Facts versus prejudices – what are shopping centers really like today?

By Alexander Otto, Chairman of the Executive Board of ECE

It's often repeated without reflection – the idea of endless boring "shopping factories" on greenfield sites that all look the same, creating an image of huge, charmless containers that suck all the life our of our city centres.

And it's not as if this kind of shopping center has never existed. Of course they do: they were built in western Germany in the 60s and 70s, and eastern Germany followed suit in the 90s. It's sad to say they are springing up again in Eastern Europe and even on the outskirts of German towns and cities – under the guise of furniture stores and other supposed speciality markets.

It's also true, however, that many "genuine" shopping centers have long since become architectural highlights at the heart of the city centre, sometimes even performing the same function that used to be fulfilled by stately department stores of former times. What are the characteristic features of the latest generation of modern city centre shopping galleries?

Prejudice no. 1: shopping center is synonymous with greenfield site

Between 1964 and 1995, one in four shopping centers was still being built on greenfield sites; by 2005, this figure had dropped to just four percent. During the same period, the share of city centre locations increased from 35 to 61 percent. Since as far back as 1969, ECE has been developing shopping centers almost exclusively in city districts and since 1984 primarily in city and town centres – even though this made life far more difficult for the company during the initial phase in eastern Germany and Eastern Europe. In contrast to the giant shopping centers on greenfield sites, city centre shopping galleries and arcades with sales areas of 15,000 or 25,000 square metres cannot survive on their own. The size of department stores, they are far too small to be able to provide the full range of goods and services required by consumers. This is why integration in the existing civic planning environment plays a central role, from the point of view of both the city itself and the developer. This is also why it is increasingly the case that the work of the architects does not stop at the entrance to a shopping center. Their job is far more extensive and involves such things as designing entire city squares or mapping out footways from one location to another. It is not seldom the case that these shopping centers also serve to modernise and revitalise urban planning environments – for example, when disused industrial or railway sites in the inner city are re-integrated and once again become part of urban life.

"Karstadt and ECE viewed what many saw as a "wasteland" as a prime location. They built a department store and a shopping center in the city and literally filled the void. As a result, Dessau has succeeded in creating a counterweight in the city centre to the shopping complexes on out-of-town greenfield sites."

Mitteldeutsche Zeitung newspaper on Oct 3, 2005

Prejudice no. 2: shopping centers are cheap concrete buildings that all look the same

Today, no two city centre shopping galleries look alike. While many centers used to be laid out in line with the "bone" design – department stores on left and right and the mall with small shops in between – the changing face of the retail trade and complex property dealings mean it is now necessary to draw up totally different groundplans and layouts in different towns and cities. The concepts for the façade designs are often selected following competitions with entries from leading architects. The façade for the new Limbecker Platz project in Essen, for example, is being designed by star architect Professor Gunter Henn, who has based his futuristic design on the famous image of Marilyn Monroe's billowing skirt. In other locations, the focus is often on cooperation with building preservation and heritage experts – as was the case during the conversion of Leipzig central railway station. Money is seldom the problem, as the cost of high-quality architecture accounts for just a fraction of the overall investment in such properties. Only developers with short-term strategies try to save money at the ultimate expense of the investors. Developers and center managers with long-term perspectives, however, prefer to spend that little bit more to allow the use of high-grade materials, state-of-the-art airconditioning systems, innovative water features, attractive illumination displays and much, much more. In the long-term, people will only want to visit a center if it provides a pleasant shopping atmosphere. And only the best materials are up to the challenge presented by tens of thousands of visitors every day.

Prejudice no. 3: you only ever find the same chain outlets in shopping centers

Anyone who walks through Germany's pedestrian shopping precincts will not seldom find the same mix of bakeries, banks and fashion outlets. The reason for this is that the property owners understandably always want to rent out their premises to tenants who can pay the highest rents. In addition, estate agents are interested in the highest possible fees and frequent changes of tenant. Shopping center operators pursue an entirely different strategy: the focus is not on the individual shop but on the property overall. This means that some premises are leased out at lower and some at higher rents in order to create an attractive branch and tenant mix, and the staggered rent system is strictly based on the financial capability of the segment in question. As a result, supermarkets are able to return to the city centres and start-ups have a real opportunity to open an outlet on a prime shopping site. Far-sighted shopping center operators even organise their own start-up and franchise events as a means of systematically counteracting the trend towards concentration in the retail industry. As always, the proof is in the pudding: while chain outlets account for 91% of all the stores on Hamburg's Mönckebergstrasse boulevard, they only make up between 45 and 60 percent of the retailers in the ECE centers in Hamburg.

