1 DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
September7,2017
Top Takeaways from The Connected Mall of the Future
TheFGRTteamattended“TheConnectedMalloftheFuture,”theinauguraleventofaseriesofcollaborationeventsbetweenFGRTandtheUrbanLandInstituteAsiaPacific,whichfocusoninnovationinretailanditsapplicationstorealestate.
TheKeyTakeaways
1) Chineseconsumersaremoretech-savvyandwillingtotryoutnewdigitaltools.
2) Consumersarenotcautiousaboutgivingawaydata.
3) Shoppingcentersshouldhavetheirownapps.
4) High-endmallsoutperformandthereisopportunityintier-2andtier-3cities.
5) Shoppingintheconnectedmallofthefuturewillbesocialandseamless.
ThethemeoftheeventseriescollaborationbetweenFGRTandtheULIAsiaPacificis“RetailRevolution:DisruptorbeDisrupted,”andthevariousconferencesandpanelsplannedthroughouttheregionaremeanttoshowcaseinnovativesolutionsintheretailspace.Theinauguralevent,TheConnectedMalloftheFuture,focusedonconsumer-facingtechnologiesthataugmentcommunicationandengagementwithcustomers.
Duringthefirstpartoftheevent,DeborahWeinswig,ManagingDirectorofFGRT,presentedontherecenttrendsinretailtechnology.Herpresentationisavailablehere.
Inthesecondpartoftheevent,WeinswigwasjoinedbytheCofounderandCEOofActiMirrorVictorRuizandtheFounderandCEOofNeomaFrancoisChabaudieforapaneldiscussion,whichfocusedonconsumer-facingretailinnovationsthatarerelevantforrealestatecompanies.
2 DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
September7,2017
CompanyBackground
• ActiMirrorhelpsstoresbecomeomnichannelhubsbycreatingapersonalizedconsumercommunicationchannelandenhancingtheoverallguestexperience.
• Neomahelpsshoppingmallscreate,launchandpromotebeacon-poweredandaugmentedreality(AR)applications,andhelpsretailerswithinthemallinspireandattractcustomersassoonastheyenterthebuilding.
KeyTakeawaysfromthePanelDiscussion
1)ChineseConsumersareMoreTech-SavvyandWillingtoTryOutNewDigitalToolsThefirstquestiondiscussedbythepanelistswasrelatedtothedifferenceinshoppingbehaviorsbetweenmarkets.BothRuizandChabaudiesharedtheopinionthatconsumersfromMainlandChinaaremoreforwardwhenitcomestointeractingwithtechnologyduringaretailexperience,mostlybecauseoftheiruseofappssuchasWeChat.
Forexample,lastyearNeomasupplieditsbeacon-poweredtechnologysolutiontothedeTourHK2016festivalinHongKong,whichhosted110,000localandinternationalvisitors,andfoundthatChinesevisitorsexperiencedsignificantlyhigherlevelsofengagement.However,consumersfromHongKong,aspointedoutbyRuiz,havebenefitedfromandexpectin-personassistancefromsalesstaff.Chabaudiecommentedthat,inmarketssuchasIndia,connectivityisstillaproblemwhichpreventstheadoptionofretailtechnologies.
Source:FGRT
ThepanelistsalsoagreedthatretailexperiencesintheUSlagbehindinretailtainment,whichpresentsabigopportunityforrealestateoperators,retailersandtechcompaniestomakeshoppingfunandexciting.
3 DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
September7,2017
2)ConsumersAreNotCautiousAboutGivingAwayDataActiMirror’sdigitalmirrorsuseface-recognitiontechnologytocreatepersonalizedexperiencesforconsumers.Inoneinstance,thecompanyranaselfieapplicationthatrequiredconsumerstoacceptthetermsandconditionsonActiMirror’swebsite,and,notsurprisingly,fewconsumerstookthetimetodoso.Fromthisperspective,Ruizobservedthatconsumersarenotcautiousaboutgivingawaydatawhenengagedininteractiveexperiences.Atthesametime,startupcompaniesneedtopayparticularattentiontoprivacylawsandtomakesuretheyarecompliantwithregulations,becauseanylargefineorsuitcoulddramaticallyimpactthesurvivalchanceofastartup.
