Shopping Centers Today International

FEB 2016

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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T H E C O M M O N A R E A 14 S C T / F E B R U A R Y 2 0 1 6 E-tailers must open physical stores to succeed: Report Online retailers that don't open physical stores won't be around as long as their omni-channel competi- tors, according to a report sponsored by mall landlord Simon and conducted by online marketing research firm L2. Online-only retail- ers are disadvantaged by the high cost of marketing and shipping, says Scott Galloway, founder of L2 and Professor of Marketing at NYU Stern. Galloway's firm compiled a research report called "Death of Pure Play Retail," in which the case is made that an online-only retail model is unsustainable. According to Galloway, online retailers leveraging physical store locations drive higher organic site traffic and lower customer acquisition costs while elevating brand awareness across multiple channels. "If you want to increase the traffic to your website, open stores," he said. "High-end malls continue to experi- ence growth in sales per square foot, making them an attractive option for evolved retailers looking for brick-and-mortar spaces." Multi-channel retailers offering in-store pickup and returns have a competitive advantage, according to Galloway. While e-tailer orders typically net 77 cents on the dollar due to costly returns that average 23 percent of order value, retailers that offer both in- store pick-up and returns enjoy an accretive effect – whereby shoppers walk out of the store with 107 percent of their original basket size after exchanging merchandise and making incremental purchases. More e-tailers are recog- nizing the value of an omni- channel presence. Simon is reaping the benefits of more online firms seeking offline space, says Mikael Thygesen, Chief Marketing Officer at Simon. "Online retailers are increasingly recognizing the advantage of opening stores in improving the underlying economics of their busi- ness and accelerating their growth, and we're seeing this trend reflected in our leasing activity." Travelodge courts malls Hotel chain Travelodge approached 20 U.K. mall landlords about setting up hotels in their properties. The company has already agreed to open at several shopping centers and says it sees the potential for a total of about 250 in Brit- ish retail centers. Hyper market French retailer Carre- four opened its largest store in Asia: a roughly 71,400-square-meter (about 768,000 square feet) unit at the Siyuanqiao mall, in Beijing. The store is the first Carrefour has owned in China without a partner. The company is trying to create a universal store concept across all its global markets. '' Online retailers are increasingly recognizing the advantage of opening stores in improving the underlying economics of their business. '' — Mikael Thygesen Simon

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