Faced with reduced footfall, cautious consumer spending and a new focus on omnichannel retailing, shopping centres have had to become more than just places to shop. To remain relevant, they must offer a unique experience and are repositioning themselves as community hubs, lifestyle centres or vast, glitzy entertainment complexes. This new global report analyses mall development, shopping behaviour and the strategies employed by mall developers and tenants to enable them to survive and grow in
Shopping centre performance has benefited from a strong recovery in global retail sales since the recession of 2009. Over the 2010-2015 period, total retail sales grew at a steady rate of just over 5% per annum in current value terms.
Private consumption has been boosted as a result of lower oil prices and low inflation in many markets. However, much of the growth came from emerging markets, driven by rising disposable incomes and aspirational spending among the middle classes.
India was a dynamic market, recording 22% constant value growth in retail sales over 2010-2015. The market is being driven by the growing number of young, mainly urban, shoppers.
E-commerce and m-commerce have increased in recent years, on the back of improving broadband and mobile technology, and the lower costs of internet-enabled devices. This type of shopping meets consumers’ needs for convenience, value and flexibility.
Online marketplaces and virtual malls, which have gained significantly in popularity, compete to some extent with physical malls, in that they enable consumers to find everything in one place.
In 2015, China overtook the US to become the largest market for internet retailing. While shopping centres in China continue to perform well, the e-commerce boom has impacted the industry, due to the runaway popularity of vast virtual malls, such as Tmall.com and JD.com.
Since 2007, shopping as a leisure activity has been impacted by economic uncertainty, alongside long-term trends for ever busier lifestyles and the move towards e-commerce. In emerging markets, a rise in the number of working women is reducing the time available to them for shopping.
Nevertheless, shopping is still a key leisure activity. In Euromonitor International's 2013 Middle Class Home Survey, 50% of respondents who said they would prefer to spend time away from home on a free day would go shopping; the highest percentage among all activities.
Leisure shopping is especially popular in emerging markets, with respondents in Turkey being the most likely to say they would shop on a free day (76%), followed by those in Indonesia (62%), Japan and China (both 61%).
According to Euromonitor International's 2013 Global Consumer Trends Survey, 43% of global respondents like to visit shopping malls, while the same percentage said they like to browse in stores even if they do not require anything specific.
Trends in foodservice also impact the shopping centre sector, since food and drink is playing an ever greater part in the tenant mix. The foodservice market in general has continued to perform well, as it is seen as an "essential luxury" for consumers, even in harder times.
Despite just over three quarters of consumer foodservice sales still being generated from outlets in standalone locations, Euromonitor International's statistics show that retail-based outlets gradually increased their share of consumer foodservice value over the review period.
The traditional central food court concept is becoming outdated as developers locate eateries in more accessible places within the mall. They are also introducing more diversity of offer, as consumers demand healthier and more exciting food concepts.
Commercial real estate agent Cushman & Wakefield estimated that across the 51 countries it tracks, there was a total of 46,846 shopping centres of over 5,000 sq m in size in 2013. In total, these covered a gross leasable area (GLA) of 924.5 million sq m.
Malls in Asia and Latin America are far larger on average than those of Europe and North America. China boasts by far the largest shopping centres in the world, with an average GLA of 85,625 sq m in 2013.
According to CBRE, another commercial real estate agent, large shopping centres (those with a GLA of over 20,000 sq m, excluding outlet centres) continued to grow in 2014, with 11.4 million sq m opening in the 171 cities surveyed.
Throughout the Asia Pacific region, consumers have embraced shopping malls as an integral part of their lifestyle, driving demand for bigger and more innovative developments. Seoul, Kuala Lumpur and Manila featured in the top 15 most active cities in 2014.
The US shopping centre industry is more mature, with a number of small and mid-size malls closing in recent years. Nevertheless, Nielsen reported that large malls of over 200,000 sq m GLA grew by 3% in 2014, with occupancy rates reaching 93% – the highest level since 2008.
Throughout Europe, many developers have opted for increasingly large-scale projects, with significant leisure offerings and an increasing share of foodservice operators, in order to give centres a unique identity.
Moscow saw the addition of 600,398 sq m of space in eight centres in 2014, including Avia Park, which became Europe's largest shopping mall with a GLA of 231,000 sq m. However, the sector was hit late in the year by Russia's geopolitical problems.
Shopping centres in the Middle East and Africa region have grown in number and size, thanks to an expanding middle class, the continued presence of expatriate residents, cushioned by tax-free incentives, and a growing shopping tourism industry.
While foot traffic may have dropped since the start of the recession, shopping centres have generally become more profitable, as developers are more flexible with regard to how they use their space, and more savvy about how to match the size of the store with the size of a market.
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