BR ANALYSIS. Mall change: Food and fun edge out hypermarkets as anchors

Razvan Zamfir 07/03/2019 | 11:47

The real estate market is being forced to adapt to the advance of disruptive new technologies, and the main victim seems to be the retail segment. Shopping centers are changing fast, trying to keep pace, and even if Romanian malls (and European ones generally) are not falling one by one like their American counterparts, they are having to invest heavily to adapt to the competition from e-commerce.

By Razvan Zamfir

“With the evolution of technology, the concept of ‘experience transfer’ begins to grow in various retail business areas. Experience transfer captures consumers’ expectations of finding innovation and opportunities in an industry, also transferred / adapted to other areas. Example: if technology allowed the online fashion option, the same thing happened for a few years for food retail (for supermarket / hypermarket brands). Also, the evolution of technology has led to the opening of a wide range of consumer options and identification of things, brands, and locations with which they resonate. A food court can no longer be as simple and impersonal as eight years ago because visitors will no longer identify with it and will choose other options more suited to their tastes and expectations,” says Corina Stamate, center manager at JLL real estate consultancy company. The obvious solution was to extend the retail center, expanding its attraction points. In this way, in many malls, the real anchor ceased to be the hypermarket, its place being taken by entertainment and food court areas.

“The wishes and needs of our customers have shown us that a shopping center cannot remain anchored in the fashion segment, so in recent years we have also focused our efforts on developing the food & beverage (F&B) and entertainment segment, an essential component for our business, for enhancing the experience of each visitor. That’s why, in addition to the great fast-food players at AFI Cotroceni, we believe in unique concepts such as La Piatza (fast food, but with extremely healthy, natural ingredients); Maggie’s Ranch, which offers customers delicious dishes in a Wild West decay setting; and Boss Burgers, which sells mini-burger alternatives in multiple combinations to the classic American burger. Moreover, the F&B segment is an area where we plan to invest in the long term, for expansion both in terms of surface and diversity. The same goes for the entertainment area: besides the Sensory Museum, which has been impressively successful, roller coaster, and ice rink, we always have new concepts that can make a shopping trip a complete experience,” says Costin Blideanu, leasing manager at AFI Europe Romania.

The strategy is simple. The food court attracts almost everyone, and a good offer will boost visitor numbers. The same is the case with the entertainment area and cinema, which are usually located away from the main entrance to the mall, so you have to walk through almost all of the mall to reach it. And in time, maybe you will stop and buy something from the stores you pass on the way.

AFI Cotroceni, the 90,000 sqm mall with almost a quarter food court and entertainment

AFI Cotroceni, for example, a 90,000 sqm mall owned by AFI Europe, has an Auchan hypermarket of around 13,000 sqm, so less around 15 percent of the area, while the food court and entertainment area together make up around 24 percent.

AFI Cotroceni was extended by around 6,000 sqm, with the works being finished last year. “Depending on the type of mall / shopping center, the anchors within them are beginning to diversify as consumer behavior changes in turn. At an international level, for a mall / shopping center, the most important thing in this period of changing trends is to correctly identify the expectations of its visitors / consumers. Expectations range from proximity shopping malls, destinations with more than 80,000 sqm GLAs, strip malls, etc. The share and traffic brought by different areas of the mall varies according to the particularities of each country, but a very visible trend not only in fashion, but at European level, is where F&B and entertainment are important anchors in fashion and food retail, in terms of traffic attraction,” said Stamate.

According to her, the trend began just shy of five years ago worldwide, but in the last three years it has grown. Last year saw some internationally visible trends in this industry in various business areas. The sectors most affected were hospitality / hotels and shopping centers.

Owners and architects are beginning to rethink spaces or create new ones that aim to unite the community within the city / sector, becoming alternatives tailored to the social, technological and psychological demands of consumers. As part of this trend, the owners of shopping centers have started to look with great attention at the tenant mix, brands, and the added value they can bring with retailers to their company. Unique experiences and a strong combination of entertainment and F&B are becoming indispensable for a center. Old, traditional, international formats are no longer performing well, and there is a trend of focusing on fresh, new, innovative brands capable of adapting to a new reality.

The trend at this moment is being felt keenly in Europe and will also grow in Romania in the coming years. In Western Europe, according to a JLL study in 2018, the following trends can already be identified:

  • Approximately 40 percent of visitors to a shopping center choose their destination according to F&B options,
  • A regular F&B consumer focusing on the dining area spends 15 percent more than the typical mall consumer,
  • Consumers coming to the F&B area will spend about 35 percent more time at the shopping center,
  • Shopping within the center grows by about 25 percent if there is an attractive F&B area.

At international level, a very clear example of how important this trend is is the new American Dream Meadowloands developed by Triple Five Worldwide, whose mix is 55 percent entertainment and food court, and the retail area remains 45 percent.

Other malls with a hefty proportion of food court and entertainment area in the total surface are NEPI Rockastle’s Shopping City Timisoara, with 11,000 sqm hypermarket and 11,500 sqm entertainment and food court, and City Park Constanta, also in NEPI Rockastle portfolio, which has an 9,612 sqm hypermarket and an almost 6,500 sqm food court and entertainment area.

”Proportionality is a novelty for the industry and has emerged as a need to stay within consumer socialization preferences. In Romania, this trend can be observed in shopping centers such as Park Lake, Baneasa Shopping City, and Promenada, which have exploited the terrace area and turned it into a city hot spot. Gradually, we will notice the owners’ tendency to reconvert certain spaces and transform them into a zone with unique, diverse experiences adapted to the community they are addressing,” predicts Stamate.

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