Developers must sell space based on data

Portland Design Associates’ Ibrahim Ibrahim discusses the changing face of retail and points out that developers should sell space based on data rather than square footage

“I am a firm believer that the internet will not kill shops – it will liberate them”

In an ideal world, design processes would all be based on research and a rich understanding of the end user. Couple that with market, sector and technology insights, and you’ve got a winning formula. There are key ways to ensure this both happens and is effective – for example, we created a dedicated insights team to perform the sole function of ensuring our designers are thoroughly informed about future behaviours and mindsets of consumers.

For us, it’s consumer journeys and missions that drive the concept and should be the focus of developers and architects. In fact, this data capture ability led us to the realisation that the space race is over for retailers. For anchor stores or major space users, the idea of needing more and more space is no longer the case. What has in fact happened is a percentage of sales has moved online and space is evolving from transactional use to experiential.

Through the shift to online shopping, the e-commerce market is currently valued at $7bn globally. Looking at the shopping haven of the Middle East, the e-commerce market in the UAE is expected to reach $2bn in 2018. Interestingly, a Mastercard behavioural study in 2014 revealed that nearly 35% of Middle East citizens had previously accessed the internet to shop online, 44% of whom had made at least one online purchase in the previous three months.

With local internet penetration of over 90%, there is so much data available to us which we should be able to translate into a clear path that developers should take. It’s imperative we take a look at the data made available to us, if we are to stay ahead of the curve, boost the retail sector across the UAE and become the proposed fashion destination of the Middle East alongside the likes of Paris, London and Milan.

I am a firm believer that the internet will not kill shops – it will liberate them, as increasingly we are looking at money not changing hands in-store. When it is no longer the focus of a space, that space evolves creatively. Retail is about three things: recruitment (sourcing customers), transaction (sales) and retention (loyalty). Increasingly, we are looking at transactions happening online and physical stores being about recruitment and retention.

The space retailers do have will be used more and more for experiences rather than transactions, much like the Apple store, which is designed to be entertainment- and leisure-driven. You can buy an iPhone as you walk down the Avenue, enjoy a seminar with artists in the Forum, fix your laptop under the trees in the Genius Grove and get some training in the Boardroom. You’ve been in an Apple Store the whole time.

Retail will take on more of a hybrid role, for the most part anchored by food and beverage, while turning into more of a social destination. Good examples of retailers turning experiential are beauty stores. Brands will create a hybrid of products and services, like makeup stores selling products as well as offering services like manicures and pedicures on site. Think of it as a lifestyle destination for a specific requirement.

Shoppers are changing, so shopping mall tenants are changing, which means developers have to change too. The issue for the developer is the changing net-to-gross ratio, whereby there will be a convergence of public and tenanted spaces, without a clear demarcation of spaces owned by a retailer and public space. Sales-per-square-metre will no longer be how one values a piece of real estate – developers need new ways to show a tenant the value of taking space within a specific mall or destination.

Developers are able to capture granular data with the use of modern technology and hence charge based on the quality of audience. A developer’s asset is also its audience, not just its space, and like it or not, this shifts developers from the property business into the media business, where they must begin to think and behave like media brands that own media platforms.

Developers need to look at commercial models of media companies. If you look at a publishing house, it charges for digital advertising based on impressions – how many of what very specific type of person will see a brand by paying to be in this location. This is what developers need to adopt and support with statistics.

Let’s now look at the future planning of retail destinations. As designers looking to design a retail destination, we must understand the shopper. To future proof a retail destination, you need to understand how the aforementioned data will affect design. If we say retail destinations are to become media platforms and brands need physical space to engage with customers, we are looking at very different designs. These are designs which will ultimately include hybrid, soft, programmable spaces, acting as destinations which are not limited to transaction but also include engagement and experiential opportunities. These spaces need to be versatile and reactive.

Smart architecture will be designed with anthropology, not architecture at its core. It really is people and places, not building and spaces. As a result, we are increasingly working with our partners to ensure that we provide developers in the region with valuable insight and design, in order to keep the region at the global forefront of retail. It would be fantastic to see early adoption by the UAE, as this type of approach is increasingly commonplace across Europe and the US.

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