Facts instead of prejudices – what are today’s shopping center really like and how can they contribute to the revitalization of city centers?
By Alexander Otto, Chief Executive Officer of ECE
It is often repeated without taking a closer look – the litany of the always same, boring shopping machines on the greenfield that all look the same, creating an image of huge, charmless containers that suck all the life out of our city centers.
And it's not as if this kind of shopping center has never existed. Of course they do: they were built in Western Germany in the 60s and 70s, and Eastern Germany followed suit in the 90s. It's sad to say they are springing up again in Eastern Europe and even on the outskirts of German towns and cities – under the guise of furniture stores and other supposed specialty markets.
It is also true, however, that many shopping centers have long since become architectural gems at the heart of the city centre, sometimes even performing the same function that used to be fulfilled by characteristic department stores of former times.
The expansion competition of shopping centers was slowed down by the financial crisis. Thus, there is more time today to develop sustainable and high-quality centers in the city centers.
As a result of closed department stores, new problematic areas will grow in the city centers in the course of the next years. Well-planned and integrated shopping centers can convert these in new, attractive areas.
We are currently experiencing a renaissance of the inner cities that finally arrived in the public and political consciousness. There is a new “desire” for cities.
Integrated shopping centers in top inner-city locations can support this renaissance of the city centers. Especially in the current time of the financial crisis, the shopping center sector has the chance to achieve a win-win situation together with the cities.
What characterizes the modern ECE shopping galleries in the city centers and how can cities and customers benefit from them?
Prejudice no. 1: shopping center is synonymous with greenfield site
Between 1964 and 1995, one in four shopping centers was still being built on greenfield sites, by 2007 this figure had dropped to only 7 percent. However, there are still large-scale food discounters, specialized markets, DIY-stores and even factory outlet centers constructed, which deduct the purchase power from the cities. In a study regarding the challenges for regional centers 89 percent of the surveyed cities stated that the spreading of food discounters is the most important challenge for their retail development. By contrast, only 29 percent considered the expansion of shopping centers as problem.
Since 1969, ECE has been consciously developing shopping centers exclusively in city districts and since 1984 primarily in city and town centers, even if that meant that the start in the new German federal states and Eastern Europe was clearly more difficult. Unlike huge shopping centers on the greenfield site, inner-city galleries with 15,000 or 25,000sqm sales area cannot exist independently. They are too small to provide the complete range demanded by consumers. Therefore, urban integration has crucial importance from the view of both the city as well as the developer. For that reason, the architect’s work does not stop at the entrance to a shopping center. Instead, urban squares and connecting footpaths are developed. It is not unusual that these shopping centers also serve to modernize and revitalize urban planning environments – for example, when it comes to the reintegration of inner-city industrial or railway wasteland in usable city space, as it was the case with the Stadtgalerie Schweinfurt or the Phoenix-Center Hamburg-Harburg.
Prejudice no. 2: shopping centers all look the same
High-quality and future-oriented architecture is the supporting foundation for the sustainable development of city centers. Wherever public space is planned, architects, developers and investors assume special responsibility. ECE is aware of that fact and develops individual solutions for each location together with the municipalities. The focus thereby is equally placed in urban construction, monumental protection and outstanding architecture.
With shopping center architecture unique buildings of the most different types are produced, which create identity. While the ECE, on the one hand, realized the façade for the new Limbecker Platz project in Essen based on a design by star architect Professor Gunter Henn, as ultra-modern aluminum dress with illuminated sequins, we reconstructed the façade of the historic city castle in Braunschweig by using numerous original components. The rebuilt and much-discussed castle, which houses numerous cultural facilities, gave Braunschweig some of its identity back.
There are always new and individual ideas for the interior design of the buildings. Every building has a special spatial experience with clear commitment to the location.
Money is rarely the problem, as the cost of high-quality architecture accounts for just a fraction of the overall investment in such properties. Only developers with short-term strategies try to save money at the ultimate expense of the investors. Developers and center managers with long-term perspectives are aware of the value of high-quality and sustainable architecture – both for the people as well as the cities and towns.
Prejudice no. 3: You only ever find the same chain outlets in shopping centers
Anyone who walks through Germany's pedestrian shopping precincts will often find the same mix of bakeries, hairdressers, mobile phone shops and pharmacies. The reason for this is that the property owners understandably always want to rent out their premises to tenants who can pay the highest rents. In addition, estate agents are interested in the highest possible fees and frequent changes of tenant. Shopping center operators pursue an entirely different strategy: the focus is not on the individual shop but on the property overall. This means that some premises are leased out at lower and some at higher rents in order to create an attractive branch and tenant mix, and the staggered rent system is strictly based on the financial capability of the segment in question. As a result, start-ups and individual niche concepts have a real opportunity to open a store on a prime shopping site. The small-scale structure of shopping centers can in this way provide a varied branch mixture satisfying a number of different consumption needs – the city regains its attractiveness with the help of the center.
