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1 Deborah Weinswig, Managing Director, FGRT [email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Copyright © 2017 The Fung Group. All rights reserved. September 7, 2017 Top Takeaways from The Connected Mall of the Future The FGRT team attended “The Connected Mall of the Future,” the inaugural event of a series of collaboration events between FGRT and the Urban Land Institute Asia Pacific, which focus on innovation in retail and its applications to real estate. The Key Takeaways 1) Chinese consumers are more tech-savvy and willing to try out new digital tools. 2) Consumers are not cautious about giving away data. 3) Shopping centers should have their own apps. 4) High-end malls outperform and there is opportunity in tier-2 and tier-3 cities. 5) Shopping in the connected mall of the future will be social and seamless. The theme of the event series collaboration between FGRT and the ULI Asia Pacific is “Retail Revolution: Disrupt or be Disrupted,” and the various conferences and panels planned throughout the region are meant to showcase innovative solutions in the retail space. The inaugural event, The Connected Mall of the Future, focused on consumer- facing technologies that augment communication and engagement with customers. During the first part of the event, Deborah Weinswig, Managing Director of FGRT, presented on the recent trends in retail technology. Her presentation is available here. In the second part of the event, Weinswig was joined by the Cofounder and CEO of ActiMirror Victor Ruiz and the Founder and CEO of Neoma Francois Chabaudie for a panel discussion, which focused on consumer-facing retail innovations that are relevant for real estate companies.

Top Takeaways from The Connected Mall of the Future … · 2017-09-10 · Top Takeaways from The Connected Mall of the Future ... Shopping centers should have their own apps. 4) High-end

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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

50

100

150

200

250

Popu

laZo

n(M

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

300

350

400

450

ChineseMillennials Totalworkingpopulalon

Popu

lalo

n(M

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