What’s going on here?
Klepierre, a major European mall operator, is honing its strategy on large, affluent cities to compete with online retailers, enhancing its offerings with experiences like yoga, dance classes, concerts, and movies.
What does this mean?
With online
sales
from Klepierre tenants growing to 35% of total sales – up from just 5-6% a decade ago – the company is adapting to a new retail environment. The dominance of fast-fashion giant Shein, which claimed nearly 20% of the global market in 2022, exemplifies the competitive landscape. Notably, Klepierre’s shopping centers house top brands like Sephora, Tommy Hilfiger, Lacoste, and Apple, who are increasingly relying on omni-channel strategies that integrate online and physical shopping. For instance, Mango reports that online sales now account for almost 40% of its total, reducing the need for extensive physical footprints. Klepierre has also streamlined its operations, cutting the number of shopping centers from 330 to just over 70 in the past decade, and has actively acquired assets like the RomaEst shopping center in Rome to solidify its presence in key locales.
Why should I care?
For markets: Retail’s urban evolution.
Klepierre’s shift to dynamic, affluent cities and enhanced customer experiences could set a trend for the retail sector. By integrating experiences and high-demand brands, they attract foot traffic and boost sales. This transformation underscores a focus on premium locations and omni-channel retailing, pivotal for survival against online giants. Investors might look for similar strategies in other retail REITs adapting to the digital age.
The bigger picture: Urban centers at the forefront.
Klepierre’s emphasis on major European cities highlights a broader trend of urban prioritization in retail. As
consumer
habits shift increasingly online, the convergence of physical and digital retail underscores the significance of adaptive strategies in sprawling urban landscapes. Enhancing customer experiences and solidifying locations in economic hubs may become essential pillars for retail businesses looking to thrive in a digitally evolving market.