How to create a successful shopping centre by optimising the tenant mix

19.12.2019
A shopping centre’s tenant mix and layout have always been crucial to its success. However, as the retail landscape is changing, physical retail must adapt accordingly. While shopping centre sales are still growing in Sweden, footfall has flatlined in recent years. This means that consumers are visiting shopping centres less frequently but spending more when they do so.

The average dwell time has also increased, much due to a wider offering of services, leisure and food and beverage. More and more, consumers are visiting shopping centres for other reasons than only traditional shopping, such as visiting a restaurant or going to the cinema. All these trends have certain implications for shopping centres and when it comes to tenant mix and layout, there are some clear paths to choose from.

Discovery shopping – tenants are placed in random order, which adds to the sense of discovery as the visitor never knows what will be around the next corner. This may make the centre feel more alive due to the mix of businesses and encourage visitors to explore more of the centre, but it can also be quite inconvenient for visitors who are in a hurry.

Theme-based – tenants can be placed in order to fit a certain theme. Ibn Battuta Mall in Dubai is an exciting example of this, where the mall itself tells the story of a 12th century explorer called Ibn Battuta. For 24 years, Ibn Battuta visited six countries, each of which is represented in the mall. Each part of the mall tells a part of the story and visitors can walk through an old marketplace in one part and pass a life-sized ship in the next. The pros and cons of this type of layout are similar to that of discovery shopping, but the layout will most likely add to the average dwell time.

Koskikeskus interior 2018 3

Clustering – this is the most common way to create a rational customer journey. Tenants are placed based on what they sell. This makes it easier for visitors to find what they need fast. This will, however, reduce the average dwell time and make the consumer take the quickest route through the centre, thus reducing the conversion rate.

Cross-over – there are ways to boost retail sales just by adding a relevant neighbour to a tenant. To achieve this type of cross-over effect, the neighbour needs to provide products or services that complement the existing tenant. A health care centre recently opened adjacent to a pharmacy in a Citycon centre. The health care centre has been fully booked since opening and sales for the pharmacy are up 20 per cent in the first five months.

The best things about the above principles are that they can be combined to some extent and utilised to bring out the best of each tenant and the shopping centre as a whole. I think that there needs to be a sense of exploration and excitement in the centre, while clustering is important to make the customer’s journey in the centre rational.

However, I firmly believe that achieving cross-over effects may be the most important way to boost sales. A good neighbour has always been important for retailers, and with a lot of innovation and new concepts within non-retail, new possibilities are opening up constantly.

Leasing Manager Tobias Rönnberg

Tobias Rönnberg

Leasing Manager with an analytical background from HUI Research (Swedish Institute of Retail). Optimist (also with time) who believes in data-driven decision making and that all work can be done more efficiently. Loves thai boxing, great food and the outdoors.