Source:FGRT
3)ShoppingCentersShouldHaveTheirOwnAppsThepanelistsdiscussedwhetheritmakessenseforshoppingcenterstobuildtheirownapps.Usersarereluctanttodownloadandusemultipleapps,soatthefaceit,theinvestmentdoesnotseemjustified.However,ifonetakestheviewthattheshoppingcenterisaretailplatform,thenamobileappcanaddsignificantvaluetotheconsumer,especiallyifnotallshoppingcentertenantshaveadigitalfootprint.WeinswigfurtherelaboratedthatthecaseforbuildingappsisevenstrongerforlargerREITSwhichoperatemultiplelocations.Theycanuseanapptocommunicatewiththeirvisitorsinadirectfashionandfurtherestablishtheirbrands.InChina,shoppingcenterscanuseWeChattoachievethesamepurpose,whilebenefitingfromtheapp’s963millionuserbase.
4)High-EndMallsTendtoOutperformandthereIsOpportunityinTier-2andTier-3CitiesWhenaskedabouttheretailoutlookforshoppingcenters,Weinswigcommentedthathigh-endmallstendtooutperformthemarket.Forexample,AmallsintheUShaveperformedstrongly,seeingdouble-digitsalesgrowthinrecentyears.Thatbeingsaid,propertiesarestillfacingchallengesfromdecliningfoottraffic,duetotheexpandinge-commercesegment.Weinswigalsocommentedthatthereisanopportunityintier-2andtier-3cities,especiallyinChina,wheretherisingmiddleclass,higherexpectedlevelsofurbanizationandshifttoaconsumption-driveneconomyareexpectedtosupportretailprojects.
4 DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
September7,2017
5)ShoppingintheConnectedMalloftheFutureWillBeSocialandSeamlessThepanelwrappedupwithadiscussiononwhattheshoppingmallofthefuturemightlooklike.Weinswigcommentedthattheshoppingcenter,whilemoreconnected,willbeaplaceforsocialconnectionsandcommunityactivities.Chabaudieremarkedthattheshoppingcenterwillprovideaunifiedshoppingandcommunityexperiencetoconsumers,whiletechnologysolutionswillbeabletomeasurethesatisfactionofvisitorsandsupplyrelevantdatatoshoppingcenteroperatorsandretailers.Ruizconveyedthatwiththehelpofinnovativetechnologies,consumerswillhavetothinklesswhenshopping.Instead,theywillgetwhattheywant,whentheyneedit,inaseamlessfashion.Inaddition,withasizablemillennialpopulationglobally,thefocusondeliveringmeaningfulexperienceswillonlyamplifygoingforward.
Source:FGRT
DeborahWeinswig:TheRetailRevolutionandtheFutureOutlookforShoppingCentersAttheevent,WeinswigpresentedFGRT’sworkontheevolvingretailmarketandthetechnologicalinnovationsinthespaceastheyrelatetotheshoppingcenterindustry.Shepointedoutthreeglobaltrendsimpactingthefutureofshoppingcenters:1)urbanization;2)demographicshifts;and3)thehyper-connectedconsumer.
1.UrbanizationUrbanizationisoneofthemostimportantdemographictrendsfortheretailsector,with66%oftheglobalpopulationforecasttobecomeurbanizedby2050,accordingtotheUnitedNations’WorldUrbanizationProspectsreportreleasedin2014.Urbanareaswillaccountforallpopulationgrowthacrosstheworld.Forexample,peoplelivinginChinesecitieswillgrowby100millionbetween2014and2019,andby292millionbetween2014and2050,accordingtoUNforecasts.
