Funda Karagöz Yýldýrým
Project Development Department
Since the opening of Galleria-Istanbul, the vanguard of modern Shopping Centers in Turkey, in 1989, investments in this area increasingly accelerated, particularly in 2004, 2006, 2007 and 2008, and the number of Shopping Centers in Turkey rose to more than one thousand. Many of these have been affected by the economic crisis that prevailed as of the end of 2008 and experienced operation and marketing problems; many planned Shopping Centers were suspended or concept changes were made in ongoing investments.
Nevertheless, it has become ever more important to maintain sustainability not only in periods of crisis but also in the natural course of the market, in other words, it has become ever more important to develop the right strategies to maintain market share. Thus, the need for new product ideas, for rendering existing products preferable, for product differentiation strategies, or for making the correct decisions to penetrate existing niche markets is increasing.
Preventing widely available Shopping Centers that offer undifferentiated concepts from turning into mere barren arcades can be possible by means of the correct observations of investors and managements, as well as correct strategies to be implemented. Shopping Centers should be first analyzed according to certain criteria, the results should be evaluated, and new strategies should be developed in the light of prevailing market conditions.
The following section examines the criteria that can be used in the analysis of the current conditions of a Shopping Center. The favorable status of some of these criteria do not guarantee the success of a Shopping Center; only all of these criteria together, their harmony and synergy in concert can pave the way to success.
Some of these criteria are summarized below:
Location
“Location” is a crucial factor in any real estate project. Decisions concerning location, particularly at the planning phase, bear great importance in terms of the success of the project to be developed; in such a manner that location bears the power to influence the essential aspects of the real estate such as its quality, concept, target group, design. Location should be evaluated together with “accessibility” and “perceptibility,” i.e., two of these criteria. If a project does not have a good location, the advanced and alternating transportation possibilities it offers, as well as an interesting concept it presents will nevertheless help to sustain a wide area of impact and contribute to attracting customers. The following aspects should be taken into account when evaluating location:
• Demographic characteristics of the population residing in its environs / catchment area (Population size, employed population, average income level, average number of household members, age groups, occupational groups, etc.)
• Projects that are planned, that are under construction, or have been completed and opened in the area (housing estates, shopping centers, offices, universities, etc.)
• Planned and existing infrastructure investments in the area (roads, other transportation projects, conservation areas, green areas, etc.).
Transportation
Shopping Centers address target groups that fall within certain impact areas according to their scale and concept. Furthermore, as indicated above, it is seen that the location of the land may determine a mixture of a Shopping Center and department store concept in the idea phase. Accordingly, transportation facilities significantly influence the customer portfolio of the Shopping Center.
• Relations with main transportation axes in terms of location,
• Availability of alternative access means in public transportation,
• Arrangement of roads that provide access to the Shopping Center both by foot and by vehicle, as well as entrance-exit roads
are the aspects that should be considered under the topic of Transportation.
Visibility
The criterion of “visibility,” on the other hand, cannot be thought independent of transportation and location. The visibility of a project that is situated centrally and along principal transportation axes will be high. In addition to location and accessibility, however, the presence of aspects such as
• Architectural design,
• External properties such as color, material, illumination, and others,
• Orientation of the building
that influence perceptibility and render the project attractive should not be neglected.
Target Group
The “target group,” too, should be considered together with the other criteria but its interaction with such criteria should also be taken into account. Here, criteria such as location, concept, and transportation possibilities that directly influence the target group come into play.
Two different target groups, namely customers and tenants, can be mentioned in a Shopping Center project. However, it would be wrong to regard these two target groups independent of one another because the targeted customer group will, without doubt, determine the targeted tenants group.
Correct identification of the target group in the planning phase will introduce important gains in potential costs, as well as during the opening and operation phases. When identifying and scrutinizing the target group, inputs such as
• Demographic data,
• Income distribution data,
• Accessibility of the Shopping Center from various points
within the catchment area; and
• Visitors profile,
• Number of vehicles to use the parking lot,
• Store revenues,
• Stores with highest revenues
at operation phase should be carefully examined.
