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Shopping centers must evolve to survive, panel says

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Shopping center owners will have to completely reinvent their spaces if they are to survive the next generation.

But in this brave new world, some old tenets may yet apply.

The present and future, and the future of the modern shopping center, were just a couple topics broached during the International Council of Shopping Centers Western Division Conference at the San Diego Convention Center this week.

South African futurist Wolfgang Grulke set the stage for the world of 2020.

"What will happen in terms of individual consumer power will be like nothing we've ever seen," Grulke said.

While Grulke, a former IBM (NYSE: IBM) executive, doesn't suggest that bricks and mortar will go away, malls will become much more service centers than they will be warehouses for products if they are to remain competitive.

"Nobody will be selling consumer appliances," Grulke said, before adding that sonic pulses used on clothing with smart fibers will do away with the need for washing machines sooner than expected. "So where are you going to sell that washing machine?"

Grulke spoke about another innovation affecting what we wear that also could have profound implications for the need for mall space.

Systems are being developed that will eventually allow the customizing and printing of clothes as easily as paper is Xeroxed today.

"Printing will be the future of manufacturing," Grulke said. Before adding that while such a printer might cost $40,000 at the outset in say 2010, it might be as little as $40 in 2015, enabling it to be used at home.

Sophie Bundalo, head of retail for Oakley Inc. (NYSE: OO) a Foothill Ranch eye-ware manufacturer, said her firm is already allowing customers to customize their glasses rather than settling for the least objectionable models.

That, she said, sets her firm apart from a traditional retailer that just offers what is on the shelf.

Grulke said it always seems to be the larger stores that seem to make the biggest mistakes.

He said a video retailer he declined to name, failed to see the impact of music downloading on its industry, let alone what it was doing to the recording business.

"Instead of realizing the impact and adjusting accordingly, they opened more of the same stores. This is what I call the ostrich approach," Grulke said. "The big new ideas will not come from the big companies."

He adds that beneath the skin nanotechnology already has been developed that will not only allow people to shop from their homes, but they will be able to shop the Internet, and access e-mail using their own minds from wherever they are.

Grulke said his daughter, who recently moved from London to San Francisco is already typical.

"She found her apartment on Craig's List and furnished it without going to a store," Grulke said.

So what does all this mean for shopping center owners?

Kenneth Wong, president of Westfield America, Inc., said those who survive "will have the ability to customize to a mass audience."

Wong said there will always be the need for malls because people are social by nature.

"People still like to get out and be with other people," Wong said.

That said, Wong does concede that his centers -- and Westfield has 57 centers in the U.S. including seven in this county -- will need to change with the times.

"We must evolve or we will become totally irrelevant," Wong said.

Wong added that he agrees with Grulke in that those who ignore the impact of technology on brick and mortar do so at their own peril.

Consultant Alan Barocas, a 25-year veteran with The Gap (NYSE: GPS), said mall owners must be innovative and take risks as well.

"You have to have a willingness to fail," Barocas said.

The International Council of Shopping Centers has more than 72,000 members in 100 countries around the world. About 6,500 members attended the Western Division Conference, which marked its first appearance in San Diego County this week.

The western conference, which outgrew its previous location in Palm Springs, is also expected here in 2008 and 2009.

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