SANTA MONICA, CALIF. — The retail landscape is changing, and the tried and true formulas for retail centers and malls are no longer cutting it. The convenience of e-commerce is cutting into purchases once almost exclusively entrusted to the local mall, and consumer tastes are evolving to demand better experiences from the centers they choose to shop at with their discretionary dollars.
Those were the conclusions suggested by panelists at the third annual Entertainment Experience Evolution (EEE) conference, where over 550 retail experts and top industry players joined Shopping Center Business at the Fairmont Miramar Hotel & Bungalows in Santa Monica Feb. 7-8. Panelists and attendees were there to discuss the future of retail and the brightest and best upcoming trends for success in today’s changing landscape.
Overwhelmingly, the conversation focused on creating an emotional connection with visitors. When it comes to discretionary purchases, shoppers seek a space where they can create memories, not just pick up merchandise and leave. This connection is attained through thoughtful placemaking, a carefully chosen mix of unique shopping and dining, the hosting of community events and the creation of an environment through lighting, music and landscaping.
Creating Memory-Making Destinations
After opening remarks by Jerry France, chairman and CEO of France Media Inc. and publisher of Shopping Center Business, the conference kicked off with a session titled “Lessons From The Best: Creating Great Entertainment Centers.” In this panel, developers of some of the most prolific entertainment centers in today’s retail landscape — including the fifty-block District Detroit, the 350-acre Broadway at the Beach in Myrtle Beach, and the Heineken Experience in Amsterdam — discussed winning methods to creating a destination for consumers.
“Today, we have two different forms of retail: commodity and specialty,” said moderator Nick Egelanian, president of SiteWorks Retail Real Estate Services. “Commodity retail accounts for 80 to 85 percent of all dollars spent, and commodity retail is that which you use on a regular basis and replenish regularly. Shoppers spend 85 percent of their time making subconscious choices between price and convenience with commodity retail, and they don’t care about the experience they have at those stores.”
“This conference is not about that; it’s about how we sell and motivate buyers to spend their discretionary income and time. When we motivate them to do that, we must make an emotional connection with them,” continued Egelanian. “Let’s talk about the best shopping center in the world — Disney World. You pay to get in, you pay to park, you stand in line, you stand in line some more, you over pay, you under appreciate and you leave happy. Unfortunately we can’t do that in most cases — we have to come somewhere in the middle, and our industry does not know how to do that.”
When creating a connection with shoppers, a mix of unique retailers and restaurants is key, according to Pat Walsh, senior vice president of asset management and commercial leasing at Burroughs & Chapin Co., which developed the Broadway at the Beach property.
“With Broadway at the Beach, we go out there and we find the most unique merchants that have an experiential aspect to them,” he said. “It may be a moonshine or wine tasting experience, or making your own soap — it’s the socialization and the experiential nature that we really go after. We don’t have traditional retailers because the visitors that come in from their home cities are not looking for that; they’re looking for a unique experience, and we’re all about building memories.”
As always, the changing demands of millennials were at the helm of the discussion.
“Millennials don’t buy goods; millennials buy experience,” said Ken Narva, managing partner and co-founder of Street-Works Development, mastermind behind the massive District Detroit development. “A third of the millennials don’t drive a car and they don’t buy a lot of specialty goods.”
In order to capture shoppers seeking experience, like millennials, Narva touts the creation of an intimate, downtown environment. “Having a longer term view on return is important when developing a project today,” he said. “America makes everything way too big, and the most important aspect of an experience is feeling intimate and immersed in a space. We’ve tried to get every retailer at District Detroit to take less square footage. Whether it’s apparel, food or beverage; the best urban environments are intimate.”
Currently at District Detroit, Street-Works is executing a total of 400,000 square feet of retail, 70 to 80 percent of which will be food and beverage. Paired with the experience-driven tenant mix, the company is focusing on creating a cozy and unique cityscape that incorporates the history of the city.
“Our firm gets its name, Street-Works Development, because we believe great cities are built from the street up, not the roof down,” said Narva. “We narrow streets, increase sidewalks and spend a lot of money on storefronts. Individuality is very important. We’re looking at concepts for District Detroit which we call Restoriums: that is a restaurant, a store and a museum together.”
The emotional connection with a guest should be first in mind when developing a space, according to Brad Shelton, creative director of BRC Imagination Arts,.
“When we’re looking to tell a story at a property, the first thing we’ll ask is ‘why are you doing this and what is the change in the heart of your guests that you want to achieve?’ Our perception is if you’re not trying to do that, no one will care,” said Shelton. “Shopping for concepts like it’s a catalogue is the wrong way to think about it. You have to think about it by saying, ‘what is the problem I’d like to solve? What is the change in the heart of the guest that I would like to achieve?’”
BRC’s recent projects include Heineken Experience — the top visitor attraction in Amsterdam — the NASA Shuttle Launch Experience in Florida, The Henry Ford Museum and the Abraham Lincoln Presidential Library and Museum in Illinois.
