Steven Lowy’s looking to pull the mall into the future with an injection of technology and collaboration, pleading with retailers to open up their customer databases.
At another time in retail history, this may have sounded like heresy – or insanity – but the Westfield co-chief executive officer wants retailers and real estate providers work together to improve shoppers’ time in the mall and unite against the common threat of Amazon.com.
“Amazon provides a different experience than physical retail,” said Lowy on Friday. “In our view, there’s plenty of room for digital and physical. We’re trying to create products and experiences that are vastly different than Amazon.”
Lowy, who heads the Australian shopping mall giant with his brother, Peter, was in Manhattan to give a keynote address at the National Retail Federation’s Big Show on Tuesday, along with Sir Charlie Mayfield, chairman of John Lewis Partnership, and Kevin Plank, founder, chairman and ceo of Under Armour.
Typically, the relationship between a retailer and real estate owner ends when the store opens. Lowy wants to turn that on its head. “We have to move from a business model where real estate providers don’t have a relationship with consumers,” he said. “Real estate [providers] have no visibility of the data.
“If you’re going to compete in today’s market, the consumer has certain expectations,” Lowy said. “They don’t care where they buy it. All they want is a great experience.”
Lowy gave an example of an “enhanced” visit to Westfield London where a shopper’s license plate is recognized at the entry gate, they’re directed to the nearest parking lot via smartphone and once inside, guided by blue dot mobile technology to a particular store or product. Westfield uses a customer’s recent browsing history to create such a “curated experience.” The technology, currently in Westfield’s London centers, will roll out to its U.S. properties next.
Westfield is capitalizing on the popularity of click and collect services with CollectPlus, where consumers can shop online and have items delivered to the mall’s dedicated lounge, which has its own fitting rooms. If an item is not to the customer’s liking, it can be returned on the spot.
The Searchable Mall, an online feature in Australia that provides customized deals on goods and services, will be launched at Westfield World Trade Center.
“We’re building the best customer experience for each customer,” he said. “With the power of our collective IT, we can make the experience even better than anything they can get online.”
Westfield has made a significant investment in the digital experience, including a smart global network that links all of Westfield’s centers and allows retailers to seamlessly plug into their customers across multiple touch points.
Westfield Labs in San Francisco, the company’s technology hub, continues to staff up for product development and design, data analytics and its building-infrastructure teams.
The company is at the midpoint of a $11.4 billion investment to develop flagship shopping centers around the world, including a ground-up project in Milan, which will feature Galeries Lafayette. It is also building another mall in London at Croydon that is set to open in 2018 and cover 1.4 million square feet. And the 2 million-square-foot Westfield London is expanding, again, and is set to become the largest mall on the Continent with the addition of 665,000 square feet of retail, residential and mixed-use space.
Westfield London and Westfield Stratford City in East London, together generate annual sales of 2.1 billion pounds ($2.9 billion at current exchange) with over 70 million annual customer visits.
“Globally, the luxury expansion reflects the demand, which was unserved,” Lowy said. “There were no luxury in malls in Europe.”
The company has been also been shedding weaker-performing assets, going from 69 malls in 2007 to just 32 centers today. “We’ve repositioned Westfield to be in the better markets and economies,” Lowy said. “Anything that was not in a top market, we sold.”
While Lowy believes the department-store business is still viable, he said, “it needs to be rethought. The journey of the department-store industry is one of aggregation and dilution. There are very few key successful players. We want our buildings to be where Neiman Marcus, Nordstrom, Apple and Tesla want to be.”
“I don’t recall the last department store we opened,” Lowy said, adding, “There’s too much retail real estate in the U.S. and it’s provided too much supply. This is all in play. Most leases a foot now are archaic in nature. The leases have no reference to technology.”
Lowy said there should be a system that credits physical stores for certain online sales. “If somebody bought goods online and returned them to the store, it’s a negative,” he said. “Goods ordered online and shipped from the store should be credited to the store. We’re all in the process of adoption right now. Once we help each other, we’ll decide on what’s an appropriate economic recognition.”
One of Westfield’s biggest projects in the U.S., Westfield World Trade Center, is nearing completion. Westfield has been working with the Port Authority, which is building the structure of Westfield World Trade Center, and is planning a grand opening in August.
In addition to previously released tenants such as Michael Kors, Vince Camuto, Victoria’s Secret, L.K. Bennett and Kate Spade, Lowry said, “Apple is opening a global flagship and Ford is opening a Ford Hub showroom and innovation center.”
“People have got to get it out of their heads that malls are just for retailing,” Lowy said. “The word mall should be gone. Mall is a historic term. They’re much deeper than places just to transact business.”