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The future of Shopping Malls
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Hello everyone, this is Carlos speaking today I have the honor to be here at VTEX commercial headquarters in São Paulo
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and I spoke with Felipe Dellacqua, Corporate Sales Director for VTEX and Juliana Secchi, partner over at Retail Hub.
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We spoke about the future of malls, how shopping malls are adopting technology to go through the digital transformation.
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Brazil really is in a peculiar moment. You don’t hear so much that malls are closing at the same rate as in the USA
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I truly hope you enjoy the content, so please let me know what are your thoughts and do you actually think its going to happen
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with shopping malls and how they can adopt technology in this new digital era. Hope you enjoy it and stay tuned for more.
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Juliana I’d like you to introduce yourself, Retail Hub and share a bit of your background with us
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I've checked you up on Linkedin, you worked as a lawyer, could you share your journey with us
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so our partners can understand the magnitute of a project as such, which is to change the status quo
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which will then digitalize and bring higher levels of professionalization for stores within malls
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so I can tell you that with my experience this is not about opening another "online channel"
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so I fell in love with shopping malls, and I believe that the current model which shopping malls
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and since then we’ve been on this journey to spread know-how and transform the digital commerce scene here in Brazil,
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speaking of retail, tax challenges amid other economic and political volatilities in Brazil
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understanding these challenges and operating here for a long time gives us a unique advantage
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and my last enterprise was a technology company called Primord, focused only in the fashion market here in Brazil
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it was a digital commerce platform like VTEX, and we joined forces in 2014 to consolidate the fashion market
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and we speak a lot with Juliana to understand more about the Shopping mall opportunity
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and we're betting that shopping malls will be competing on this new digital era as well
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Cool. So let’s talk about malls. We were discussing previously about malls and different realities.
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let’s focus on the Brazilian reality and eventually give a few inputs on what we hear about what happens in North America
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how about vacancy rates? do retailers fear opening stores in shopping malls? what is the sentiment?
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Right, before we go on and speak about different realities, let's define the concept of shopping malls here in Brazil
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A mall is a place that gathers a mix of stores, can be retailers and/or service providers
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differential is the location and the capability to deliver a wide and differentiated mix to the end consumer
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but much of what we see or, by contrast, what is Amazon has done with these malls that closed down?
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they are buying these properties and transforming them into intelligent distribution centers
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Conversely in Brazil, most shops are located in "premium" areas- Juliana can talk more about it
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so not only will they operate as a pure marketplace as they've done for the past 2 years
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as they are becoming even more professional in Brazil to cater a better experience for the end customer
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but i also believe in Brazil Shopping malls have an opportunity to fight Amazon and Juliana can talk about it
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Juliana in your view, what is a shopping mall, and please explain how can they be competitive?
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Right, like Felipe, suggested, the Brazilian and North American realities are different
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when you look at where shopping malls are most profitable it is usually on rents and parking lot
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so the revenue of shopping mall parking lots which used to be quite high, starts to decrease
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there are large malls quite well located, but there are also smaller and more regional malls
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on top of it, there is an issue with rents. I cannot make general statements once again, but retail has changed
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there is a budget to follow, there are bills to pay, so that in an of itself has to be profitable
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imagine I have a property in a prime location, I'll then build a "supermall", offer a great experience
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nowadays what basically happens is. If you have omnichannel customers, and by the way there was interesting research at NRF
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in New York, 29% of the respondents answered that regardless the actions shopping malls might take, they won’t visit the mall.
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so a mall that operates in analogue mode only is automatically telling digital consumers that they are not relevant
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because the consumer is saying that there is nothing the mall can do that can possibly attract them to go there
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means that the mall has to transform itself into something more, or malls will no longer see this parcel of shoppers, that are quite representative
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imagine offer the possibility to the consumer buy however they want it. If they want to research on the internet, that is fine
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imagine you have to make 3 different purchases on the same day...wouldn't it be nice to have convenience?
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(Carlos) Cool, you've touched some very cool stuff there. Now I'd like to question things from different perspectives
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I recall João ( a VTEX partner) talked about legacy systems and things as such as some challenges
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but from the perspective of a digital commerce platform. Right so you have the shopping mall
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first thing is to think about two main points. Shopping malls used to be extremely product-centric
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the mall basically rents that space for a store but the mall knows nothing about their customers
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and due to this lack of relationship with the customer plus the flow of people visiting the mall
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provided that the mall would be able to generate a huge ammount of data, which can help them to
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know their customers and from there and onwards they'd be able to offer a true experience
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The end customer, the one who buys from stores and the tenants who are renting space from the mall
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and the same is happening within the digital commerce space, there are basically 3 firms dominating the market, VTEX is one of them
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about 4 years we started developing a system to transform Walmart into a market place in Brazil
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integrating this into the same system you can basically offer an omnichannel marketplace
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I can have multiple stores within the same digital environment, offering a complementary mix of products at the same time
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with the convenience of the omnichannel experience, allowing the shopper to buy however they prefer
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to buy online and pick it in-store or buy it in-store and pick at home, and cover all needs for the omnichannel shopper
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the millennial shopper decides how they want to communicate or interact with a brand and we can no longer take that option away
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that is why the concept of the Omni-marketplace is to offer the possibility for the mall to go through the digital revolution and be
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capable of facing their competition on equal terms against Amazon, B2W, Magazine Luiza in Brazil
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but most importantly to show impatient consumers that malls can be nimble and solve their pain
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no one nowadays likes to use 40 minutes of their lives to walk and search for a gift, for example.