Prejudice no. 4: shopping centers take away public spaces

Inner city shopping centers are nothing more than marketplaces with a roof. They are not just places where shoppers come together, they also serve as a stage for politicians during election campaigns as well as for celebrities, artists and local people who want to showcase their hobbies. There is one big difference, however: all the technology is free of charge, the stage is already in place and a professional event management team ensures that everything runs smoothly. In many towns and cities, shopping centers are even fulfilling the function of the absent civic hall – by staging jazz concerts, exhibitions and a wide range of sporting events extending all the way through to pole-vaulting championships. Many center managers not only take on responsibility for their own property but – in times when the public coffers are empty – also make sure that the surrounding area is kept clean and taken care of, as they too feel responsible for ensuring that "their" city retains its attractions as a shopping location.

"The Franken-Center has been the vibrant focal point of Langwasser district of Nuremberg for 35 years now. For many people, the shopping center has become not only a meeting place and a marketplace but often also a workplace. The successful development of Langwasser would be almost unthinkable without the Franken-Center."

Dr. Ulrich Maly, Lord Mayor of Nuremberg

Prejudice no. 5: shopping centers only employ people on a "mini-job" basis

Every shopping center in the city centre creates hundreds of new jobs and apprenticeship places. As in nearly all other shops, it's naturally the case that there are also casual employees in shopping centers. Unlike the situation in discount outlets and speciality markets, however, the high number of specialist shops in the city centre shopping galleries mean that the overwhelming majority of employees are permanently employed full and part-time staff, as in today's world only highly qualified sales personnel are able to provide the standard of help and advice that discerning consumers expect. But shopping centers even stimulate the regional economy before they actually open: hundreds of people work on the construction site, and a major part of the total investment sum flows directly to the contractors in the town itself or in the surrounding area – as numerous chambers of trade have confirmed following the completion of construction work on such projects.

"The EASTGATE project has given a major boost to the regional economy and has created new jobs,"

Klaus Wowereit, Governing Mayor of Berlin on the first anniversary of the EASTGATE development in September 2006

Prejudice no. 6: shopping center tenants have to accept extremely strict contract terms

Retailers who lease premises in shopping centers supposedly have to sign extremely restrictive contracts. This preconception is a little surprising in view of the fact that hundreds of retailers, many of them with wide-ranging experience, apply for such premises every year. Perhaps this is because the contracts in fact do not make life difficult for the retailers but lay down certain "rules" in the interests of all the parties involved: all shop owners have to pay their share of marketing costs, for example. They have to adhere to standard opening hours and only sell the product range agreed at the outset. Many pedestrian shopping precincts envy the inner city shopping centers precisely because of these "rules", as they know how difficult it is when shoppers can no longer keep track of different opening times, when more and more retailers sit back and let their colleagues pay for the Christmas illuminations or when every second shop suddenly starts selling ice-cream and T-shirts in the summer months.

Prejudice no. 7: shopping centers harm the city centres

A tailored branch and tenant mix, support for start-ups, vibrant marketplaces, uniform opening hours – these are all things that help to revitalise the city centres. Then there is the provision of additional low-priced inner city parking facilities and the often wide-ranging support for the civic marketing and city management functions. More importantly, however, it is often only the existence of a city centre shopping gallery that creates the necessary space for modern retailing operations complete with a wide variety of goods and costly product presentations that are often missing in a fragmented city centre. A Saturn consumer electronics outlet, for example, cannot operate from ten stores each measuring 250 square metres but needs a single sales area of 2,500 square metres. The biggest Saturn outlet in Hamburg city centre is larger than many city centre shopping arcades – and no one has the impression that there are insufficient goods and shoppers to fill this area. Bookstores are another example: over the last fifteen years, the sales area required by a bookshop has increased from just a few hundred to between one and two thousand square metres – chiefly because, in the era of Amazon, consumers no longer want to wait two or three days for their book to be ordered. If towns and cities do not respond appropriately to the changing needs of the retail trade, the shops and stores begin to disappear and are soon followed by the shoppers – who either head for a greenfield complex or on to the next town.

