Will Covid change the shopping centers’ business?

We discussed this topic with Roberto Zoia, IGD’s Director of Asset Management, Development and Network Management, who explained to us that there will not be a pre-Covid and a post-Covid era because the business will continue with the metamorphosis that was already underway. It will just be much quicker.

 

Even if we are still dealing with thousands of infections each day and a number of restrictions are still in place, can we already take stock of the Covid experience?

The first thing that these months of restriction and confinement has shown is that people are still social beings. The significant limitations on operation we experienced in 2020 provided us with a clear message about how shoppers appreciate being able to make purchases in a safe, climate controlled environment, with a clear set of rules to be adhered to. This means that even at a time when only essential businesses were allowed to stay open our payoff “Spaces to be lived in”, namely our philosophy to focus on the wellbeing of people in the spaces were create and take care of everyday, was confirmed; a credo that in IGD has always meant combining the concept of property management with that of retail management . In the period between May and October, when a few of the restrictions were lifted as infections slowed, we saw that customers were gradually beginning to frequent shopping centers like before.

What was your first thought when you saw the results at the end of October?

Between August and October the sales of retailers in our Italian malls had almost completely recovered compared to same period 2019: this greatly assured us about the effectiveness of the steps taken to continue to provide a safe and satisfying shopping experience. At that point we thought that in the end we won’t need to change our world… nor our way of doing business.

There won’t, therefore, be a pre-Covid and a post-Covid era for shopping centers?

Covid will likely be the catalyst for the metamorphosis we had already begun.

In the future we will need to live with e-commerce: our response was and will be to improve our shopping centers as places capable of providing experiences and services.

The isolation experienced during this period has made it clear how important the physical presence is when doing things.

It’s a new awareness: that needs to drive us and accelerate the evolution that was already underway in IGD.

This transformation of the shopping center is something that involves IGD specifically?

No, not just us. The entire sector needs to understand that these changes need to be embraced quickly and now, including when we will have the historic opportunity to invest in infrastructure and sustainability in the wake of the EU’s Next Generation program.

Last October you were appointed chairman of the CNCC or Consiglio Nazionale dei Centri Commerciali. Which factors should be promoted in order to successfully exit the crisis triggered by Covid?

The work of the association will allow us to have a greater impact, as we will be able to present the topics that the sectors’ most important players have referred to. The focus will be on the values that shape all our choices and guide our efforts, even throughout the difficulties we encounter every day.  A serious commitment to the values, at the peak of the virus, for example, ensured that shopping centers were the safest places to shop in because of the rigorous protocols implemented and the compliance required.  Shopping centers belong to a labor-intensive sector which, in Italy, employs around 780 thousand people. The association wants to ensure that the policy makers heed our message and understand that in order to compete with e-commerce in an environment of weak consumption there must be a new set of rules.

Can you give us an example of the type of changes you would like to see in order to do your job better and be more competitive…

All you have to do is think of the bureaucratic constraints we are subject to, that compromise our ability to be reactive. If we need to create new spaces to substitute prior ones, we have to wait months for the authorization. In order to relaunch consumption, it would also be useful to liberalize promotional sales: now shopping center retailers may only start a sale after the proposed dates have been approved by the regional and municipal authorities.

Are these problems typical of Italian bureaucracy?

Not only: the CNCC also participates in the European Counsel of Shopping Places, ECSP, which is also responsible for managing the Public Affairs of our sector in Brussels. The issue of equal operating conditions with the big online sales players is not the only issue that we share. Together we also want to address aspects linked to the sustainability of our structures, in terms of both environmental impact and employment, as well as social responsibility in the areas where we are present. We also have another issue to address together relative to banks and how to handle the moratorium on loans which has become a priority in light of the payments lost due to the Covid crisis. The topics, however, are no longer just local. On a domestic level the sector has found a new cohesion precisely this last year. On a European level, on the other hand, the affinities that emerge gradually can be translated into more structured lobbying efforts with the European Commission. Working on a domestic, as well as a European, scale is, therefore, crucial.

You spoke about the need to co-exist with e-commerce. Can you give us an idea as to how this will actually be done?

In IGD the idea is to provide the customer with a complete experience, that can start with the promotions found online which results in a visit to the shopping center store to try on an article of clothing or find out about the electronic device that best meets your needs. It can also be that the experience begins when you see a new item in the store and then make the purchase online or in the store at a different time. Or the shopping experience can start digitally, but then the merchandise is picked up at your convenience in the shopping center, where the ample parking provides another advantage.

This is why we are convinced that true omnichannelism leads to the shopping center.

Is the new CRM system that Gruppo IGD is working on consistent with this way of thinking?

Yes, we want to work on establishing a digital dialogue with visitors in a systematic, centralized way. Then each shopping center will render the CRM system effective based on the input that only a regional approach can provide, leveraging on the deep understanding of the habits and needs of its customers. At that point, in the futures stores will be spaces for physical shopping, but also showcases for online sales.

At that point how will rents be calculated?      

Already today many retailers track their online sales using postal codes. The road will likely be the one to develop new lease formats based on the tracking of sales promoted in shopping center windows.

At that point having a CRM system that works well is strategic.

We always take into account that the cost per contact in a shopping center is much lower than the cost per contact online. The retailer needs a physical store because in order to sell in a certain area it needs to be seen and recognized locally. This is true omnichannelism and this is what we are getting ready for. The game has many very interesting possibilities; and we want to be out on the playing field.

Thanks, and buon lavoro.

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