Oneimpactofthisurbanizationtrendisthatnewinfrastructureprojectssuchasmetrolinescreatemorelocalcommunitieswithnewopportunitiesforretaildevelopment.Atthesametime,morepeoplelivingincitiesmeanssmallerlivingsspaces,andthisnecessitatesmoreplaceswherepeoplecanspendtimetogetheroutsidethehome.
Source:FGRT
5 DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
September7,2017
2.DemographicShifts
SilversThesilverpopulationaged65andoverisforecasttogrowfrom8%oftheworld’spopulationin2015to13%in2035,andisexpectedtoaccountforover33%oftotalpopulationgrowththrough2035,accordingtothePopulationDivisionoftheUN.Thesizeandgrowthrateofthesilverpopulation—andofthesubgroupswithinit—varyconsiderablyacrosskeyregions.By2035,Japan,SouthKorea,WesternEurope,NorthAmericaandChinawillseesilversaccountforthehighestshareoftheirpopulations,atmorethan20%ofthetotal.
Silversaredrivingahugelydisproportionateshareofconsumer-spendinggrowthinmanykeyregionsglobally.Insomemarkets,theyaredrivingnearlyallsuchgrowth.
Retailersareoptimizingstoredesignsandlayoutstocatertotheneedsofsilvers,aswellasopeningsmallerstoresclosertowheretheylive,astheytendtotravelshorterdistances.Silverswillalsodrivee-commercegrowth,duetotheirlimitedmobilityand,consequently,theneedfordeliveryservices.
MillennialsandGenZersThesedemographicgroupscomprise43%ofthepopulationintheUSandmajorEuropeanmarkets,accordingtodatafromEurostatandtheUSCensusBureau.Thisisasegmentofgrowingvalue,sincemillennialsareenteringthehigh-growthphaseoftheirearningspotential,whereasGenZershaveagreatinfluenceonfamilyspending.
InChina,millennialsnowaccountforover30%ofthepopulation,representing415millionconsumers.ThisismorethantheworkingpopulationoftheUSandWesternEuropecombined—undoubtedlyaneconomicforcetobereckonedwith.
Figure1.PopulationSizein2014,byYearofBirth(Million)
Barlabelsrepresentthe%ofthetotalpopulation.Source:NBS/Euromonitor/GoldmanSachsGlobalInvestmentResearch
11%
14%
16% 16% 16%
12%
7%
4%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
0
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Popu
laZo
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illion)
6 DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
September7,2017
Figure2.ChineseMillennialsAreaBiggerDemographicthantheTotalWorkingPopulationoftheUSandWesternEuropeCombined,2014
Source:Euromonitor
AccordingtoastudybyBostonConsultingGroup,by2020,annualconsumptionbythoseaged18–30inChinawillincreaseby14%peryear.Thisisdoubletherateofthepreviousgeneration.
ChinesemillennialsdoappeartobemorewillingtospendmoneyonluxuryproductsthantheirAsiancounterparts.AreportbyMasterCardin2015,foundthatChinesemillennialsplantospendanaverageofUS$4,362onluxurygoodsoverthecomingyear,farexceedingtheluxuryspendingbudgetsoftheircounterpartsinSouthKorea(US$2,638)andtheAsianaverage(US$2,584).
3.TheHyper-ConnectedConsumerIsAlwaysOn:MoreInformedandwithGreaterAccessConsumersareevermoreconnected,bothphysicallyanddigitally.AccordingtoresearchfromBoeing,airtrafficisexpectedtoincreaseatanannualrateof4.8%between2016and2035.TheGSMAssociation(GSMA)forecaststhatby2020,therewillbe5.8billionsmartphonesglobally,leadingtoa49%increaseindatatrafficbetween2015and2020.Thispaceofgrowthinconnectivitymeansanexpandingconsumerbaseforbrands,retailersandshoppingcenters,yetitalsospellsamorecompetitivelandscapeaswellasanincreasinglysophisticatedconsumer.
