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This excerpt of exclusive analysis by A.T. Kearney examines the future of retail real estate and what the industry will look like in 2030. Our study suggests the industry can have a robust future provided it evolves and successfully harnesses three change drivers: the human element, technology and commercial considerations. We see yesterday's shopping centers and malls morphing into consumer engagement spaces (CESs)transformed mixed-use commercial offerings designed to meet the needs of new and future generations of shoppers.
RETHINKING SPACE AND THE CONSUMER
It's been said that there are only two kinds of futures-the one you inherit and the one you design. As it looks toward 2030, the retail real estate industry finds itself at a crossroads. One fork leads to business-as-usual-a predictable, problematic Darwinian scenario in which the weakest shopping centers and malls continue to close due to lack of customer interest, changing demographics or the inability to develop a sustainable alternative to digital competitors that are growing more powerful every day The other path-and the one we will explore here-takes us to an industry future that has never looked better, at least for those brave (and wise) enough to pursue it.
The industry's future potential rests on the ability of operators and retailers to relearn the rules of an ever-changing game. Where 20th-century malls and shopping centers grew through "push"marketing brand-oriented offerings to a mass market consumer interested in acquisition21st-century retail real estate (or what this report refers to as CESs) will prosper by catering to a customer base proud of its diversity, less interested in owning things than in having experiences, and who demand the right to co-develop and design the goods and services they buy.
The competitive environment is changing, forcing us to rethink all our assumptions about the industry, from how many and what kind of tenants CESs need to house and how large a CES must be in order to be successful, to how, why and where sites are selected, the role of anchor stores, and the necessity of incorporating nontraditional elements, such as housing, entertainment and healthcare, into CES design.
Finally, CES operators and tenants must find ways to coexist with digital retailers, embracing them as partners rather than insisting on viewing them as enemies bent on disruption...