With the rise of mobile technology and e-commerce demand, subtle changes have been occurring to the retail store layout in the CEE region. Over time we believe this will increasingly impact the store size or footprint. The bricks-and-mortar format has begun to look different to the store of five years ago and distribution channels are no longer singular or even multi – they are fusing.
Damian Harrington, Regional Director of Research for Colliers International, Eastern Europe, says: “Developing technologies have been a critical element in driving changes in the retail store format but other factors such as declining consumer discretionary spending, increased business costs and even corporate social responsibility are playing a role in this evolution.”
According to the report, in 2009, household disposable income in the CEE region declined on average 6 per cent, with annual growth rates only rising on average 2 per cent post-crisis, compared to more than 10 per cent annually pre-crisis.
Consumers are seeking greater value, greater access, greater transparency and greater convenience when they shop. While some of this is price-driven, the advancements in technology during the last five years have intensified the desire for a better service experience. As a result, more retailers are citing investment in capital expenditure towards implementing and/or upgrading technology and infrastructure models for their business, in particular to move into the multi-channel / omni-channel shopping space.
Sustainability initiatives driven by corporate social responsibility are also driving store format change such as logistic distribution models that use environmentally conscious transport modes.
“This is an important shift in the operating model. As retailers become more sophisticated in supply-chain and inventory management, occupational demand for the logistics and distribution sector is intensifying. We have already begun to see evidence of smaller ‘hub and spoke’ distribution models take shape within the core CEE markets as e-commerce demand has buoyed” says Mr Harrington.
According to the report, industrial take-up from occupiers specialising in e-commerce has increased fourfold, from 1.9 per cent in 2011 to 9.1 per cent in 2013.
Sophisticated technology is commonly being implemented to streamline customer service experiences. This includes initiatives such as click-and-collect service, radio frequency identification technology (RFID) and mobile marketing platforms utilising free Wi-Fi .
In the store, marketing efforts are now more closely related to technology, digital engagement and understanding how to collect and use big data analytics. However, the extent to which this is impacting the physical layout of the store is yet to fully materialise.
In terms of physical changes to the store model, no major changes have been observed to the size of the retail store in the CEE region for the fashion and grocery sub-sectors. However, some retailers selling brown or white goods have already transitioned to a showroom style bricks-and-mortar store, typically on a smaller floor-plate where consumers can browse in-store and then order online.
Technology kiosks are a common feature in-store, such as tablets and touch-screen computer terminals to check inventory, and there is a greater emphasis on entertainment and leisure services within shopping centres, particularly in Russia and Poland.
In future, as retailers decrease the size of the inventory held on-site, and rely on sophisticated supply-chain efficiencies to deliver consumer demand for stock held off-site, the size of the store floor plate may shrink. This could lead to a further repositioning of shopping centre layouts and the balance between retail and entertainment uses.