ECE Retail Newsletter, July 2018

“Time is the currency”

Klaus Rethmeier, Director Key Account Management International Leasing, tells of the almost forgotten offline era, cool new coffee hot spots and centers as regional community hubs

Klaus Rethmeier

Klaus, you've been with ECE since 1996. How has business changed since then?

Of course, business has changed incredibly. Twenty years ago conditions were completely different. There was no Internet and no email. Also, in the new states of the Federal Republic of Germany there was a lot of catching up to do with regard to sales areas. For that reason, a large number of centers were established and they performed outstandingly. The introduction of the euro led to a slight dip, but then things took off again and ran very well. A great number of regional tenants and business start-ups created an upbeat atmosphere. Starting in 2006 we noticed online activity increasing—and consequently also world-wide brands.

What requirements does a center have to meet today?

What the customers want and what the tenants offer—these days that changes significantly faster. The half-life of brands or trends is much shorter than before. So we always have to be quick off the mark to get the latest trends into the centers. But there's another thing that has radically changed. These days, no one needs to go to a center. You can order everything online straight to your home. Therefore, our centers have to perform many more functions than they used to. They have to be like a hot spot like in a neighborhood, with spaces to spend time at and an atmosphere that makes people feel happy. We want to be the ones the customer spends his or her time with. That is the most important currency. If I have great stuff to offer, customers will come and spend time with us.

How has the role of food services changed?

Food services at our centers have been completely transformed. As recently as 1999 the general view was that food retailers were a negative for a center because they created smell and noise. As far as possible, food outlets were confined to out-of-the-way sites. Anyway, you could always get something to eat at the butcher or the bakery. This idea has totally changed. We realized that the customer coming to the center would also like to eat something. At first it was fast food establishments like McDonald’s, Nordsee or Mr. Clou. Then there was the great coffee era with Starbucks, Balzac, World Coffee and many others. Of course, ice cream shops have always been around, some of them as much as 500 m² in size. Now we have come to see food services as an anchor feature. The desire to sit down and have a cup of coffee is not a mere prelude to shopping: it is actually the purpose of a center visit for many customers. Forty percent of visitors choose a shopping center for its food offerings; 60 percent make use of it. High-quality food services attract people.

What does the food services setup look like these days?

The key feature is the cafés, from coffee bars and ice cream shops to pastry shops and confectioneries. Or hyper-cool coffee hot spots serving craft coffee aimed at bearded hipsters. There has been a great deal of development in the whole idea of cafés, where the café is combined with all-day casual dining, such as Wilma Wunder or Cotidiano. Quick service restaurants are also very popular. Then, the third piece is casual dining restaurants. These restaurants are places people go to have a relaxed dining experience, to meet friends or to be with family. Some examples are “Hans im Glück,” Balducci, Vapiano, or L’Osteria. And there is a fourth component: bakeries, butchers and also juice bars. At present, the combination of grocery and food retailers is a fast-growing sector. I also see a trend in themed restaurants, concepts such as O’Leary's where you can go bowling. These are off and running in other countries and, you might say, are straining at the leash here.

How does digitalization affect food services?

We’re currently testing a digital ordering platform at Skyline Plaza called “Easy Dining.” The idea is to shortcut the ordering process by ordering my meal ahead of time through an app. Then, when I show up at the restaurant my meal is ready. Especially these days it's wonderful not to have to stand in line during my break, but to get my meal served without delay.

So, better service through digitalization?

Exactly. Many in the food service industry are wondering how to improve service without driving up costs. Take McDonald's for example: they are now delivering some meals to the tables. When I can digitalize the ordering process, then I don't need someone at the cash register to take the order, enter it, and pass it on. Cashier personnel are then freed up to serve the meals to the guests at their tables. This creates a completely different contact with the customer.

What other developments do you see for the future?

I believe it will shake out like this: We need a good choice of food services. We also need new sectors, such as automobiles or service. It could be a tattoo parlor or a barber shop. Of course, online concepts. I believe there will be a big swing back to regionalism, on the theory: Bring into the center all those things that make up the region and the neighborhood. Create the community hub there. Integrate service-oriented businesses, a lot of them. Make it pleasant for the customer. Maybe doctors in the upper levels. If our customers feel comfortable in the center, drink their coffee and then do some shopping, then I believe a location will be vital and successful for a long time to come.