Prejudice no. 4: shopping centers take away public spaces
Inner city shopping centers are nothing more than marketplaces with a roof. They are not just places where shoppers come together, they also serve as a stage for politicians during election campaigns as well as for celebrities, artists and local people who want to showcase their hobbies. There is one big difference, however: all the technology is free of charge, the stage is already in place and a professional event management team ensures that everything runs smoothly. In many towns and cities, shopping centers are even fulfilling the function of the absent city hall – by staging concerts, exhibitions and sporting events. Many center managers not only take on responsibility for their own property but – in times when the public coffers are empty – also make sure that the surrounding area is kept clean and taken care of. They feel responsible for the attractiveness of their city as shopping location. Shopping centers, moreover, cooperate closely with the local City Management and merchant initiatives and financially support events, city festivals, cultural events, etc. in the city centers.
In many places, the public space is designed simultaneously with the construction of the shopping center so that attractive urban squares are created. Such as in Braunschweig with the Schlossplatz (palace square) in front of the Schloss-Arkaden or in Ludwigshafen, where attractive external facilities are designed directly at the waterside on 25,000sqm next to the Rhein-Galerie.
Prejudice no. 5: shopping centers only employ people on a "mini-job" basis
Shopping centers are not only locations for strolling and shopping but also an important factor when creating jobs. Every shopping center in the city centre creates hundreds of new jobs and apprenticeship places. As in nearly all other shops, it's naturally the case that there are also casual employees in shopping centers. Unlike the situation in discount outlets and specialty markets, however, the high number of specialist shops in the city centre shopping galleries mean that the overwhelming majority of employees are permanently employed full and part-time staff, as in today's world only highly qualified sales personnel are able to provide the standard of help and advice that discerning consumers expect.
The number of employees in shopping centers has been constantly growing since 1965. According to a recent study of the German Council of Shopping Centers 497,000 employees in shopping centers represented at the end of 2008 approx. 18 percent of the direct working population in the retail industry. According to forecasts, this figure will rise to 544,000 people by 2010. The employment intensity is thus with 58 employees per 1,000 square meters sales in shopping centers considerably higher than in the overall trade with around 23 employees per 1,000 square meters sales area.
But shopping centers even stimulate the regional economy before they actually open: hundreds of people work on the construction site, and a major part of the total investment sum flows directly to the contractors in the town itself or in the surrounding area – as numerous chambers of trade have confirmed following the completion of construction works on such projects.
Prejudice no. 6: shopping center tenants have to accept extremly strict contract terms
Retailers who lease premises in shopping centers supposedly have to sign extremely restrictive contracts. This preconception is a little surprising in view of the fact that hundreds of retailers, many of them with wide-ranging experience, apply for such premises every year. Perhaps this is because the contracts in fact do not make life difficult for the retailers but lay down certain "rules" in the interests of all parties involved: all shop owners have to pay their share of marketing costs, for example. They have to adhere to standard opening hours and only sell the product range agreed at the outset. Many pedestrian shopping precincts envy the inner city shopping centers precisely because of these "rules", as they know how difficult it is when shoppers can no longer keep track of different opening times, when more and more retailers sit back and let their colleagues pay for the Christmas illuminations or when every second shop suddenly starts selling ice-cream and T-shirts in the summer months.
Prejudice no. 7: shopping centers harm the city centres
A tailored branch and tenant mix, a complex calendar of events, atmosphere, uniform opening hours – these are all things that help to revitalize the city centers. Then there is the provision of additional low-priced inner city parking facilities and the often wide-ranging support for the city’s marketing and city management functions.
More importantly, however, it is often only the existence of a city centre shopping gallery that creates the necessary space for modern retailing operations complete with a wide variety of goods and costly product presentations that are often missing in a fragmented city center. If towns and cities do not respond appropriately to the changing needs of the retail trade, the shops and stores begin to disappear and are soon followed by the shoppers – who either head for a greenfield complex or on to the next town.
Moreover, shopping centers lure new customers in the city centers, who by far do not only visit the center but go shopping in the complete city.
In Kempten, for instance, it was shown in a multi-annual study by the local university of applied sciences that the Forum Allgäu is the most important generator of frequencies in the city. More than half of the visitors of the city center is shopping there. At the same time, the other businesses are benefiting as well from the center’s magnet effect. Measurements of frequencies clearly show that the visitors of Kempten’s city center are also visiting the complete shopping areal of the city center in the north and south and that the desired visitor exchange between the center and the remaining city trade works successfully.
