Where to Build a Presence within a Shopping Centre?
Location of both a shopping centre and a retail store is a top priority. Many retailers target main passageways within a retail complex. The more passers-by and the greater store visibility, the bigger the chance of more sales and more business. No wonder such locations generally command top rental rates. The strategy of choosing easy access stores works for most sectors, with some notable exceptions though. Szymon Łukasik, Head of Retail Department at Cresa Poland, advises retailers on store's location.
Balancing display and sales floor areas
Corner stores that can be accessed from two or even three sides are ideal for improving store visibility and marketing purposes. Store displays, however, tend to occupy a big portion of very precious sales floor areas that to some operators such as sports retailers are especially important.
Luxury goods sections
Exclusive stores, boutiques and service outlets should rather target more secluded locations, preferably next to other high-end brands.
In most countries, luxury retailers focus on establishing a presence in high streets. By contrast, in Poland, where there is a paucity of high street locations, shopping centre architects design special places to cater for the tastes of the more affluent customer.
Luxury brands tend to be grouped together in specially-designated aisles, just like in the Galeria Mokotów shopping centre. Seclusion is likely to result in much lower footfall, but it need not be a disadvantage. A vast majority of shopping centre customers are not driven to buy a smart suit or watch by what they see in shop windows. Those seeking luxury products are rarely interested in what hypermarkets can offer and prefer to keep away from congested areas.
Most desirable neighbourhood: best-known and loved
Anchor tenants, including H&M and Inditex brands, generate substantial footfall wherever they are established within a shopping centre. They attract many keen customers who will also pop into neighbouring stores to see what competition has to offer. Smaller retailers therefore benefit from proximity of chain giants as appropriate neighbourhood has an impact on both retail sales and rent.
Presence of a hyper- or supermarket in a shopping centre is also an important locational factor for some tenants. When targeting hyper- or supermarket customers, it makes sense to open nearby service outlets, mobile telephone stores, kiosks and specialised, non-luxury products stores such as pet or flower shops.
The F&B sector is increasing its presence in shopping centres at a rapid pace. Several location options could be considered.
Until recently, most F&B outlets were opened along outer walls of shopping centres, preferably with separate entrances and outdoor seating areas. Smaller cake shops, cafés and snack bars targeted indoor areas, close to the main entrance and escalators. Such small-scale operators preferred corner units and locations providing access from all sides.
This changed with the growing popularity of food courts. Rents per tenant for shared seating space fell while customers were given a greater choice of eating out options.
The largest F&B operators therefore often open two or three outlets within a shopping centre.
Entertainment on completely different rules
Cinemas, bowling alleys and other leisure facilities tend to be located quite far from main passageways. Cinema operators, for instance, have special height requirements for cinema halls that can be built in a limited number locations within a shopping centre, and need to be open outside the opening hours of a retail complex.
When to start looking for a place at a shopping centre?
The widest choice of options is available before a shopping centre is actually built. Lease negotiations can be conducted while construction work is still under way or frequently during the early designing phase. Anchor tenants such as hyper- and supermarkets can even persuade a shopping centre owner to slightly modify the architectural design. Most importantly, however, they negotiate solutions to facilitate store access.
In this case, however, tenants also run the risk of a gap between theory and practice as the actual shopping centre layout can be put to the test by the market only when the retail scheme finally opens.
Tenants seeking to gain a foothold at existing shopping centres usually have a very limited choice of locations and store sizes as few units are generally vacated at a given time.
In this situation it is advisable to review all factors that can have an impact on location profitability and to find out what choices were made by similar brands. Most shopping centre owners develop a tenant layout during the design phase to ensure optimum space usage.
Tenants look for premises where targeted customers can enjoy easy access, even if it means having to operate in the immediate neighbourhood of competition. Good store location provides opportunities for further growth of a brand, but the key to success lies in tailoring an offer to customer needs and market conditions.