In the past, American shopping centers have been the first to embrace new initiatives, such as direct to consumer selling, with European shopping centers following later. However, shopping centers across Europe are currently leading the way in the digitalisation of their offering, and their relationships with the brands that rent space from them. Here, we look at two essential areas where American landlords and retailers can learn from their European peers.
Physical location, Online interactions
Every shopping center faces fierce competition, vying for a customer’s attention and his or her hard earned cash. Not only are there alternative physical retail destinations, but a constantly growing trend towards online shopping means it is imperative that your destination stands out. Shopping centers must provide customers with the brands they are interested in, and also create a place where they want to spend time.
Experiential services are essential to ensure that the customer’s journey to and at your location is worth the effort, and that customers have an experience they will want to replicate time and time again. Finally, once they are happy to visit your shopping center, you must do all you can to maximise their spend so that you and your brands hit revenue targets.
The question is… What brands and entertainment, and what incentives will resonate and encourage customers to increasingly spend with you? This is where European shopping centers are leading the way – by embracing digitalisation and adding an online element to their physical retail offering.
Loyalty programs are a popular and incredibly effective way to gain huge amounts of data about your shoppers – both from their profile data and data captured during their customer journey. Geofencing can be used to identify real-time location, and transaction data provides a wealth of information on shopping preferences and habits. The real value from this data comes with the intelligent application of this knowledge to inform multi-channel marketing campaigns, sent to the relevant people, at the right time for them to take action.
Using sophisticated segmentation and automation, data can be used to group like-minded shoppers together, and send them offers and incentives in real-time while they are in the shopping center, which will encourage higher spend, longer dwell times and more frequent returns. In fact, one very popular European shopping center reports that members of their loyalty program spend 26% more than non-members. Another retail destination generated €2 million in sales from 12,000 new members in less than 3 months of launching their loyalty program.
Relationship with Brands
Of course, the incentives and offers shared with loyalty members have to be provided by the brands that take space in your retail destination, and this is another area that European shopping centers are leading the way globally.
Increasingly, shopping center management companies are sharing data collected through loyalty programs with their brands, who in turn provide transactional data on customer purchases. The shopping center creates an entertaining and enjoyable place for a customer to spend their time and money, and brands provide the offers and incentives the customer data suggests will be the most effective at driving spend.
The improved relationship between shopping centers and brands means a better experience is had by customers and they will spend more time and money with you. The knock on effect of this is that with more happy and spending customers, brands have more incentive to renew their leases year after year.
The value that a shopping center brings to a brand is two-fold. Firstly, the shopping center provides a physical environment full of avid shoppers willing to shop and spend in real time, but it secondly, very importantly, introduces customers to brands they may not have experienced before. This is especially true of outlet centers, where many brands will take a space in an European Outlet Center as an acquisition channel to acquire both imminent outlet sales, but also highly valuable long term customers.
As stated in a recent article by RLI, even in post-Covid times there are very few people who only come to browse – nearly every consumer makes at least one purchase. Shoppers who are unsure or unfamiliar with a certain brand often first come across the Outlet versions of their stores, and use loyalty program discounts to justify their first purchase. Once this initial sale is made, brands often find they have secured a customer for life, not just for Outlet merchandise but of full price goods both in physical stores and online.
Conclusion
It is often the case that for everything Europeans do, Americans do bigger and better. However, it never hurts to take a look at what your industry peers are doing well and using these insights and ideas to boost your own business success by:
- Embracing digitalisation and data to tailor marketing to your customers
- Work with your brands to achieve goals that are in everyone’s best interest
As the US has more space, a larger population, and often more inclination for retail spend than many European countries, there is a wealth of opportunity to reach untold success by combining the best of both worlds.