Concept
The “concept” is what constitutes the identity of the Shopping Center. The concept of a Shopping Center is shaped by the characteristics of its architectural design, its store mix and target group alltogether. Developing a concept according to the intended target group will generate direct impact on the success of the Shopping Center.
Next to store mix, the concept of the Shopping Center will further affect the store sizes, the properties of the building material used and spatial requirements in the planning phase. To attain diversity, sub-concepts can also be developed in addition to the main concept of a Shopping Center. But considering these aspects at the planning phase will prevent possible problems during the operation phase.
When evaluating the concept of a Shopping Center,
• The catchment area of the Center,
• The harmony between the concept and the target group,
• Whether or not the concept is perceived correctly,
• Whether the announced concept and the perceived concept are different,
• Activities, characteristics of the stores and brands, architectural design properties, building material-color-light utilization and other qualities concerning the concept,
• Publicity and PR activities
should be scrutinized.
Shop Mix and Lease Management
“Shop mix” is closely related to the Shopping Center concept. Creating a mix under the retail branch titles that are determined according to the target group and concept, and distributing these based on brands constitutes the basis of the shop mix. It is very important to specify the emphasis of the retail types and anchor stores when determining the shop mix.
When evaluating the shop mix,
• Harmony between shop mix and general- and sub-concepts,
• Harmony between brand mix and general- and sub-concepts,
• Harmony between visual aspects of brand decorations and general- and sub-concepts,
• Ratio of unoccupied spaces (number of leased stores / area)
should be taken into account.
When creating and managing the shop mix, “lease management” plays an active role in the planning / development phase. It is observed that the success of lease management is closely connected with
• Developing the correct shop mix,
• Reaching as many brands as possible,
• Creating the correct brand mix for the project,
• Actualizing diverse brands that are not repetitive,
• Establishing lease contracts that protect both the investor and the tenant,
• Developing lease prices / revenue shares based on feasibility study with regard to the return of the investment,
• Low / null ratio of unoccupied spaces (number of leased stores / area),
• Creating profitable lease areas other than the planned stores.
Operation Management
“Operation management” assumes an active role in the operation phase of the Shopping Center. Operation management intends to address end-users (customers and tenants). The operation management’s task should not be to collect monthly fees but to ensure “customer satisfaction.” Correct implementation of the operation management will have crucial impact on the success of the Shopping Center. Some disadvantages (spatial shortcomings, architectural problems, etc.) can be eliminated with the support of operation management.
When assessing operation management,
• Cleaning and security services of the Shopping Center,
• Relations of employees with customers,
• Technical maintenance and repairs,
• Repair and maintenance of damaged / broken areas of the building,
• Parking services,
• Landscaping of environs,
• Functioning of ventilation – heating – cooling systems,
• Operation expense items and their explanations (e.g., the connection between the number of visitors and cleaning costs)
• Transportation / Shuttle services
should be taken into account.
Publicity and Public Relations
The “publicity and public relations” activities of a Shopping Center start from its planning and construction phases. These activities will contribute to attracting tenants to the Shopping Center, increasing negotiation power with tenants, and establishing a customer portfolio. Either assistance can be obtained from outsourcing or an in-house department can be established for this activity. Even fast moving construction works can be used as an element of advertising. Thus it would be correct to commence publicity and public relations activities before the operation phase is reached.
Relations with municipal administrations can be considered under this topic. Good relations with local administrations will contribute advantages to the firm at planning and construction phases.
Activities that can be implemented during operation phase (concerts / press meetings / fashion shows / exhibitions, etc.), gifts, periodical promotions, announcements, adverts, posters, and other similar activities are evaluated among the publicity and public relations activities to be implemented during the operation phase. All these initiatives create the brand image of the Shopping Center.
When assessing the publicity and public relations activities,
• The image created,
• The number of visitors achieved,
• The number of visitors and, if available, the visitors profile during the period of intense publicity and public relations activities,
• Revenue changes in the same periods
should be studied.
