Sebastian Mahu (IULIUS) will be a speaker at BR’s re:FOCUS on eCommerce, Retail & Logistics

Mihai-Alexandru Cristea 01/02/2022 | 17:48

Sebastian Mahu (IULIUS) will be a speaker at BR’s re:FOCUS on eCommerce, Retail & Logistics 2022 edition. Previewing the first conference of 2022, we talked to IULIUS’ Head of Asset Management about the shopping mall segment in 2021, the new consumers’ shopping behaviors, and the evolution of commercial centers in 2022.


How did the pandemic continue to influence the shopping mall segment in terms of their tenants and footfall in 2021?

The year 2021 was more challenging than the previous one due to a combination of stressors: the ongoing pandemic and restrictions, increased psychological pressure, economic crisis, energy crisis, inflation. This mix of factors created more pressure and amplified the unpredictability, even in the short term. The ace up our sleeve has been our resilience and proactivity, which developed a lot in our operating segment since the beginning of the pandemic.

In our case, building a relationship based on trust and mutual support with our partners has helped us find a balance in the tenant mix, a balance that requires significant efforts from all stakeholders and that may be threatened by the unforeseeable evolution of the pandemic. This has allowed us to continue our opening plans with new brands entering the portfolio and to maintain a vacancy rate of around 1%, while also signing important collaborations for the projects under development, particularly Family Market. However, even with strategic operating decisions for rethinking the share of certain profiles in the service mix, partnerships with delivery services, tenant facilities and support programs, etc., this segment remains under pressure for a combination of reasons, as the retail industry is facing challenges in terms of supply chain, employees, inflation, capital management, etc.

Moreover, in addition to the broad expertise they have as an advantage in the fight against the pandemic, international tenants also benefit from the measures taken by the authorities in their countries of origin, while in Romania such measures have yet to materialize. For this reason, we focused greatly on supporting the local entrepreneurs and producers in our portfolio, who are finding it harder to cope with the extended crisis period. As a result, in 2021 we launched the Go Local program, supporting local entrepreneurs to enter IULIUS projects with rent-free periods and advertising packages. There has been significant interest in the program and we are in advanced discussions with many operators, with the first two already securing locations in our shopping malls.

In summary, 2021 is well above 2020, but still below 2019, following the impact of periods with restrictions still in place. Although there were periods during the year (spring to summer) with very good footfall and sales results, comparable to the pre-pandemic period, November 2021 saw a 25% decrease compared to the summer of the same year, following the implementation of green certificate-based access to shopping centers.


What footfall rates did your shopping malls achieve in 2021? Did they reach pre-pandemic levels?

It is impossible to speak of a constant footfall measuring up to pre-pandemic levels, and understandably so given the sanitary and social crisis that has been going on for almost two years now.

In 2021, the number of visits improved significantly compared to the previous year, function of the pandemic waves, the mandated restrictions, psychological accommodation, as well as our focus on providing relaxation and leisure experiences and opportunities, having the advantage of our mixed-use projects that are connected to the city life and allow for events to be organized safely.

More exactly, between May and September 2021, the results were well above expectations, and in some shopping centers we even exceeded the 2019 results for the same period. Unfortunately, however, these periods are interspersed with months when the measures mandated by authorities significantly impacted these indicators.

We were also optimistic in December, as we had many attractive seasonal activities in all our projects. In Iulius Town Timișoara we had a Christmas fair that certainly rivals any other fair in the country and even those in Vienna or Budapest, where residents in the area used to go. Furthermore, we opened the ice skating rinks in Palas Iași and Iulius Mall Suceava, while Iulius Mall Cluj is accommodating a light installation that has attracted a very large number of visitors. We have prepared a Christmas tailored to the visitor profile in all five of our projects, complemented by an exciting leisure offer.

Did the consumers’ shopping behavior during the pandemic continue into 2021?

The pandemic has already shaped new shopping habits and will continue to do so, because its strong impact has been and is primarily at a psychological level, shifting personal priorities. It is our duty to closely monitor this fast-paced process, to understand the consumer, and to deliver according to the new requirements.

As an immediate impact, we noticed a decrease in the average number of visits per month, while the length of the visits increased. Similarly, we noticed that restaurants and outdoor spaces have become an important anchor, with people looking for a safe space in terms of medical safeguards for social interactions.

Nowadays, the consumer is less focused on access to products and more on making the most of personal time, experiences and socializing, which challenges us to seek the means to provide just that when they visit IULIUS projects. In fact, in the case of our developments, these components are very well represented, being practically one of the pillars in the synergy of the mixed-use concept. The ground floor of office buildings is designed for retail, complemented by a shopping street component, dominated by restaurants, coffee shops and bistros with an international theme, opening onto gardens.


How do you imagine the shopping malls in Romania will evolve this year considering 2 scenarios: continuing at the same pace (intermittent waves) of the pandemic or the pandemic dying out at some point this year?

It has become increasingly difficult to predict during these last couple of years, as the context remains volatile. Drawing on our operating experience in these extremely challenging times, I can say that we remain moderately optimistic about 2022, when the uncertainties related to the evolution of the pandemic will continue to shape the general outlook. Fortunately, nowadays we have become more resilient and have new tools to do business in this new context.

I think success in retail and shopping centers will polarize around extremes. Super regional centers that focus on experience, entertainment and diversity in terms of shopping will continue to grow; on the opposite end of the spectrum, retail parks will be champions in terms of efficiency and convenience. However, the projects between these two extremes will suffer, failing to provide relevant services to increasingly demanding consumers.

As far as IULIUS is concerned, we are expecting a V-shaped evolution, with lows generated by pandemic waves and solid recovery periods in between. By the end of 2022, our performance should be at least comparable to our 2021 results. We are also taking into consideration other new challenges that 2022 could bring, ranging from inflation to new layers of the crisis caused by factors such as energy, bank interest rates, supply and logistics difficulties, etc.

In a best-case scenario, humankind will soon be better able to contain the pandemic, so we can hope for extended periods of normalcy, ergo better results.

BR Magazine | Latest Issue

Download PDF: Business Review Magazine April 2024 Issue

The April 2024 issue of Business Review Magazine is now available in digital format, featuring the main cover story titled “Caring for People and for the Planet”. To download the magazine in
Mihai-Alexandru Cristea | 12/04/2024 | 17:28
Advertisement Advertisement
Close ×

We use cookies for keeping our website reliable and secure, personalising content and ads, providing social media features and to analyse how our website is used.

Accept & continue