Also the city center in Karlsruhe benefited from the construction of the Ettlinger Tor.
The targeted extension of the main shopping zone to the south revitalized a number of neighboring businesses and additionally strengthened the Kaiserstraße as main shopping street. The customer frequency in the city center increased by remarkably 50 percent between 2003 and 2006. This was the result of a census commissioned by the city of Karlsruhe.
In the scope of an extensive study, 60 percent of the persons interviewed in Dresden answered that the city center became generally more attractive due to ECE’s Altmarkt-Galerie and that the visitors are shopping both in the shopping gallery as well as the pedestrian zone.
The cities’ success with well-developed and well-managed shopping centers is consequently reflected in the people’s preferences. A city center with a shopping center is clearly more attractive to visitors than a city center without shopping gallery.
Prejudice no. 8: shopping centers squeeze out the existing retail trade
The construction of an inner-city shopping gallery often serves as a wake-up call for the retailers already operating in the vicinity: investment plans that have been shelved are finally implemented, shop designs are modernized, city management companies are set up and the shopping precinct is refurbished. A city center that equips itself to face the competition in this way does not need to fear either a shopping center or neighboring towns and cities. On the contrary: it holds greater appeal for consumers and also benefits from the influx of additional shoppers. If, however, as can sometimes still be observed, retailers use 1970s-style product presentation concepts in the 21st century, then they are bound to run into problems sooner or later – with or without an inner city shopping center. The same applies to a group of people who inherits properties dating back to the 60s and who takes years to agree on whether or not to adapt their premises and operations to demands and expectations in the modern retail sector.
The construction of the Schloss-Arkaden Braunschweig, for example, generated in the meantime more than 100 million euros of additional private investments in the city center. Moreover, the city of Braunschweig invested in the design of pedestrian zones and in the city marketing. The exchange of passersby between the shopping gallery and the city center thus works perfectly. The visitors of the Schloss-Arkaden are also visiting the city center and vice versa. Surveys and the high number of visitors show that the Schloss-Arkaden are considered to be a positive impetus for the complete city.
Prejudice no. 9: shopping centers are always potential "abandoned investments"
Local people are often concerned that what they are told will be a great addition to the city centre might subsequently turn out to be a costly mistake. And their concerns are not totally unfounded, as German towns and cities are full of examples of how not to develop such projects. Experienced investors with long-term strategies are therefore reluctant to compromise for the sake of compromise. They know that a shopping center that is too small will only lead to a redistribution of shoppers but will not attract purchasing power back into the city center. Therefore, no standard center sizes irrespective of the city and location are accepted. Claims for a generally defined maximum size of shopping centers regardless of the size of the town or city or the catchment area must consequently be clearly rejected.
In fact, there is no standard yardstick for an agreeable size of a gallery. For every town or city, the individual size must be defined with regard to the integration and compatibility with the existing retail by means of a thorough analysis. It is not possible either to give a general statement on the relation of sales areas of the city center and the shopping gallery.
A general rule applies: too big is not good, but too small neither! A shopping center must be big enough. This is the only way to provide sufficient space for attractive businesses, which in turn attract further visitors to the city. If the center is too small it cannot unfold its additional appeal.
Prejudice no. 10: politicians are looking on helplessly as new shopping centers sprout up everywhere
Today, politicians and local authorities know exactly what they want for their towns. And they are certainly not afraid to express these wishes in clear terms. They are also tough negotiators and generally ask their colleagues in other towns and cities about their own experiences. As it was the case in Leverkusen: the city council asked eleven other mayors how the development of shopping centers had affected their towns and cities – the responses were so positive that Leverkusen has now decided in favor of its own city center shopping project. City councilors, representatives of the local authorities and journalists often visit other cities to gain their own impressions – and this is perhaps the best way to find out about the facts rather than relying on prejudices.
German Council of Shopping Centers: Eckdaten des GCSC zum Spektrum der vertretenen Branchen und ihrer wirtschaftlichen Bedeutung, Juli 2009
Prof. Dr. Alfred Bauer/Christiaan Niemeijer, Mittelstandsinstitut an der Fachhochschule in Kempten: Untersuchung zum Einkaufsverhalten in Kempten, März 2008 sowie Juni 2005
Stadt Karlsruhe: Zukunftsfähige Innenstadt. Entwicklung der Karlsruher City, 2007
Dr. Lademann & Partner: Oberzentrenstudie 2008
Gordon Pilz: Die Dresdner Innenstadt aus Sicht ihrer Besucher unter besonderer Berücksichtigung der Altmarkt-Galerie. In: GEOGRAPHISCHE HANDELSFORSCHUNG, Nr. 22, Dezember 2007