- Westfield owns some of the most valuable malls in the United States. According to commercial real estate research firm Green Street Advisors, Westfield’s parent company falls in the top four mall companies in the US in terms of asset value.
- Westfield was acquired by France’s Unibail-Rodamco, a commercial property investor, for $US15.7 billion in 2017.
- Business Insider spoke to the president of Unibail-Rodamco-Westfield’s US operations to find out how the company has been able to stave off the retail apocalypse and stay ahead of the pack.
Not all American malls are dying. In fact, a select group of high-quality mall operators are still managing to survive in today’s tricky retail environment.
Unibail-Rodamco-Westfield (URW) is one of them.
This recently formed company – Australian mall operator Westfield was acquired by France’s Unibail-Rodamco, a commercial property investor, for $US15.7 billion in a deal that was finalised in June 2018 – owns some of the most valuable malls in the United States. According to a recent report from commercial real estate research firm Green Street Advisors, URW falls within the top four mall companies in the US in terms of asset value.
Business Insider spoke to Jean-Marie Tritant, president of US operations at URW, who explained how the company looks to stay ahead of the pack and stave off the retail apocalypse:
“Retail is about location, location, location,” Tritant said, adding that this is an extremely important factor as the mall concept comes under pressure.
“The focus of our group is to be in the best catchment area in the best cities in the Western world,” he added.
There are currently 32 Westfield malls in the US, located in cities such as Los Angeles, New York, San Diego, and San Francisco.
A good transit connection to the mall is crucial, especially given that many of these malls are located in urban areas where customers would not typically drive.
Tritant said that URW is currently working with local authorities to extend a train line to its Century City shopping center in Los Angeles.
One of the biggest downfalls in a weaker mall is its linear layout.
A linear layout makes it harder for customers to see storefronts. To combat this, Westfield has tested out different layouts and formats depending on the area.
“When you are in a very dense urban area where the square foot is expensive, people enjoy being able to be in places where they can enjoy the space,” he said. This is why Westfield might look to add large spaces for people to hang around and socialise in.
A lack of signage can hinder the customer experience.
It’s about “having something that is easy to walk around,” he said. “We work a lot on the customer journey, not only when you are in the mall but when you arrive at to the mall” to solve “pain points.”
Acoustics and aesthetic
Acoustics and aesthetics are also important.
URW traces out the customer journey, arriving at the mall and walking around it, to experience the noises and sounds visitors would be exposed to.
This is especially important in some of the areas where customers might sit down for several hours.
A lot of food courts in other malls are noisy and unpleasant places to eat, Tritant said. URW works on both aesthetics and acoustics, which encourages consumers to spend longer there – and, therefore, more money there.
Investing in the details
Thinking of the customer individually rather than as a crowd helps the company to look at aspects of the shopping experience that might seem trivial, Tritant said.
He used the bathrooms as examples of this. Bathrooms are typically created for a crowd and for intensive usage, he said. URW tries to make the bathrooms more comfortable and appealing so that the customer has a better impression of the mall overall.
As much entertainment as fashion
One of Westfield’s key strategies is to shift the focus from fashion and offer more entertainment and dining options as well as experiences.
“We have been ahead of the pack in terms of changing the retail mix,” Tritant said, adding that 70% of the new leases signed in 2018 were non-fashion concepts and more than 53% of its malls now have health and fitness services.
“We are changing the retail mix so there is much more in connection with the things that millennials are looking for,” he said.
This means scaling back on fashion and shifting the balance.
Experiences, such as concerts or pop-ups, also help to drive traffic to the mall and target more consumers.
Constantly assessing what works and what doesn’t
URW has a target rotation rate for its stores: 10% per year, per mall. This refers to the number of relettings, or renewals of leases, divided by the number of stores. This enables it to bring new concepts to the mall and keep the offering fresh.
“That’s something we are working on every day,” he said. “You need to always be ahead of the pack, bring something new, have the latest concept; you need to have the new brand that is hot at the time.”
The company would either negotiate to end leases of underperforming tenants or work with these concepts to refresh stores.
Partnering with digitally native brands
As of the end of 2018, URW had opened 58 stores of digitally native brands such as Amazon Books, Peloton, Bonobos, and Warby Parker.
As these popular brands have limited stores in the US, they help to drive traffic to that mall.
“What we are seeing is that everyone needs omnichannel,” he said.
This means that not only do brick-and-mortar retailers need to be online, but that online-only brands need to also have a physical presence.
URW looks at the social buzz around these brands to determine whether they have enough brand awareness for brick-and-mortar stores to be successful.
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