A New Age of Retail

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Thu, 27 Jun 2019 - 04:29 GMT

Southdale Mall

Southdale Mall

It might be hard to believe that malls have only been around for the past 63 years—and that in many places around the world they’re already dying out. But just as Southdale, the first shopping mall to open its doors in 1956, in Minnesota revolutionized the shopping experience, so are today’s leading experts, at least when it comes to Egypt and the Middle East.

Last month we stopped by at the inaugural Egypt Retail Summit where industry movers, shakers and disruptors hit the stage to share some of their opinions, lessons and advice on the new age of retail. So where is retail heading in the digital age? Group Director and CEO of AlFuttaim Malls Timothy Earnest sits down with Egypt Today to answer that question and discuss how malls are evolving in the Middle East and Egypt.

“I have never seen a successful mall close down,” Earnest said during his talk at the summit. The “mall of today” should have four pillars to be successful: retail, entertainment, food and beverages, and social engagement. An excellent example of this is Cairo Festival City Mall (CFCM), where all of these come together. “The space and design are essential in catering to consumer and retailer needs, as temperatures in the Middle East tend to rise during the summertime, making outdoor shopping experiences unfeasible. AlFuttaim set out and perfected the outdoor shopping experience indoors, with cool marble interiors, soft music, sunlight and of course controlled indoor temperatures.” Earnest also stated that online retailers are always seeking out a physical footprint in order to provide their consumers with credibility. “There is no doubt that malls will always be around, offering the next generations an enjoyable shopping experience.”

Innovation is key, and AlFuttaim are at the forefront of it. During the summit, Earnest announced that CFCM will soon launch a new 22,143 square kilometer expansion, which will be named Festival Avenue, adding 120 shops, including 60 retail stores bringing in major international brands, 20 new food and beverage outlets and two new entertainment concepts. “The retail sector in Egypt is witnessing huge growth, and we want to further support its development. The brand-new Festival Avenue luxury expansion will truly position Cairo Festival City as setting the standard for retail in Egypt as it becomes Egypt’s premium urban entertainment and retail destination.”

Festival Avenue will have approximately 1,000 parking spaces and a new-to-market 1,567 square kilometer food hall, featuring outlets with both inside and outside terraces. They are aiming to open its doors in 2021. Taking the environment into consideration, Festival Avenue is set to have 75 percent of its area enclosed in glass in order to provide the outside shopping experience in a controlled climate, which is needed given high summertime temperatures in Egypt.

Earnest also argues that malls are significantly benefiting the economy, and even the environment at large.

“There have been studies commissioned, regarding the various ways to shop and the various distribution channels that are effective, and malls rank fairly high. As you think about it, it’s a one-stop shop situation.” Earnest continues, “[If it weren’t for malls,] consumers might have to burn a higher rate of carbon emissions as they visit different markets or destinations in one day. However, at Cairo Festival City Mall, you can go to the hypermarket and then go purchase some clothing, after that you can go to a movie, or to the pharmacy or choose from a selection of dining options depending on your needs.”

CFCM aims to set an example for all by always looking for more efficient ways to minimize pollution while observing the behavior of shoppers, tents, and the industry as a whole. “We as an industry have taken the time to assess the properties, looking to achieve more sustainability and with sensitivity to the carbon footprint,” Earnest says.
The mall is the leader in sustainability due to the LED lighting in place, which brings down their energy demand by 30-40%. When it comes to improving practices that are already in place, Earnest points out that the new renovation and expansion make sustainability a given when it comes to energy. “We are looking at all of our HPC cooling systems, we are looking at LED lighting, and we are looking at how we handle trash and the types of things that can done with recycling.”

The hazards of single-use plastic are high on everyone’s mind. Could malls contribute to limiting its use by banning single-use plastic? “What’s interesting about malls is that we’re landlords,” Earnest explains, “There are certain things that we can control that might be government regulated. Let’s say that the government says no more plastic, then we will have to write our leases in a way that you can’t have plastic; for us to put down that rule from the outset would be extremely difficult, because every business has their own platform. But we certainly do educate retailers on what we’re hearing in the market trends, we are able to show best practices, and we can encourage that [on the sustainability front].” By educating their tenants and creating the much-needed awareness, green practices are achievable.

Earnest points out that being a landlord only gives him so much power, and for an impactful change to happen governments would need to step up. “But to mandate it from our standpoint as the landlord would be very difficult. It would be very difficult to monitor…But I think that more and more retailers are becoming sensitive to these issues.”

With some of the largest malls in the world being located in Dubai and the Middle East, Arabs are no strangers to shopping—in fact they are amongst the largest spenders around the world. Similarly, Cairo is currently home to an estimated 24 operating shopping malls and many more are under construction; a cluster of malls that have risen in small, crowded areas and are often built not very far apart.

“Malls will always survive if retailers rent space. And retailers will only rent space if they feel that there are going to be customers to buy their merchandise,” Earnest points out “Ithink what you see in a place like Cairo is a lot of buildings being built and that points to a critical mass of retail. How you fix that is very difficult; some cities have done it through zoning, and some cities have done it through regulation, sometimes it naturally happens through the cost of capital, access of capital. There have been certain markets, especially in this part of the world, where capital has been cheaper, where there isn’t any zoning, so build what you want as long as it meets the conditions of the building inspectors. After that, the marketplace has to [assess] whether that was a good decision or not.”

Cairo Festival City Mall is the perfect example of a successful mall, employing 10,000 people, serving as a model that is both economically lucrative and environmentally conscious. Earnest also reminds us of the impact that malls have around them; “You have to keep in mind the [prospective] development that’s going to happen around [the venue] and the value that’s going to be created. Because people like to live close to malls, they like to work close to malls. When it’s successful and done right, it can be a big boom to the economy.

There is still a lot of work to be done; AlFuttaim are leading by example and are definitely headed in the right direction. Here’s to hoping that others will follow.”

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