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the shopper wants to use the smartphone, check what and where is readily available and purchase it
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Juliana, how malls can adapt both in terms of technology as well to the behavior of the modern shopper
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We use these 2 different ways of thinking to persuade and show the potential of the project as a whole.
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first way of thinking, which I learned with the folks from Amazon. Always,always think about the customer
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for example, say I have a trip tomorrow and I need a very specific pair of snickers because I'm have to run where I'll travel to
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unfortunately my sneakers were mistakenly put to wash,so I have a specific pressing need at that moment
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I do my search and have and can see a few shops where that pair of sneakers is readily available
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For the brand from which I’m going to buy my sneakers, it doesn’t really matter where I'm purchasing it from
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The second is to look for other industry benchmarks, as in who's doing and how they are doing things
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Despite being an innovative project, I personally believe Brazil is quite ahead when it comes to this sort of innovation
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Because Alibaba invests heavily in malls, but not like a logistics hub, rather, as a digital enabler for stores.
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Alibaba is a digital platform, they understood that customers go through a certain journey
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and Alibaba throught their platform enables these store owners to digitalize their operation
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look at shopping malls, they are in prime spots,have an audience and a constant stream of people
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the question is how can they transform what they have into a digital platform to support store owners
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because store owners are responsible for bringing a large chunk of the revenue for the mall
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several anchor stores are closing shop, and malls find it hard eventually to replace them for new anchor stores
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as stores cannot sustain their operation, and malls cannot easily replace those stores for other ones
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malls end up having to create new attractions, including different types of experiences
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perhaps creating a co-working area which may not be as profitable as other stores would be.
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So if we were to design a road map as to where we want to get to, and where mall want to get to
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I would say the “dream” is for malls to become a digital platform;all integrated,business,data,
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marketing intelligence,the possibility to have a pro-active management of the mall instead of reactive
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about 50% is comprised of regional brands, who cannot really afford to invest in technology
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the goal is to have a mall making a pro-active management and being a platform that can drive traffic
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whether its acquiring traffic online or offline and then again avoiding the distinction between on and offline.
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Can you comment more about this project, what was the pain that the mall was going through
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the challenges, the success and eventually who knows this can be replicated in other countries...
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The pain today is common among all shopping malls, due to the hybrid model of consumption. What Hybrid consumption means?
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a potential client visits a store. She is trying clothes on while at the same time looks similar options in other shops
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potentially cheaper counting on "same day delivery option" in the neighborhood that she works or lives in.
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from the moment that you already have a marketing investment to drive people into the mall but you cannot convert that into sales
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because the hybrid consumption model enables the user to compare in real time other cheaper options
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it has been proven that consumers even being at a mall when offered the digital option, they go with the latter.
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there's is a natural migration towards digital channels, so why not offer your audience to purchase from a digital channel anyway?
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then start learning why consumers at the moment of the purchase use their phones and start looking for other similar products.
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so basically malls can offer an another alternative and not loose that potential revenue
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we’ve been following these trends closely, the stream of clients in malls has not decreased so much
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this is a common pain among all Brazilian shopping malls, and the opportunity we are after with
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Retail Hub who's our partner ochestrating all of it that is really hard for a shopping mall accomplish on their own.
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when we started speaking about the project with the stores, not only as a marketplace but with a bigger vision
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talking about the digitalization of the mall as a whole, meaning the mall as a pro-active actor
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I'd say the feedback has been super positive. Great! Final Question. Future. What is next, where are we going to?
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The future without a doubt is about digitalization.In Brazil online commerce represents 4,5 to 5% of the total volume transacted
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It is forecasted that the total online retail volume within the next 5 years will reach 9% of the total volume transacted
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that also means that if malls are not part of this they will be constanly loosing revenue
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millennial consumers are more representative and with consumption fire power so everything points out for a digital future.
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in order for malls generate(+)revenues, better serve their customers,increase the average ticket, they must become omnichannel marketplaces.
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you can only talk about customer experience once you understand how to work with the data you have available
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in all possible segments, I have no doubts that the future is about becoming data-driven and knowing how to translate this information
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speaking of malls, how to acquire this data, if today the mall's customer is a customer of the store in reality
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so the question is, how to capture and leverage this data so this is the project we are in and believe in.
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Terrific! Fellows, time to sell yourselves.How can anyone find you or learn more about VTEX?
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please shoot an email to vendas@vtex.com.br we have a dedicated corporate sales team here and we have a very good feeling about this market