Shopping centers are always reinventing themselves. But with brick-and-mortar stores closed for months due to the pandemic, this renovation trend has picked up steam – and now, with the store fully reopening, what you can see is the emergence of a mall with a new face.
This renewed face of projects ranges from changing the mix of shops, including more services, such as restaurants, primary schools and medical clinics, to leisure spaces for children and pets. A new wave of major events and exhibitions related to artists such as Van Gogh, Renoir, Miró or about the world of Disney, for example, has gained momentum. The upheaval in shopping centers also includes major investments in technology, such as apps and virtual assistants. The intention is to make life easier for consumers, collect customer data and bridge the gap between those who want to buy and those who want to sell. Even with the advancement of online commerce, which enables distance shopping, the focus is on physically bringing consumers into businesses.
“The proposition of a shopping center as a shopping center is being replaced by a community center,” says consultant Luiz Alberto Marinho, managing partner of Gouvê Malls. He notes that this change, which is global, was happening even before the pandemic, but it accelerated it.
What is happening today inside shopping centers, according to Marinho, is a greater representation of the consumption model of the population, along with progress in the participation of services – which make up the largest share of the gross domestic product (GDP). There is also a greater balance in the shopping center mix between the shopping and entertainment sectors.
A recent study conducted by Multiplan, one of the giants in the shopping center sector in the country, shows exactly the shift that has occurred in the last ten years between the segments in the space occupied by the company’s projects.
Despite still representing the largest share of the gross leasable area (GLA), with 32.7% of the total, in the second quarter of this year, clothing stores had a 3.5% drop in space occupancy compared to the same period in 2012. The segment of home products also decreased, with a drop of 2.5 percent in that period.
On the other hand, jobs related to food grew by 3.6% in the occupied territory. Small things follow, including grocery stores with a growth of 2.2%, and services, which today occupy almost a quarter of the area with a growth of 0.2%.
According to Armando dAlmeida Neto, Vice President for Finance and Investor Relations at Multiplan, shopping centers have always followed major consumer trends. But he admits that perhaps the changes were “great” due to the interruption of work in the midst of the pandemic.
The purchase comes from the name
The CEO says that the company’s malls want to be a complete place, serving not only those who will shop, but also those who are looking for convenience, food and entertainment, for example.
A clear sign of these changes came last November, when the company opened a new shopping center in Jacarepaguá, west of Rio. Originally, the name of the company would be ParkShoppingJacarepaguá. “We removed the name from the mall, which became ParkJacarepaguá, because we believe that word did not define the company,” says the vice president.
With 39 thousand square meters (m²) of GLA, the new development has a 6 thousand m² park integrated with a shopping center, an ice rink, an outdoor amphitheater with a 150 m² screen, an amusement park, a pet area, a convention center and restaurants. “Jacarepaguá shows that the mall is not just a shopping paradise as it was seen decades ago.” At the height of the pandemic and with the progress of retail digitalization, Marcos Carvalho, co-president of Ancar Ivanhoe, another important company in the purchasing sector of shopping centers, recalls that it was heard that consumers would move away from physical stores and opt only for online. However, this has not been proven by the cooling of covid-19, he says.
“Consumers have come back to physical spaces in a big way, and malls have added several environments for leisure, entertainment, services, convenience, so these pleasure experiences have been added to shopping,” explains the CEO.
According to him, the mix of shopping centers of the group has been adapted to the new requirements, with spaces for aesthetic clinics, medical clinics and more restaurants, for example. This year, the group’s shopping centers should break the sales point record. “It shows that physical commerce is very important for creating experiences,” he says.
investments in technology
On the other hand, the legacy of accelerated digitization left by the pandemic has also gained importance within the company, which is investing tens of millions of reais in technology in shopping centers to make life easier for consumers. The Shopping 5.0 investment package, as the company calls it, includes an app, a virtual assistant and a hub with patron profile information for targeted promotions that lead to increased sales.
