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Retail and the era of customer experience

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How is the retail property market developing thanks to new retail schemes? Here we take a look at the market, focusing specifically on one of BNP Paribas Real Estate’s core regions, Central and Eastern Europe.

New relationships to technology, time management, and social interactions are changing the way consumers approach retail. This, in turn, is making the sector evolve and become increasingly more multichannel. As Fabrice Pumelle, Head of Retail, Central & Eastern Europe at BNP Paribas Real Estate points out, “It is crucial to understand the effect of new consumer practices on their relationship with brands, specifically what it means to be a retailer or retail asset owner in an era of instant interactions on social media and e-commerce while having a strong understanding of the on-going structural changes occurring across retail.”

The Polish retail market for example is maturing, and currently going through its third “differentiation” phase, meaning that players in the market are coming up with new retail schemes designed to create an overall enjoyable experience for consumers, rather than just a place to shop. In other words, new and old retail centres are changing their landscapes to create places where people can enjoy high quality shopping, that are also exciting places worth visiting and spending time in

Meeting new customer needs

The definition of a perfect shopping experience has changed drastically over the past few years. It used to be that interacting with a friendly shop assistant was the sole criteria. Nowadays, customers rate their experience on a mix of values, experiences and emotions attached to the brands and places they shop at. They also interact with retail shops, restaurants and entertainment venues on several different levels, and via several different channels at once: brands create compelling content online, be it on social media or the Internet, and attract customers with impactful and influential non-traditional campaigns, comparable to traditional TV adverts. Today, our favorite brands provide us with more relevant and personalised content. They also work hard to create a pleasant atmosphere in their locations, calling on specialised designer and shop fitters to help them, whilst still paying close attention to the quality of the service. In fact, in many cases, branding now pervades all aspects of a retail business.

Attracting customers now relies on the retailer’s ability to combine traditional sales psychology techniques with entertainment or cultural functions. Players in the industry can draw inspiration from their e-commerce segment to focus on the customer’s experience, rather than relying too heavily on the real estate assets. The Notino concept store, for example, was successful in meshing its online and offline sales strategy, and now perfume e-store iperfumy.pl is following in these footsteps and have just opened their first store in a shopping centre in Warsaw.

More specifically, consumer’s use of social media has transformed interactions with brands into real ongoing relationships that one maintains with a brand. Retail brands can now capitalise on this phenomenon by expanding the relationship, building experience into the retail spaces with intelligent WIFI, beacons, emotion recognition systems or virtual mirrors, thus making browsing the store an activity in and of itself. Beyond interacting with brands, customers meet each other and share their experiences on social media, which needs to be noted as an important factor that can strongly impact brand recognition and trustworthiness.

 

Third places

As the retail market in Central and Eastern Europe evolves, retail assets move towards becoming “cities within cities”, or what the industry calls “third places”. The “first place” being the home, the “second place” the office, and the “third place” being the location where we enjoy our free time and socialise. A “third place” has to be a neutral and widely available space, where one can relax and take part in activities that are not part of a daily routine: take advantage of entertainment options, enjoy a nice meal, practice sports, discover culture and art, and of course shop. Retail spaces should be welcoming, and enjoyable, rather than solely utilitarian. It is relatively easy to build new structures fitting this new trend, but it remains a challenge for older buildings to embrace the changing customer requirements.

Additionally, shopping centres still need to learn how to integrate smoothly with their surroundings, creating a symbiosis with the existing community, and finding the high market segment. Larger shopping centres face this issue less directly as they are perceived as a place for entertainment, although shopping remains the main activity.

Dining options

Food and drinks areas are also getting a tune up: convenient, on the go options are being replaced by eating areas deliberately and comprehensively thought out by a team of designers, architects, and food and drinks specialists. Developers have observed trends and behaviors around food and entertainment and have noticed that they are a key component of a successful multifunctional complex. In fact, one Polish developer, Unibail Rodamco, was quick to understand this new trend and meet customer’s needs. Indeed, they decided to redesign and extend their food courts, and to rename them Grand Kitchen.

Today, a person’s most valuable asset is his or her time. Our economy is shifting more and more towards consuming experiences rather than goods, which is why the ability to spend quality time with friends and family has to be a central part of the retail experience. Additionally, gastronomy and high-quality food has become very fashionable. The combination of these trends means that a good restaurant or entertainment zone has to offer an enticing atmosphere as well as interesting and tasty culinary options. A few years ago, hardly anyone would have predicted that shopping centres would become places where we go to spend quality time with our loved ones, enjoy a nice dinner in a stylish restaurant, or conduct a business lunch with clients and colleagues. It was also marginal to design commercial property to look beautiful, include green spaces, or an open square with a summer cinema. But, as consumer’s desires change, so do retail spaces.

Our approach to retail is evolving. The industry is going through challenging times, forcing it to closely listen to the market and consumers, reassess its strategy, and make important decisions to continue being relevant. Some players in the retail space knew how to forecast these trends and anticipate changes in customer behaviors, and they are demonstrating how they are rising to the challenge of this changing market, thus increasing their odds of becoming a dominant force.

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