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Seven evolutionary trends of the retail market in 2018

20 January, Manager Italia

During the RICS conference taking place in these days, experts and players of the sector discussed the trends of the retail market.

The participants have been: Mario Abbadessa, Managing Director & Country Manager of Hines Italy; Monica Cannalire, Head of Retail Agency JLL; Maurizio Ciabatti, Worldwide Real Estate Director of Prada; Corrado Trabacchi, Investment Director of Orion Capital Managers.

More in detail, the conference was an occasion to discuss the future and the opportunities of the retail market, and the future trends for investors as well as for retails were highlighted.

1- The retail outlet is the protagonist

Monica Cannalire, Head of the Retail Agency JLL, said: “The shop remains an important protagonist of the retail, as we noticed with the last transactions and openings, like Urban Outfitters in Milan; this trend will continue also in 2018, when we will see important flagship stores of new brands not yet on the market: Starbucks, Uniqlo and other surprises on large space. There are different brands that are looking to expand in the main Italian cities, in high streets as well in shopping centres, plus the new hybrids such as the innovative Citylife Shopping District. The role of the shop is evolving: today it’s an interface with the retailer, a contact point and a complementary loyalty channel for e-commerce, the place where shop assistants are brand ambassadors rather sellers. As usual, the retailer world never sleeps.”

2-High street retail

Mario Abbadessa, Managing Director & Country Manager of Hines Italy, said: “2017 was a particularly satisfying year for Hines Italy in terms of operations and development projects. Also 2018, we continue to see important opportunities, in high street retail in particular, but also in other fields, especially in Milan, Rome, Venice, which offer excellent opportunities in terms of quality estate properties strategically located. In fact, our focus is to find the hidden value of this estate, keeping sustainability in mind and in a long-term perspective.”

3- Shopping centres, a positive cycle

Corrado Trabacchi, Investment Director for Orion Capital Managers commented: “Unlike the United State where the market is saturate, if not overcrowded, Italy is at its beginning of a positive course for shopping centers. Besides Milan that has already a pipeline of important projects, other Italians cities like Rome, where we invested two years ago, Venice and southern Italy in general have a huge potential for this kind of operations. Because the retail sector is aiming at having fewer shops but with important and profitable spaces rather than a capillary but less profitable distribution.”

4-Leisure and entertainment

As it emerges from the JLL’s report “Italy Retail. Trends Belpaese, Shopping, and Real Estate”, the retail has transformed and it’s not able to offer an experience that goes beyond selling products, offering also leisure and entertainment to visitors, for example with playgrounds for kids. With this mindset, even the food offer plays a strategic role in attracting the most selective and informed customers. More and more stores that will have spaces dedicated to the organic and ethnic food, gourmet as well as local food.

5-Technology and the human interaction

Technology is a growing reality that has a significant impact on sales and customers choices. However, who uses a physical channel to do his/her shopping recognizes the importance of human interaction. Sales assistants are destined to become actual brand ambassadors capable of providing information to customers and of sharing the brand’s values.

6-The evolution of costumer

For what concerns the physical channel, this faces a customer that has evolved, who tends to acquire information on the web in real time, to read product reviews and feedback and to carefully evaluate his/her purchases (webrooming). Therefore, the store will have to improve its pre and post sales services giving the chance to customer to negotiate a convenient final price.

7-For the investors: flexibility, dimensions, and exit strategy

For what concerns investors, the JLL report confirms some trends. Flexibility: a flexible layout is a potential advantage for the future since diversity calls interest, increases transitions and improves revenue. Dimensions: investing offers the opportunity to create an advantage in the redevelopment and development of new areas able to offer engaging experiences to customer and brands. In additions, size offers the opportunity to make economies of scale for both single operations and for the entire portfolio. Exit Strategy: a shopping mall that is the core of an area, must be a fluid investment, refundable at any moment. For this reason, it is necessary to choose the right consultants that guaranty transparency, trust and an incomparable tax structure to sustain the risk profile.

To grant the interest of international investors in our country, RICS decided to organize a second European Retail Conference in Milan planned for the 6th February 2018. This event represents one of the most interesting appointments for the retail market internationally where the main players of the business will gather.

“In less than 2 months, Milan will be the capital of the European Retail market for a day” declared Daniele Levi Formiggini, MRICS and President of RICS. “The RICS European Retail Conference will take place this year in our country. The leading companies of the industry will attend demonstrating how Milan has grown in the last few years and has become an important point for international investors, like Paris, London and Berlin”.

Source: Manager Italia

Translator: Cristina Ambrosi