Through the application, the public visiting the group’s shopping centers is informed about events – another pillar of the new era – such as the Renoir exhibition at Shopping Pátio Paulista, which was visited, or the Spanish painter Miró, at Shopping Rio Design Barra, in Rio. At Shopping Eldorado, managed by Aliansce Sonae, leisure and entertainment are among the main pillars of the business. For example, Mundo Pixar, an exhibition held at the mall about the universe of Disney productions, has brought a large flow of customers in months when there are usually fewer visitors, says the mall’s marketing manager Lilian Piva, without disclosing the numbers. For store owners, the introduction of new business segments in shopping centers is extremely productive. “The flow of people is increasing, and with an increase in flow, sales are certainly improving,” says Luis Augusto Ildefonso, Director of Institutional Relations of the Association of Store Traders (Alshop). He argues that retailers are benefiting from this new consumer going to the mall in search of services, which have filled the spaces left vacant by the pandemic.
According to executives, the flow of people in shopping centers is growing month by month and faster than expected. However, still below the pre-pandemic monthly average of 430 million people per month. In July of this year, for example, the flow of visitors in Brazilian shopping centers reached a figure of 397 million.
The flow of people gains space in revenues
One of the challenges of the new shopping center model is how to monetize this new business, emphasizes consultant Luiz Alberto Marinho, managing partner of Gouvê Malls. Traditionally, shopping centers have lived off income from space rental and a percentage of physical sales. Now, however, the constant flow of people seeking services also has value for the mall. “The shopping center will become a media channel where advertisers and retailers will have to pay administrators to talk to customers,” predicts the consultant. physical store avoids shopping center fees. It is about changing the financial model of the shopping center, and the Brazilian Association of Shopping Centers (Abrasce), which brings together entrepreneurs in shopping centers, has not announced anything.
The school goes to the mall
In 2020, businesswoman Melissa Fukuda was nearing the end of her lease on the property where the school she is a partner and director of, Sunrise School, was operating. The bilingual elementary school was located on a busy avenue in Osasco, in the metropolitan region of São Paulo. Always struggling with the problems of boarding and disembarking children, but also with safety, she decided not to extend the rental contract.” As we were in the middle of a pandemic, the moment came: wouldn’t shopping centers, because many stores are closing, have more space for rent in school?”
Based on this perception, the entrepreneur started looking for spaces in several projects, but not all of them had free spaces of the required dimensions. The wedding was held at Continental Shopping, located in São Paulo, on the border with Osaka.
There was a space of 1,500 square meters, spread over two floors. “It was a dead universe,” says Melissa. In the past, part of the site was occupied by an ice rink, and the other by a bank branch. Last May, the school signed a ten-year lease with the shopping center. “Being in a mall is 30% more expensive than on the high street, but that is offset by convenience, security and partnership.”
Investments to make the inactive area look like a school, with 14 classrooms and an indoor playground, for example, totaled R$3 million. In January of this year, the school started regular work. It receives 120 students per day, aged 5 to 12, who are guided by parents or guardians. It’s a constant flow of people who can consume and expand sales from other operations.
“We already feel a greater flow of people, compared to other shopping centers,” says Agnério Carvalho, supervisor of Continental Shopping. He reckons the mall has also added 30 new operations in the past 16 months, such as Casa Bauducco and Sodiê Doces. The combination of all these factors led to a 10% increase in the flow of people in the company in August compared to the same month in 2019, before the pandemic.
According to the manager, the Continental, a family-controlled mall that is not affiliated with large groups and is the second oldest in the city of São Paulo, after Iguatemi, is undergoing a transformation. In addition to the school, the third sports hall in the company was officially opened in October last year. In December of this year, the first self-sustaining cinema opens its doors.
“At the moment there is great potential in bringing in colleges, a third academy and a cinema,” he says. This does not mean, according to the Executive Committee, that the center no longer has shops. “We want both: shops and services.” But he points out that each service adds a secondary purchase to the mall’s bill — but, at this point, he says he has no way to measure this increase.