Lessons from East and West

Is the world of retail being threatened by too much of the same? Why is there not greater integration of social, leisure and retail activities to satisfy the needs of the consumer? Are we taking to heart the lessons to be gained from the growing popularity of mixed commercial/retail/residential use?

Are the signals of innovations in town and lifestyle centres where a hypermarket or supermarket is not the anchor tenant, as tradition would have it, being received loud and clear? Are western-style leasing strategies becoming tired? Should we not be looking more to the new freshness emerging from the East, quite distinctly injecting energy into retailing? Are we recognising the needs of teenagers in centre development and leasing strategies, and providing them with a space to hang out and enjoy themselves?

All these issues bring some interesting debates into the equation and have to be addressed through our leasing strategies. Certainly we are seeing an evolution in the thinking and practices driving development and leasing of centres in markets such as the Middle East and India.

In short, it is important to realise that with the Middle East you cannot assume that something will automatically be appropriate, and that you cannot simply translate a western theme into a Middle Eastern shopping mall.

Throughout the whole process of leasing a shopping centre there are lessons to be learned, so what can the East learn from the West? Quite a bit, it seems. There is a desire to replicate the kind of centres that are found in the West, but there is not a complete understanding of how it all works.

A key issue is the importance of having all or most of your tenants opening at the same time when a shopping centre is launched. Middle Eastern culture is not yet attuned to that concept and there are two major consequences of this. You face a virtual re-launch of a centre when the remaining retailers feel ready to open – with those that do open on time possibly left feeling disadvantaged. They might even have to start asking themselves: can we sustain the business until the other retailers open?

A significant feature of the Middle Eastern retail market – totally different to any other market – which has a bearing on this, and many other facets of leasing strategy, is the fact that so many of the major brands will be under the ownership of one individual, sometimes the developers themselves. So, of course, it isn't the individual brands that engage in discussions about opening schedules. Also, one owner can hold back a lot of shops if he considers, for whatever reason, his portfolio of brands is not yet ready for trading.

The other major challenge is introducing the concept of turnover leases. The market is not yet familiar with turnover clauses and there remains a feeling on the part of the occupiers that such information is their affair – and why should they disclose it to the likes of the mall owners. And yet, we see such clauses as vital to the lease. Economically, you have to get over the fact that managing a successful centre means you have to manage the individual retailers – and through feedback on sales you can better judge their performance.