and anything else that is important in each community. That will be the future role of the center manager. The good thing about technology is that it will facilitate us doing this. There are many more ways to reach out to people than just going from door to door with printed paper. We have many more options now to have a dialogue with people. That’s the current line of our thinking.
ACROSS: What is the perfect tenant mix for such a meeting place?
Groener: I come back to this community thinking. It very much depends on the local situation. Of course you always have the international global brands. That is a basic strength you need to have in fashion, electronics, and of course in home furnishing. Fortunately, we already have very strong anchors that always join us. One is the IKEA store. When talking to potential tenants, the most important question they always ask is, “Who is going to be my neighbor?” The second one is, “How many people visit the center?” If we start a development, we always have a good answer for them. The answer is “Your neighbor will be IKEA.” If IKEA is your neighbor, you will have a guaranteed footfall driven by that store.
About Gerard Groener
Gerard Groener was recently appointed as the new Managing Director of IKEA Centres. He has 25 years of experience in retail real estate. He joined IKEA Centres as Deputy Manager in June 2015 having previously worked for the Dutch-based retail property company Corio. He held different positions within Corio from 1996, ultimately as CEO from 2008 until 2015, when Corio was acquired by the French property company Klépierre.