Scale
“Scale” is another criterion that comes forth. This is a criterion that should be deemed together with the other criteria, particularly architectural design. Zoning conditions of the building also play an important role in determining the scale. As much as market conditions, however, location, target group, and concept can also influence the decisions concerning scale, and even further the decisions to modify zoning conditions. Scale often plays an important role in creating the brand and shop mix. It is observed that some brands refrain from participating in projects smaller than a certain scale or participate in such projects with a different brand.
When making assessment about the scale of a Shopping Center,
• Developments in the vicinity,
• Characteristics such as size, concept, architectural design, etc. of other Shopping Centers in the vicinity or in the catchment area,
• Other functions and their qualities, if available in the project (if the project is mixed-usage),
• The concept specified for the project,
• Properties of the architectural project,
• Shop mix
should be taken into account. Modifying (enlarging) the scale at operation phase is impossible for many Shopping Centers. Detailed market research is therefore necessary to make the correct decisions about scale during the planning phase.
Architectural Design and Engineering Solutions
Architectural design is one of the most important criteria that affect the image, target group, visibility and concept of a real estate project. The fact that it concerns design and often addresses judgment of taste makes evaluation more difficult. Assessment based on certain concrete concepts such as the following will provide objectivity when evaluating architectural design and engineering solutions:
• Sufficiency / excessiveness of circulation areas,
• Relationship of occupied and unoccupied (used-unused) areas,
• Galleries and their visual perception,
• Quality of the material used,
• Colors,
• Store sizes and the relationship among stores,
• Illumination,
• Acoustics,
• Environmental arrangement and landscaping,
• New architectural trends (green buildings, energy savings, efficient energy consumption, etc.),
• Properties of the façade,
• Characteristics of common areas such as toilets and nursing rooms,
• Entrance and exits for pedestrians and vehicles,
• Facilitated usage and capacity of parking areas,
• Spaces that fall outside of the customer domain such as management offices, plant rooms, etc. and their locations and relations with the Shopping Center,
• Ventilation, heating-cooling, etc.
It is necessary to observe and identify the architectural and other technical aspects that give rise to flaws in the operation phase, and produce suitable solutions by means of correct operational strategies.
As indicated earlier, suitability of one or several of the criteria is not sufficient to achieve the desired performance in the Shopping Center. The important point here is to strategically analyze the Shopping Center, identify its weaknesses and strengths, consider the threats and opportunities according to market conditions, and thus emphasize its strengths and eliminate its weaknesses. For example, it is not by “mere luck” that one out of the several Shopping Centers situated along the same axis may turn out to be more successful than the other/s. The underlying aspects of this success are sound operation management, good brand mix and a different concept.
The reason why one Shopping Center is preferred by customers over the others may be the ambiance it offers, the activities it offers to customers, the seats in cinema halls, or the arrangement of the parking lot, or even facilitated entrances and exits. Considering the demand for Shopping Centers particularly on weekends during the winter months, it can be observed that Shopping Centers that offer easy access, convenience in car parking, or sizable spaces where visitors can comfortably roam despite the crowd are preferred over the others.
If we regard these criteria as the vital organs that demand Shopping Centers to be considered as “living entities,” we can see that such centers should be periodically examined (planning / construction / execution) and evaluated in order to be able to lead a healthy life. Evaluation activities will largely contribute to the development of correct and successful projects, and show the way to correct flaws.
When the Shopping Centers of Istanbul are evaluated, it can be observed that
• They are concentrated on certain axes,
• Shopping Centers that come forth among those that concentrate on a certain axis have successfully implemented operation managements, and offer the correct shop mix as a result of correct identification of the target group in the area,
• Successful Shopping Centers
o are run by professional operation management services,
o services such as security and cleaning are provided correctly with trained personnel,
o offer suitable shop and brand mix for the target group,
o offer improved transportation facilities,
o offer several functions that are differentiated from the others’ (e.g., open area usage, different concepts, attracting diverse income groups,),
o offer successful cinema complexes,
o successfully offer activities for children,
o bear differentiated features in their architectural design,
o maintain customer loyalty,
o offer the correct concept, and
o successfully introduce their concepts.
© 2009 PY Consulting International - All rights reserved.
Unauthorized distribution, transmission or republication strictly prohibited.
|
