While retail rents have remained strong, landlords and retailors face major challenges such as the rapid growth of ecommerce, rising operational costs, and an increasingly sophisticated and demanding consumer base. To tackle these, industry players are adopting various strategies to handle the changing market climate.

More Flagship Stores

Jones Lang Laselle research showed that brands have begun focusing on direct retailing to have greater control over sales and operations. In 2014, the central Tokyo Area saw 26 new flagship store openings, including new-to-market brands such as Balenciaga, Alice + Olivia and MCM.

Larger Stores

Not contented with having more flagship stores, retailors and landlords are now upsizing their store sizes, to enforce a stronger brand statement and presence. With fast fashion retailors leading the way, the Inditex group has raised their store size requirements for all their affiliate brands. In Madrid, Zara opened their largest store worldwide with a total area of approximately 5,000 m2, and plans to increase their Barcelona flagship store by up to 6,500 m2. H&M followed suit with its store at One Herald Square in New York with a floor area of 6,000 m2, while Mango increased its minimum flagship requirement to 1,800m2.

Mall Customer Experience

CBRE’s retail market analysis also noted that landlords and retailers are integrating more ‘experiential’ elements into their properties, including cinemas, ice-skating rinks and pet parks. To be completed in 2015, SM Seaside City Cebu mall in the Philippines includes cinemas, an 18-lane bowling alley and a 23,225 m2 roof garden. In Hong Kong, Agnès b’s one-stop lifestyle concept store at K11 Art Mall includes fashion products, a florist, café and books. Bangkok’s The Embassy Diplomat Screen, a cinema at Central Embassy Mall introduced adjustable lights, electrical chargers, butler service and even a complementary mini-bar.

Landlords and retailers have also begun working in unison to incorporate their business objectives into a unified marketing and development strategy. Personalised retail experiences with tailor-made products, unique retail concepts and entertainment can hopefully enhance the consumer experience.

Luxury Retailer Trends

While luxury retailers generally adhere to overall market trends, they are now placing a greater emphasis on increasing the profile of their stores. Some luxury houses have chosen to expand their sales offerings to display entire range of products to include perfume, accessories and watches. Some examples of this strategy in London include Tod’s on Bond Street, Burberry’s flagship store on Regent Street, and Valentino on Sloane Street, while other luxury houses focus on acquiring more brand presence in prime retail locations, such as Richemont on New Bond Street in London, Chanel on Avenue Montaigne in Paris and LVMH on Place Vendome in Paris.

Future

CBRE’s white paper on 3D-printing technology gives us a glimpse into an upcoming future trend for retailing, which will change how retail real estate works. Retailers may in the future re-purpose industrial and warehouse spaces to serve as printing depots, while utilising storefronts simply as a point-of-pickup. There is a possibility that printing and sales can be consolidated into a single place, eliminating cumbersome stock-keeping and forecasting analytics, being able to produce exactly what the client wants immediately. In such a print-on-demand retail landscape, size would no longer be a predominant factor; instead, an even greater premium will be placed on prime locations. As 3D-printing is a form of light manufacturing, there is a likelihood that production may be restricted to industrial areas or specially-zoned sectors.