Screen FX's Infopod at Meadowhall
Balancing act
Published: 01 March, 2007
Long gone are the days when shopping centre owners made their money solely from letting retail units; these days, it's as much about the non-rental income that can be generated from space on the malls.
But through the introduction of RMUs, promotional areas, vending machines and so on, are owners striking a balance between revenue generation and overall experience?
Stephen Court, commercialisation manager at Hammerson, says any aspect of commercialisation must be complementary, both to the shopper and to the retailers. "We have a responsibility, when we are delivering commercialisation, to look at what the catchment will want to see above and beyond what we can achieve through retail repertoire," he explains.
Court points to a number of important factors to consider when determining the use of space for commercialisation. "Satisfying the communities where we have a presence is central to this approach," he says.
"We have a pragmatic view of what our commercialisation team can achieve, balancing the provision of stimulating promotions and marketing-led attractions with sound commercial awareness.
"We take a view as to what impact any promotional, sponsorship, partnership or media content will have on our consumer audience, their experience, perceptions and also look at how these activities integrate with the surrounding retail repertoire."
Recently, Hammerson hosted the Toyota Auris brand at West Quay in Southampton during its UK model launch campaign. Toyota's agency used a combination of managed mall space, banner advertisements, 6 Sheet poster sites and also covered a shop unit with a bespoke billboard structure to provide an integrated indoor campaign, exploiting several available commercialisation channels to reach the consumer market.
Court reckons we will see more emphasis on this type of multi-channel use, as well as sponsorship and partnership arrangements.
Last year, The Oracle in Reading created a beach on the river, which provided a revenue-generating opportunity to create content that brands would want to be a part of.
"The retail and commercialisation mix is evolving to meet the needs of the people that use and visit our destination," adds Court. "That's what we have to think about every day when we go about our commercialisation work."
Brent Cross, which is jointly owned by Hammerson and Standard Life, is being very cautious about its plans to extend the RMU line-up without going overboard and having inappropriate products.
Centre manager Tom Nathan says: "It's obviously rewarding from a revenue point of view, but we need to balance off revenue and branding so that it doesn't affect our image."
Nathan points to other malls he has visited in the UK, which belong to other groups, where the malls are quickly being filled with kiosks and RMUs. "For me, it was overpowering," he says. "But they would argue that it diversifies the offer."
He says the latest RMU, given over to Nut Hut, has improved the customer's experience by filling a gap in the market.
"There could be conflict between revenue-earning promotions and non-revenue earning promotions and RMUs, and so you have to make up your mind how you will use your mall space," he adds. "We have taken the view that we want to balance off the desirability of revenue with the importance in creating events that customers will enjoy and giving space over to the community."
Peel Advertising, a sister company of the Trafford Centre Limited, looks after all the non-rental income in and around the Manchester mall. This primarily consists of advertising opportunities and promotional events.
Jon Levenson, managing director of Peel Advertising, says: "All centres are different but we are very big on the the mall's architecture, art works and various other attractions within the centre. For instance, we have a lot of palm trees because it all extends from the whole vision of the Trafford Centre, which is that shopping should be a leisure activity. So it's balancing. I prefer the word optimising rather than maximising the mall space because we want to ensure our malls are interesting and exciting."
There are six promotional areas within the malls and two outside, and Levenson points out that all promotional activities must be exciting for visitors and engaging, while they also like them to promote products that are available to buy within their stores.
"We like car launches and fragrances. We tend to shy away from home improvement as we like to keep promotions glossy to fit the visitor profile," he says.
But in order to keep everything 'leisurable and pleasurable' the centre purposely doesn't have all its promotional areas filled every day. "Also we like to keep space back for charity and community activity as well," he adds.
The huge screen in The Orient and the 160 6 Sheet panels provide ample opportunity for advertisers. While the Screen FX InfoPods, introduced more recently, are providing further income-generating opportunities.
As well as providing information to customers, retailer offers, gift card balance readings and prize draws - which also offer an outlet for customer data collection - the InfoPods present an ideal platform from which brands can advertise.
Levenson adds: "The media proposition for brands, which are freely available in the shopping centre, to advertise to shoppers while they are in shopping mode, is fantastic. We are not seeing any loss of income from 6 Sheets so it's definitely an additional revenue which we wouldn't have had if the Screen FX pods weren't there."
Shoppertainment, which is part of the Modus Group, organises all areas of mall income generation activity on their own malls and at other schemes.
The company believes promotions should give shoppers something interesting to look at and participate in. At the Pyramids and Grange shopping centres in Birkenhead, for example, Shoppertainment introduced an ice rink during the Christmas period. The grand opening included professional ice skaters, a Coca-Cola bear and wind chasers.
Clare Andrew, director at Shoppertainment says: "It's very, very important that we get a balance. We naturally make sure it is more pleasing on the eye for our shoppers and that there is plenty on offer."
Andrew points out that some occasions, such as a World Cup event in one shopping centre, started out as something for the 'lads and dads' while the women went shopping, but it ended up generating income through sponsorship.
"It was a good income generator, but it started as a promotion," says Andrew. "That's the smart thing - to make sure you have something for everyone. Shoppers are happy because they have enjoyed themselves, and they don't realise we have generated income.
"We don't have promotions that hassle anyone, instead they do giveaways for shoppers or may be even competitions. There is always something in it for our shopper."
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=== Open wide ===
Forum CentreSpace has more than doubled its turnover in just 12 months, following massive growth in the importance of mall space as an income stream.
Kathryn Ling, the founder and managing director of CentreSpace, says: "We have now been in business for more than 12 years and the marketplace has undergone a radical transformation in that time. It's not only that centre owners appreciate the value of their mall space, it is also that small and large business owners appreciate the value of cost-effective locations that are highly visible to passing trade.
"The reason for employing a company such as CentreSpace is our knowledge of the mall lettings sector, which has enabled us to assemble a nationwide database of companies that use shopping centres for retail or promotions. This is a priceless resource, which enables us to match locations with exhibitors far more effectively than an individual centre."
At Crossgates shopping centre in Leeds, revenue has gone up by 470 per cent since management of the mall space was handed over to CentreSpace.
Steve Seymour, centre manager at Crossgates, says: "We have found that working with CentreSpace not only removes an administration burden from the centre management team, it also provides a huge boost to the income stream. The centre is now so popular that we've had to identify new spaces in order to meet the demand."
Having said that, Seymour is wary of the dangers of overusing the mall space. Despite the size of the centre he says the malls are very wide. "Our malls are wider than White Rose's malls, which is a design thing from 1967," he explains. "We benefit from the amplitude of space so it is driven by that side of things. We were really underusing the space, so it is really a case of looking at it, and the landlord funded some additional works because critical to this was having power supplies."
Seymour believes it is important to maintain easy movement around the malls and to ensure sightlines and retailer doorways are not obstructed.
"The last thing your tenants want is something stuck outside their shops that stops people getting to them. We also want a good variety and that's what CentreSpace has done right for us."
