Foreign experience
As for well-executed reconceptualization projects outside of Russia, Nike Style in Seoul could be the one. The store has its own video studio with an interactive background where customers can create their own content for social networks, adds Khakberdieva. The store is also to host seminars and sports events for the members of their loyalty program. The customers can also enjoy the virtual fitting rooms to check how a design they pick would look on them.
Nike also opened a two-floor flagship store in a famous London shopping centre Westfield. The shoppers can test the sports equipment right in the 1.5k m2 store and the interactive screens provide information about any pair of shoes. Those who do not like queueing, can book an appointment online to visit the store.
The new flagship store Zara (3, 000 m2) located in the shopping and entertainment centre Europark in Austria boasts with a greater variety of men’s, women’s, children’s clothes as well as a completely new department of sports clothes. The store has got a new concept using natural materials in the design, furniture and interior design. It blends in the experience of shopping in a brick-and-mortar shop and an online shop.
When using their app, customers can check all the goods available in stock, order them online and pick them up within two hours. Besides, they can book a fitting room in the same application. The monostore is equipped with self-service check-outs and exclusive zones for the pick-up or the return of goods. Another example, is the department store Galeries Lafayette Champs Elysee in Paris. It is located in a historical art deco building.
Threats and risks
While considering a reconceptualization, one must be careful with assessing the internal and external factors affecting the footfall and the profitability of the project, explains Khakberdieva. If you do not consider the new formats of your rivals or the changes to the customers’ habits the shopping centre will stop being up-to-date. There are also cases, when the owners do not see eye to eye with their potential tenants on how to develop the areas.
Developers often find it difficult to evaluate the term for return and the necessity of the investments, mentions Stogova. In some situations, owners of shopping centres do not have enough money or knowledge to do a proper reconceptualization.
“Based on the evaluations of most experts, and average term for return of investments into a renovation of a shopping centre is four - seven years with a potential for the rental income to increase. Today, the planning horizon is much lower. It is difficult to make a forecast on the term for return and many developers are waiting. I suppose, there will be no big changes in this segment of the market until the end of 2023,” adds the expert from Glincom.
Another problem is a lack of high-quality analytics. It may be difficult to find the reason when the owner sees a constant decrease in the footfall and tenant rotation. We must analyze not only what happens inside the project, such as the zoning, technical problems, relevancy of the architecture and interior design, etc.) but also outside: the changes to the target audience, the infrastructure of the neighbourhood, the competitive environment, explains Stogova.
One of the goals of a reconceptualization is to properly distribute the time to change the layouts and interiors as well as to minimize the losses of rental income because of the retail floor not being used, highlights Kutkin from CORE.XP. It is also important to identify critical points and weak areas in the current concept.