In January, Rick Caruso, the chief executive of one of the country’s largest privately held real estate companies, made a dire prediction about the future of the retail. The executive, whose company owns a number of large-format shopping malls, said that the mall, unless “completely reinvented” would become a “historical anachronism — a sixty-year aberration that no longer meets the public’s needs.”
Caruso is reading more than tea leaves. Green Street Advisors predicts that 15% of malls in the U.S. will fail or be converted into non-retail space within the next ten years. Driving the estimate is a massive slowing in foot traffic recently as consumers increasingly choose to stay at home and shop online in lieu of wading through the traffic and congestion of the mall parking lot. But the more existential threat comes in the form of fading anchor tenants — large retailers like Macy’s, Barnes and Nobles and others which have chosen to forgo the mall in favor of an increasingly online business.
But brick-and-mortar firms are fighting back. The Westfield Group, one of the largest owners of indoor malls in the world, has invested in new technologies and digital strategies to reshape the physical shopping experience. In 2012, the the company opened Westfield Labs, a San Francisco-based division tasked with developing technology to improve the retail experience in the 87 malls which the company operates across five countries.
Nicholas Cabrera heads up product and strategy at Westfield Labs and will speak at Street Fight Summit West on June 3rd in San Francisco. We caught up with Cabrera to talk about the role of technology in the in-store experience and the evolving relationships between mall operator, retailer, and consumer in a connected world.
It’s been a tough past decade for the brick-and-mortar retailers. When you sit down to design the shopper experience in a mall today, what’s changed?
Traditionally, shopping centers were actually not necessarily very focused on the consumer. I know that sounds crazy, but most of the design was about pleasing the retailer. We thought that we needed to rethink the consumer experience and build a one-to-one relationship with our shoppers, and better understand their needs, understand the way they shop, understand what they’re looking to buy. We need to engage our shoppers so we can actually give them a more fulfilled experience.
More and more, we see our physical locations — our shopping centers — as experience hubs more than just a place to buy a product. What’s different about the physical shopping experience is the experience you’re going to get while you’re here. That experience includes everything from finding the right product which is relevant to your needs, to finding the right service and shopping assistance or service that gets you to the product for which you’re looking. We can augment that with, say an application that helps you better navigate our centers better, or a tool that helps you find the products and amenities that you need.
Over the past few years, we’ve seen a number of visions of the “future of retail,” but little actual change in the product. Since Westfield Labs opened 18 months ago, what technologies or strategies have panned out and which have not?
Over the past 18 months, we’ve spent the bulk of our time just organizing a lot of the data from each of our retailers to ensure that we will have the right content to power these technologies. We’re finally coming to the point now where we have begun to test some of the customer-facing technologies.
So one part of the consumer journey which we’ve really needed to improve was the carpark. Today, we’re testing a system in a London shopping center called Express Parking, which provides a more seamless, frictionless experience in navigating the car park, from entering at the boom gate to finding the right space, to finding your car when you return. And then, we make the payment experience seamless using bluetooth beacons.
There’s obviously a lot of white space to improve the consumer experience in the physical store. But how has the introduction of these new technologies impacted the relationship between the mall owners and the retailers on which they depend?
Anything we do, will need the retailer’s participation and partnership because at the end of the day we’re here to connect their product and their service with shoppers. But in many ways, the relationship with our retailers has evolved from a transactional and commercial exchange to a partnership in which we work together to create a better experience for our shoppers. It’s new to us, it’s new to retail, and it’s new to our retailers.
That often requires education. A handful of [ retailers] are ahead of the curve but for a lot of other them, it’s still new and we’re working together to figure out what they should do in that space.
We often talk about technology serving as a an overlay of sorts to augment the store experience. But how has a technology influenced the way that you actually design, build and organize the physical structure?
That’s a good point. At Westfield Labs, we have a lot of design experts which work very closely with our interior designers and architects because a lot of the digital experience, which we want to design impact physical aspects of our centers. We need to make sure that we’re building our centers with technology in mind and that our digital experience work in conjunction with the overall physical environment.
The other component is working closely with our retailers to ensure that we address different needs in terms of the way they want their stores to be designed. For instance, there may be a push for bigger stores because they actually realize that it’s not just about the product itself, it’s about the entire shopping experience. How does a better search experience shape the way you organize all the different stores in the center between the big majors and some of the smaller stores? It’s all part of the consumer journey. We don’t just think about how digital innovation can change the experience but how do we rethink the physical design of our centers as well.
From a technologist’s perspective, what’s the one user experience flaw that you really think you can solve today? What technologies do you think will have a last impact on the physical retail industry?
One of the areas that we’re focusing on is search. We have these beautiful locations but what we hear from users and shoppers every time we talk to them is that it’s still hard to navigate our centers. They’re really big, there’s a lot of things going on and I would love to have a better way to navigate a center.
One technology that’s really helping us solve that problem is Bluetooth Low Energy. We believe it can help us in serving up location specific information as well as helping users navigate certain aspects of the mall. It’s something that would be very interesting in the future. So, that’s something that we’re really active in testing.
Over the past few years, we’ve seen a lot of investment in the retail-oriented tech companies. How does Westfield approach working with partners, and will the division actively seek acquisitions down the road?
We know that more than ever, physical retail is becoming a technology business. While a lot of our technology will be built by us here internally, we know that a big part of our success will come from partnering with startups and other external companies that have technologies that we want to leverage. And yes, we’ll also have the opportunity to buy specific companies or technologies that we believe should become part of core capabilities.
Steven Jacobs is Street Fight’s deputy editor.
To find out more about how Westfield Labs is rethinking retail, join us at Street Fight Summit West, where Nicholas Cabrera will talk about how the company is planning for the shopping mall of the future. Click here to buy tickets.