"Looking back, it is fair to say that Augsburg has profited from the development of the City-Galerie. The added competition has given a boost to the city centre retail trade, and some stores have made major investments. The events and activities in the City-Galerie enhance the "city centre experience."

Peter Grab, Augsburg City Centre Manager, Augsburger Zeitung newspaper on Oct 10, 2005

So has the new ECE center made the former prime retailing sites in Braunschweig less attractive? Certainly not yet. In fact, a recent survey shows that the opposite is the case. Even the real estate experts at Kemper’s in Düsseldorf got quite a surprise: when it comes to newly leased premises in the city centre, Braunschweig has now overtaken major players like Dortmund, Bremen or Düsseldorf.

Braunschweiger Zeitung newspaper on Jan 26, 2006

Prejudice no. 8: shopping centers squeeze out the existing retail trade

The construction of a city center shopping gallery often serves as a wake-up call for the retailers already operating in the vicinity: investment plans that have been shelved are finally implemented, shop designs are modernised, city management companies are set up and the shopping precinct is refurbished. A city centre that equips itself to face the competition in this way need have no fear of either a shopping center or neighbouring towns and cities. On the contrary: it holds greater appeal for consumers and also profits from the influx of additional shoppers. This is clearly confirmed by the development of the "centrality index" (which measures the relationship between purchasing power and retail sales) in many cities. If, however, as can sometimes still be observed, retailers use 1970s-style product presentation concepts in the 21st century, then they are bound to run into problems sooner or later – with or without an inner city shopping center. The same applies to people who inherit properties dating back to the 60s and take years to agree on whether or not to adapt their premises and operations to demands and expectations in the modern retail sector.

"The Kornmarkt-Center has become a magnet for the entire region, attracting high numbers of people and therefore added purchasing power. The Reichenstraße boulevard has not been severely affected, as many people had feared, and the Old Town district has lost none of its drawing power."

Heidemarie Weiß, Bautzen city councillor, Sächsische Zeitung newspaper on Sep 30, 2005

"I've taken a good look at the "Forum" shopping center that opened last year, and I've come to the conclusion that it's a good idea. It was obvious that the "Altstadt" (old city) quarter would have to reposition itself, but the two ideally complement each other. Wetzlar is now a town that's worth taking a trip to. It was the "Forum" that prompted Wetzlar to make a real effort – otherwise the town would have become just another also-ran."

Frank Albrecht, President of the Hessen Retailing Federation, FAZ newspaper on Feb 4, 2006

Prejudice no. 9: shopping centers are always potential "abandoned investments"

Local people are often concerned that what they are told will be a great addition to the city centre might subsequently turn out to be a costly mistake. And their concerns are not totally unfounded, as German towns and cities are full of examples of how not to develop such projects. Experienced investors with long-term strategies are therefore reluctant to compromise for the sake of compromise. They know that a shopping center that is too small will only lead to a redistribution of shoppers but will not attract purchasing power back into the city centre. They are aware of the needs of retailers and the preferences of consumers. That's why they only use architects who are experienced experts in their respective fields – as opposed to architects who spend the rest of their time planning houses or office buildings. They are also fully conscious of the fact that the retail trade has always been and still is constantly evolving, leading to the realisation that a product range tailored to suit consumer preferences in 2006 cannot be set in stone for all eternity if they still want to be successful in and together with the city in 2016.

Prejudice no. 10: politicians are looking on helplessly as new shopping centers sprout up everywhere

Today, politicians and local authorities know exactly what they want for their towns. And they're certainly not afraid to express these wishes in clear terms. They're also tough negotiators and generally ask their colleagues in other towns and cities about their own experiences. The authorities in Ludwigshafen, for example, want to extend the city centre towards the Rhine. An extremely detailed tendering process was set in motion, and three potential developers had to submit their concepts for evaluation based on the city's criteria. The winning concept was one that includes a city square complete with cafés, restaurants and leisure facilities directly by the river. Another case in point is Leverkusen, where the city council asked eleven other mayors how the development of shopping centers had affected their towns and cities – the responses were so positive that Leverkusen has now decided in favour of its own city centre shopping project. City councillors, representatives of the local authorities and journalists often visit other cities to gain their own impressions, and this is perhaps the best way to find out about the facts rather than relying on prejudice.