Bay Area Retail Asks: Are You Experiential?

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Overall, entertainment is becoming a bigger factor in malls and other shopping centers, said Garrick Brown, director of research at Terranomics Retail Services. With traditional retail often flagging, shopping centers increasingly feature restaurants, bars, movie theaters and patio seating. In an era when people spend so much of their lives online, noted architect Slater, “Real experiences are paramount.” Slater recently spoke to The Registry about the future of retail.

What are some of the bigger changes you’re seeing in retail real estate?

We’re post-record store and post-bookstore at this point. That was quite a shock to the system of a typical mall developer. Those were two real stalwarts. Essentially, online killed [them]. That coincided with department store consolidation. What do you do with that extra space?

They’re starting to realize that if they introduce entertainment and food, they can afford to give up some space in the back. They can introduce multiple functions into a traditional shopping center.

You [can] cut the lease spaces down—have half the space face the mall and the other half you give to the outdoors, to a restaurant that faces onto a patio facing a parking lot. An Olive Garden or Cheesecake Factory facing the parking field will do very well. You leave storefronts to the interior mall.

Definitely, online has pushed us into smaller lease spaces and shorter lease terms. So if the concept doesn’t work, you can flip quickly to another concept. Now, a retailer can say, ‘I don’t need all the space in back, I don’t even need stock anymore.’ To compete, mall developers now have to negotiate.

Is the basic purpose of a store changing?

It’s more of a showroom. It’s all about marketing.

When you go into a Nike [store] now, in many cases there’s not one shoe or product. It’s a wood wall behind the glass. All it’s saying is “brand.” They have customize-your-own-shoe kiosks within the store. You make your crazy neon-paint shoes with all the various components, and they display it for you. In many cases, you don’t buy that shoe. It’s expensive [for the customer]. But it’s fun. It’s really all about getting their technology out. It’s all about Nike.

In South America, we worked on a concept [of] car dealerships in malls. You don’t need every color, every model, every option. You just need one, and then you order it. You look at the car, look at all the options, order your car just like you would order a Dell computer, and it comes to you. The old model of an Auto Mall Row is a waste of time and space.

So shopping needs to be more entertaining and interactive now?

Absolutely. Often, that’s the only draw to get someone to go to your center because they have so many options online. [People] are looking for an authentic experience—a shopping street, a real rain-or-shine experience that also involves buying stuff.

Santana Row in San Jose is really high-end but has restaurants, patios and covered walkways, and it’s open. It’s a real experience. Stanford Shopping Center is all outdoors. The architecture doesn’t really matter as much as the landscaping, flowers, paving, places to sit, people spilling out of stores. Union Square and Fourth Street in Berkeley are all experience-based.

Uniqlo is new to the Union Square area. It’s really kind of an inexpensive North Face, [selling] nice little down jackets for $48. But they’ve got them on rotating mannequins in every Day-Glo color. They’ve got an amazing number of people working. The lighting level is really high. It’s like playing a video game essentially. It’s a real visceral experience. It’s nothing very special—except presentation and the shopping experience.

What does the emphasis on entertainment and interaction mean for the design of shopping centers?

Social interaction, food, drink, movies—all those things are integrated now into the shopping experience much more than they were. Online has really pushed that—in some ways, unexpectedly. It’s making people want to go on a shopping trip and not buy. It’s more like, ‘Let’s see what people are doing, then let’s go home and spend money.’

There need to be street performers, fountains, wide sidewalks, cafes, coffee, food, wine. You want people to have lunch, have coffee, meet somebody, walk no more than two or three blocks.

The way we design shopping centers now is much more transit-oriented, more foot traffic-oriented. You’re not carrying massive bags and boxes necessarily. You’re ordering things online in the store, on the phone, or getting the information to do that at home. So the design of the street to store to home, that triangulation is different from the traditional mall.

How is the physical design of stores changing?

The traditional American mall was built on a 30-foot by 90-foot model—30 feet across the front of a store [for display windows and entrance] and 90 feet deep [with stockrooms, restrooms and exit corridor in the back].

[But] people don’t want to go on an adventure 60 feet back into your store especially if in the first five feet they’ve realized, ‘I’m not into artisanal olive oils.’

I’m seeing things going more [toward] it’s all open, your merchandise spills out. You don’t need the physical space you used to need. The older model was you have to have it, or you can’t sell it. [Now] we don’t need to waste our physical space on huge stockrooms. We can get any style, any color, overnighted to you.

It’s a very large challenge for traditional real estate. Landlords are having to adapt to smaller footprints. Pop-up shops within department stores are a big deal right now and food trucks are a big deal right now because they don’t require a lot of real estate.

Photos of Sean Slater at Uniqlo in San Francisco by Chad Ziemendorf

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