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Shopping Centers A.D. 2019 - i.e. how e-commerce enters to the shopping malls

Shopping malls — as we all know — have been revolutionising trade for decades. However, the dynamically growing share of online sales and non-commercial Sundays pose new challenges for the whole industry.

Generation “a lot and immediately”

On the streets of big cities you can practically always meet the same concept — huge billboards with different image ideas (sometimes with celebrities, sometimes with models that are perfect to the limit) remind you of the new sale season and invite you to visit shopping centres. The question may be rised that their present sales and communication model still works? All research shows that the generation born after 1995 has completely different shopping habits. Weekend shopping with friends/family is not important at all. Authorities such as celebrities do not have the power of attraction. Moreover, the representatives of this generation are also true multi-screen. Very often they use two or even three devices at the same time (e.g. when watching TV they use a smartphone to talk on the Snapchat and browse the pages of popular “Influencers” on the Instagram). The average time of focusing on a message does not exceed 10 seconds. What are the conclusions? Both the shopping model and the communication of shopping centres do not attract them at all. Instead of going out to the store they prefer to order all the necessary products online, and in the era of growing importance of Big Data and Machine Learning, they can expect the next day products delivery (and even the same-day) from ordering.

Lost battle against time

Shopping malls with such a shopping model lose out on the whole area. On the Internet shops we have an infinitely wide range of products and the possibility of unfettered browsing and ordering dozens of them (without rush and stress). In addition, the ability to evaluate the appearance of the product at first contact is increasingly better than in real life (natural videos or long Instastories about products), not to mention the increasingly efficient and faster logistics. Shopping malls mainly have the advantage of directly checking the quality and size of the product in the fitting room. In other fields they lose:

  • no possibility to check the products you are looking for before going to the store (you can do it stubbornly, but it requires a lot of effort to check which brands are in a given place, then checking if a given brand offers the possibility to check the availability status in a given traditional store after searching for the right products… who has the time to do it! and still it may turn out that in the meantime someone has just bought a product).,
  • limited commercial space, which translates into less stockholding,
  • a waste of time related to searching for either the shop itself or products from the “wish list” already in the shop itself,
  • often limited to 5 pieces, the possibility of bringing the products into the fitting room once,
  • fight for ‘goods’ with other customers,
  • differences between the price on the label and the real price in the sales system.

These are just some of the consumer problems that have a real impact on the sales model offered by a shopping centre.

Omnichannel Shopping Center, ie e-commerce enters the gallery

Three years ago in Strix we wondered what a big revolution would be the omnichannel approach in the entire shopping mall. If its website did not only have an image function, but first of all a sales function. How much would benefit both consumers and the retailers themselves. Each advertisement could show the real products available in a specific shop of a given centre. The customer would be able to solve a basic problem — time spent on searching and checking availability. A retailer would gain a business partner in the gallery with a much wider range of sales support options..

We were even more convinced by the Magento system implemented at Frankfurt Airport, which showed that the popularisation of this model of reservation and sale in shopping centres is only a matter of time.

Since we have been close to Magento for 10 years, we started thinking about implementing a proof-of-concept, showing how such a system could work in practice on the CEE market. So we started discussions with several leading retailers (including Tous, S’portofino, Lancerto, whose products could feed the system) and Blue Media (an online payment service provider) with a conceptual model of the entire omnichannel ecosystem of a shopping mall.

The diagram of the architecture of such an ecosystem is more like the following illustration.

General outline of the architecture of the Omnichannel Shopping Mall business model

From the customer’s point of view, the process looks more or less like this. Let’s assume that an exemplary consumer is looking for a new “red scarf”. On the shopping centre’s website (by going there directly or through various other social and advertising channels, such as Google AdWords, Instagram, Facebook, etc.) it is possible to browse the entire available product catalogue of all the brands located in the centre. He then enters the product catalogue and searches for “red scarves” using the filtering function. As a result, he sees on the screen a list of products (in a classic layout known from the world of e-commerce) together with information on where the shop is located and what is the availability of their stock levels. He/she enters the product card and can make a direct reservation (or purchase) of the product by clicking the “make a reservation” button.

Exactly at this point, the shop assistant receives a notification on a specially prepared application that someone has made a reservation. After making sure in POS system (or by downloading the product from the store) that the product is in stock, shop assistant click the confirmation link and sends information to the customer that the product is being reserved. The confirmation e-mail can include a link directly to the online payment system, so the product can not only be booked, but actually purchased (which is significant in the “ hot” sales seasons).

If the customer creates an entire basket of online reservations the system analyzes and distributes specific order lines to specific retailers.

The assumption of the model is such as to give the possibility to collect products only directly in the shop, i.e. to attract the consumer to the shop, where, as we know, shop merchandising and the sales staff will have the possibility of additional up/cross-selling.

From the retailer’s point of view, in order for the system to work efficiently in its minimum viable version, it is important to have knowledge about product information and the precise stock levels in a specific location. Product data files will be fed and mapped with the target category structure of the shopping centre’s website through an intermediary, i.e. the PIM (Product Information Management) system. This will relieve the main reservation system, and since it is the retailer who manages the warehouse and pricing policy, an intermediary engine that only deals with updating prices and stock levels is important.

We are aware of the fact that this is a conceptual model, which we will soon try to test in selected locations and a lot of effort will be needed for the final implementation, but in such a model we can see the transformation of business models of current shopping centres.
We will gladly get to know other points of view on the future of the Shopping Centers industry.

You are interested in talking about omnichannel and digital transformation, please contact us — contact@strix.net.

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