Figure3.EstimatedAnnualGrowthRatesforPassengerAirTrafficfor2016–2035,byRegion
Source:Boeing
415
353
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ChineseMillennials Totalworkingpopulalon
Popu
lalo
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illion)
TotalWorkingPopulalon
3.1%
3.7%
4.8%
6.0%
NorthAmerica
Europe
World
Asia
WesternEurope
USA
7 DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
September7,2017
TheEvolvingRetailLandscapeandChangingShopperExpectationsCallfortheShoppingCentertoReinventItself
ReinventingtheMallExperienceMalloperatorsarerethinkinghowtheydeliverexperiencestoconsumersandhowtokeepoccupancyrateshigh.
• Curationandnovelty:Pop-upsareusedtocreateacuratedmixofsmallerstoresthataddasenseofnoveltyandurgencytothemalloffering.
• Contentandevents:Artexhibitions,performancesandexclusiveeventshaveproveneffectiveindrivingtraffictoshoppinglocations.
• Locallygrownandmade:Consumersareseekinggoodsthataregrown,madeandproducedlocally,andthatincorporatemoreregional,artisanalflavorsanddesigns.KimcoRealtyhasexpandedaprogramthatofferssmallbusinessesoneyearoffreerentandreducedpropertycharges.
• Convenience:E-commercecompaniesarepartneringwithmalloperatorsonmorecompellingomnichannelofferings,includinga“driveup,pickup”serviceatmalls.
ReinventingtheRelationshipwiththeConsumerMalloperatorsmustrethinkhowtheyengageandretaintheirvisitors.
Tech
Experiences&Entertainment
NewTypesofTenants
ConnectwiththeConsumer
Conversations
PersonalizedServices
Community
TheConnected
Mall
8 DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
September7,2017
ReevaluatingHowTheyThinkAboutTheirTenantsMalloperatorsmustrevaluatewhotheirpotentialtenantsmightbe.
• Onlinegoingoffline:Fore-commerceretailers,physicalstoresaremarketingassetsthatsupporttheironlinebusinessmodels.Theyrequiremoreinnovativeleasingmodels.
• Officeandwellnessservicebusinesses:Co-workingspacesandgymsrequireflexibleaccessschedulestooffermoreconveniencetousers.
RethinkingHowTheyApproachTechnologyREITsandshoppingcenteroperatorsareturningtoinvestmentsinstartups,andrunningacceleratorprogramsasawaytoaccesstechnologyinnovationandfutureprooftheirbusinessmodels.Overthepastfiveyears,companiessuchasWestfield,theSimonPropertyGroup,GGPandMacerichhaveinvestedinretailstartups,whileWestfieldLabs,partneringwithR/GAVenturesontheConnectedCommerceAccelerator,openedaretaillabinSanFrancisco.
PartneringwithTechnologyCompaniestoBridgetheGap:AGlobalOverviewofSolutions
Entertainment:Location-Based,Fully-ImmersiveVirtualReality(VR)
• DreamscapeImmersiveisanewLosAngeles-basedstartupforlocation-basedVRthatisplanningtoopenaVRMultiplexinLosAngeles.
• NomadicVRisaCalifornia-baseddeveloperofVRgamesthatcanbetouchedandfelt.ThecompanyreceivedaninvestmentfromHorizonVenturesanddemoeditstechnologyattheWonderfulWorldsoftheWhampoamallinHongKonginJuly2017.
Security:RobotsinShoppingCenters
• ThePrudentialCenterinBostonandtheWestfieldValleyFairinSanJosehavepilotedsecurityrobots.
• TheK-5robotbyKnightscopetakespicturesandvideo,andcandetectheatandCO2.Itleasesforamonthlyfeeofabout$8,000.
Security:UsingCrowdsourcingtoCatchShoplifters
• SpotCrowdisanonlineplatformthatstreamsexisting,real-timefootagefromretailstores’surveillancecameras.