Foods Halls, Experiential Anchors — Developing for the Future
The first day of EEE continued with deeper looks into a variety of hot retail trends, from chef-driven restaurants and food halls to public spaces as a retail anchor. During a session on chef-driven concepts titled ‘Stars Within Reach,’ Phil Colicchio, founder and managing director of Colicchio Consulting, provided the audience with a list of important considerations when choosing a chef-driven concept for your center.
“You have to focus on the idea that to land these types of players [top chefs], you’ve got to be a little more flexible than the old-fashioned, ‘here’s the lease, sign it’ approach,” said Colicchio. “Your industry does not have embedded food and beverage operating teams like hotels do. You have to choose operators who can operate. You have to create guest experiences.”
“Thoughtful, intelligent curation is important,” continued Colicchio. “It’s imperative to choose the right chef-driven concept for your property. Food halls make great anchor tenants if done correctly. You can leverage the chefs if you provide an environment where they are able to create their projects. Top chefs will appear at your spaces at different times during the year, and they can help attract crowds and do demos in any of your other tenants spaces.”
This panel was followed shortly after by ‘Public Spaces: The New Anchor For Retail and Mixed-Use,’ which discussed creating spaces for community gathering and the effect that has on time spent at a retail property. A range of experts gave their tips and tricks for creating successful gathering spaces, including Michael Atwell, vice president of real estate at Olympia Development of Michigan; Clifford Warner, chairman of Mycotoo; Julie Brinkerhoff-Jacobs, president and executive senior principal of Lifescapes International Inc.; and Jeff Kreshek, vice president of West Coast leasing for Federal Realty Investment Trust.
“We feel that a strong concept, creative leasing and flexibility within our designs are the key to the success of our projects,” said Ed Lopez, senior vice president and senior design principal of JERDE, and moderator of the public spaces panel. “We also know that public spaces can take multiple forms and shapes — we have concepts from outdoor living spaces to water-filled, themed environments with musical fountains. We have park schemes where the entire project terraces over retail.”
“Ultimately, our projects are becoming much more layered,” continued Lopez. “We’re using all disciplines of design — water, landscape, lighting and music — to create unique and powerful destinations for our projects. These provide greater value to projects by increasing stays and bringing more visits.”
After a final session on the impact of active entertainment environments on retail — which focused on pop-up retail concepts, creative placemaking and top-notch customer service — attendees migrated into the exhibit hall for an opening cocktail reception sponsored by Benning Construction Co., where they were able to build new relationships andexplore a variety of booths from exhibitors.
Feb. 8 kicked off with breakfast roundtables, where colleagues and experts came together to discuss a range of topics related to entertainment and experience in shopping centers today. These sessions included discussions on everything from virtual reality and entertainment lighting, to attracting millennials and the transformation of malls into mixed-use main streets.
Garrick Brown, vice president of retail research for the Americas at Cushman & Wakefield, began the general sessions for the day with a keynote address titled “Food Halls, Retail Mash-Ups and Cool Streets: Can Hipster Retail Concepts Save Retail?”
In his address, Brown explored the changes occurring in the retail landscape today, with a focus on experiential retailers, food and entertainment concepts, and outside-the-box tenants that are growing while many others are in contraction mode.
“The hottest things going in retail right now are entertainment and food and beverage, with food halls at the top of it,” said Brown. “If you want to see what’s going to bring people into retail, thanks to our hipster and millennial friends, it’s all about experience and having fun.”
Unfortunately, commodity retail doesn’t really fit there,” continued Brown. “Retail continues to evolve. We’ll get through this current phase without a hitch for most of us, but right now we have a lot of ugliness ahead.”
Brown continued to state that Cushman & Wakefield tracks announcements of major chains, and that the last year saw 4,000 closure announcements — the highest level seen since the recession when Blockbuster closed 5,000 units. “We think that number is going to jump 25 percent this year,” he predicted. “The overwhelming majority of closures, however, will be in just a few categories.”
The second day continued with multiple sessions on the generation ahead. A panel discussion titled “New Development: Envisioning Retail and Mixed-Use for Tomorrow’s Consumer,” moderated by Randall Shearin, editor of Shopping Center Business, looked into developing for future generations
The panel gathered representatives from leading development companies — including Stellar Development Inc., EPR Properties, Regency Centers and DLR Group Inc. — to discuss what they envision for the coming years in retail, and their opinions on Generation X, millennials and Generation Z.
A second keynote address by Michael Wood, co-founder of 747 insights, continued on this topic, looking into the evolving expectations of retail from millennials and Generation Z. Wood noted that Generation Z is coming into the picture, and bringing with it a new set of attitudes, values and perceptions that differ in many ways from that which we’ve seen with millennials.
The day saw a full schedule of general sessions, where attendees were given a deeper look into food and dining as an anchor, engaging the senses and enhancing retail environments through music, and luxury cinemas and the growing trend towards incorporating five-star chefs, ultra chic cocktail lounges and intimate gathering spaces.
— Katie Sloan