Shopping malls management needs to change

Intense predatory-like competition and crowding out currently define the retail sector in many European markets. In Western Europe, this competition is more pronounced as compared to Eastern Europe, which has also witnessed an increase in competition among key players in its retail markets. One of the factors that contribute to this increasing competition is the internationalization of the retail markets in the last two decades. For example the American Walmart had in the last ten year expanded their operations to more than 25 countries across the globe. A few years ago, retailers such as Hennes & Mauritz (H&M) had their presence in only ten countries. However, this retailer has since expanded its business operations to more than 80 countries across the globe. The same applies to The Body Shop, Marks & Spencer, Inditex Group, and Douglas among others. In this case, during the last few years, most retailers have become global players.

During this period of expansion and internalization, the global market places have witnessed increased construction activities that have resulted in emergence of numerous shopping centers in order to address the increased demand for retail space. Research points to the fact that these construction activities have led to the development of approximately 15,000 shopping malls and centers, retail parks and/or specialist malls, hypermarkets with retailers’ shopping galleries, and factory outlets across Europe. In most cases, these have comparable concepts and similar tenants.

What is it for customers?

Apart from increasing global retail competition, another factor that is making things difficult for shopping center is online retail boom and the changing behavior of retail consumers.

Evidence points to the fact that that there has been a considerable growth in B2C online retails activities in the USA, Europe and Asia. In this regard, online retail enjoys a sizeable market across the globe. For example, recent studies points to the fact that online retail activities will account for approximately 25 per cent of the total retail sales by 2020 in EU.

Business scholars, researchers, and analysts argue that the growth of online retail will only stagnate once its market share reaches 70 per cent. This implies that the mortar and brick retail business will become irrelevant in future.

But we still have time, right? I dont think so.