LoyaltyandRewards
• SpringMarketplaceisusedat75livemalllocationsintheUStodate.ClientsincludeSimon,Taubman,Macerich,PREITandGGP.Whenconsumersusetheircreditordebitcard,Springtrackstheirspendinginrealtimeandofferspersonalizedmarketingandrewards.
9 DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
September7,2017
FlexibleSpaces
• WithMe:Pop-upstoresaredesignedtobeassembledquicklyfromthegroundup.ThecompanyhaseightlocationsintheUS.
• Storefront,anAirbnbforretail,isarentalplatformoperatingineightmarkets,includingHongKong.
OmnichannelSolutions:SolvingtheIssueofSame-DayDeliveryandEasyReturns
• HappyReturnsacceptsin-personreturnsfromparticipatingonlineretailersatsixmalls.
• ShopRunBackisanon-demandreturnsservicefore-commercebusinesses,whichoperatesreturnsdrop-offpointsaswellasanetworkofdeliveryprofessionals.ThecompanycurrentlyworkswithMangoinEurope.
• ShopTurn,aTechstars-backedcompany,isanon-demand,returnsserviceenablingconsumerstoreturnpurchasesdirectlyfromhome.
• OLAMisatechnology-enabledlogisticsplatformsolutionformall-basedretailers,providingconvenient,same-daypurchaseoptionsforshoppingmallpurchases.Thecostperpickupis$5.
Hassle-FreeCheckouts
• ShopicisaQRcode-based,expressself-checkoutapp.ThecompanycollaboratedwithTycoonanapplicationthatenablesconsumerstoremovethesecuritysensoronitemsatthepointofsale—withoutrequiringanyassistance.
• QueueHopletscustomerscheckoutontheirphoneswithouthavingtowaitinline.ItusesQR-codescanningandRFID-poweredsecuritytagsthatautomaticallyunlockafterpaymentismade.
PersonalizedandData-DrivenMarketing
• ActiMirrorhelpsstoresbecomeomnichannelhubsbycreatingapersonalizedconsumer-communicationschannelandenhancingtheoverallguestexperience.
• Neomahelpsshoppingmallscreate,launchandpromotebeacon-poweredandARapplications,andhelpsretailerswithinthemallinspireandattractcustomersassoonastheyenterthebuilding.
AbouttheULI/FGRTPartnershipTheUrbanLandInstitute(ULI)AsiaPacificandFGRTarecollaboratingonaseriesofeducationalconferencesandpanelsintheAPACregion,culminatingwithULI’sAsiaPacificSummitinJune2018.Thepartnershipispartofawide-ranginginitiativetoshowcasethefutureofretailrealestate,encouragegreaterintegrationoftechnologyinshoppingcentersandprovideaplatformwhereindustryprofessionalscanlearnandshareaboutretailandtechnology.
10 DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
September7,2017
AbouttheUrbanLandInstituteTheULIisanonprofiteducationandresearchinstitutesupportedbyitsmembers.Itsmissionistoprovideleadershipintheresponsibleuseofland,andincreatingandsustainingthrivingcommunitiesworldwide.Establishedin1936,theinstitutehasmorethan40,000membersworldwide,representingallaspectsoflanduseanddevelopmentdisciplines,includingmorethan2,000intheAsiaPacificRegion.Formoreinformation,pleasevisituli.orgorasia.uli.org.
11 DeborahWeinswig,ManagingDirector,[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
September7,2017
DeborahWeinswig,CPAManagingDirectorFGRTNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comKirilPopovSeniorAnalyst
HongKong:2ndFloor,HongKongSpinnersIndustrialBuildingPhase1&2800CheungShaWanRoad,KowloonHongKongTel:85223004406London:242-246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NewYork:1359Broadway,18thFloorNewYork,NY10018Tel:6468397017FungGlobalRetailTech.com