Shopping malls as places for purchasing, entertainment and new experiences
The conclusion of the panel about the future of retail and shopping malls held within The Fifth Serbian Property and Infrastructure Development Conference in the hotel Metropol, in Belgrade, is that shopping centres are still not threatened by the widespread e-commerce, but they will have to adjust to the changes on the market since their future doesn’t lie only in traditional shopping.
Milos Babic, Novaston CFO, said that the research of global trends shows that the new challenges in consumption could be placed on three fronts- experience deepening, technology utilizing and format changing.
“Shopping malls do not sell only products, but experience as well. They cannot compete with huge Internet players such as Amazon and Alibaba. They have to offer something more - cinemas, ice skating rinks - content that attracts consumers and offers them new experience besides classic shopping,” emphasized Babic, adding that people spend more and more time in shopping malls.
The second key point is accepting and using technologies, and information exchange. As a good example he cited the possibility for shopping malls to get in touch with consumers before they visit a mall, while visiting and after they leave it.
“The third front is the change of the format of a real estate. Shopping malls are becoming architectural achievements today. Historically, they were created by plans for urbanization of American suburbs, but today they are built in downtowns, adapting to the surrounding, and they even compete for awards in architecture. The spatial format also changes. While the leasing area used to be 70%, and the public space 30%, today that ratio is almost 50% - 50%”, said Babic.
Panel moderator, Uros Grujic from the CBRE Group, pointed out the expected changes in the next three to five years on the global scene, taking into account the negative influence e-commerce has had on the retail sector in the USA.
Milos Babic believes e-commerce is the reality, but will not have a significant impact on the shopping malls and retail parks in Serbia and the region.
“Closing of the myriad of shopping malls in the USA is exclusively the result of the failure to adapt to the changes on the market. Although online shopping offers comfort and competitiveness, the importance of the sense of sight and classic shopping should not be overlooked,” Novaston CEO said.
Milica Mitrovic from Poseidon Group emphasized that the expanding of shopping malls and retail brings negative aspect for investors as well, due to the expected fall in rental prices.
“In Serbia there are 25 retail parks, which is excellent, given the fact that five years ago there wasn’t any. There are only two or three towns left to be covered, which means that the market is not only focused on Belgrade. Even though there is a danger of saturation if one town has two retail parks, it is not a rule. For example, in Sabac, one more project is underway because there is a demand for it,” said Millica Mitrovic, adding that in this area, within the well-known names, we expect the arrival of Pepco in Serbia.
She also believes that online shopping will not have a major impact on traditional, because waiting for the delivery makes it repulsive to consumers.
Talking about the situation in Croatia, Filip Vucagic, a partner in Coliers International says that by construction and expansion of capacities the market in Croatia has been stabilized, but there is also space for new projects.
“The most expensive real estate is the one with empty squares, that is to say, the one that can be poorly charged. Just a few kilometers of distance can make a change between a successful and unsuccessful shopping mall. That is why a quality management has now become number one in this area,” said Vucagic.
According to him, the disadvantages of the profitability of online shopping are related to the return and damage of goods, and the advantage is the information about where something can be bought. Vucagic believes that big brands will not focus only on the Internet, but will make a combination- you can choose a product in a shop, and it will be delivered to you home.
Panel members agree that pedestrian zones remain current, but shopping malls and retail parks have more amenities, such as parking and other facilities, and customers can find everything they need at one place.
Apart from the future of retail parks and shopping malls, on The Fifth Serbian Property and Infrastructure Development Conference experts exchanged predictions and experiences about investment questions, the development of commercial and residential real estate in Serbia and the region, the benefits of green building and energy efficiency model, project financing and property valuation standards.
It is estimated that the stabilization and economy growth in Serbia will contribute to the continuation of the trend of investment in Serbia, especially when it comes to greenfield investments. Our country is becoming competitive not only in the region, but on the market of Visegrad Group as well, hence it is necessary that the reforms be continued in the local governments. In the future, most investments are expected in infrastructure, especially transport, and one of the challenges will be achieving standards in sustainable development and green economy.
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