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EXPERT ANALYSIS: Learning from European retail

For more than five decades, the unprecedented appetite of the American middle class has served as a fertile test market for retail developers. The lessons learned from consumers form the textbook on which the U.S. shopping center's basic model is built. This model can be defined as a suburban shopping center anchored by two or more department stores and may incorporate entertainment, festival markets, lifestyle, sports entertainment, and e-malls.

As a result, the U.S. retail industry is studied and imported by much of the world. The most recent annual “European Shopping Centre Review” published by ICSC Europe, features nearly 50 new centers representing trends, industry leadership and award-winning designs. A quick glance confirms the American shopping center model is being absorbed around the world. Examples of the U.S. model's exportability include Bluewater in the United Kingdom, Oberhausen in Germany and Columbo in Portugal.

Yet, American shopping center developers and retailers entering the global marketplace note a departure from their local tradition. They find a distinct departure from the American model. A closer look at leading European retail developments reveals variations offering insight to both the American scene, as well as how American developers might participate more effectively on the global stage.

Most significant is that a majority of centers are not anchored, at least not by department stores. The European national department stores aside, only a few countries, such as Chile, Australia, Japan and Korea, have fostered a department store industry; the Europeans stores included, even fewer are in the mood to expand or consider crossing borders.

The European unanchored center gives the United States ideas on how to address the precarious nature of our own department store industry. It offers more options for American retail development in a world predominantly department-store free.

Three strategies lead to greater flexibility in the international market: retail districting, focused retail concepts and hypermarkets as anchors.

Retail districting

Without the department store, some centers group tenants in collections. This is described in European terms as districting, or in Australia, as retail precincts. Typically, European shopping centers combine several of the following six districts:

  1. Fashion: The grouping of fashion tenants is reminiscent of High Street (a neighborhood noted for high concentration of fashion tenants in urban areas such as the Champs Elysees in Paris or Oxford Street in London). Tenants often serve as the core of the center, segmented as juniors, better women's boutiques and ready-to-wear. The fashion district may add a large-scale retailer such as H&M and also include accessories and cosmetics.

  2. Entertainment: The entertainment district is often oriented around a cinema. It is associated with a food court, and a possible complement of restaurants, depending on the shopper demographic. It can be supplemented with video arcades and bowling, or more upscale venues that might include books and music.

  3. Lifestyle: Housewares, gifts and other lifestyle-oriented shops offer home décor and casual furnishings. These shops are similar to their American counterparts although they are increasingly niche-focused.

  4. Home appliance: A fourth cluster, usually associated with more name-oriented centers, includes home electronics and kitchen appliances, known in some markets as “brown” and “white” goods.

  5. Food: While we are beginning to see food offerings in the United States, the European model is more inclusive of grocery, deli, prepared meals, and an assortment of bakery, cheese, wine and meat shops. This creates a district with increased vitality and visits. The Australians have refined this mix.

  6. Restaurants: Probably due to the European centers' more urban nature and cultural tradition, their grouping of full-service restaurants offers the destination value that a multiplex cinema offers, providing a range of choices associated with high-quality food, presentation and service.

While American centers are incorporating attributes of districting in selective applications, the European model demonstrates the power of a more deliberate strategy of combining similar merchandisers to create a strong traffic magnet, especially in the absence of an anchor.

Focused retail concepts

Strong retail shop concepts largely fill the void of the department stores by creating a niche. Notably, French cosmetics retailer Sephora is redefining the staple of the traditional department store by focusing on style, clarity, accessibility and choice. The fashion sector spawned concepts from individual shops such as Mango, Zara, Jigsaw and the highly popular mid-market retailer H&M.

Books and music have Virgin, HMV, FNAC and Waterstones, which in their flagship stores capture all the excitement of their American counterparts. IKEA, too, is a pioneering product, packaging and presentation concept in home furnishings with proven, universal application in the international marketplace.

All these shop concepts focus on customers, quality of presentation and service, and most importantly, each merchant's exportability. They are adventurous and mobile.

Hypermarkets as anchors

Hypermarkets are seen as a mixed blessing. They can offer a role as anchor and are often willing to be situated in a rear position. However, the relentless frontage of cash wraps, carpark accessibility, its trolleys and preference for one-level stores in a two-level center often offset advantages. Hypermarkets are also in-and-out destinations with few, if any, small-shop visits. Still, the reality is hypermarkets are one of the fastest growing global retail forces, with Carrefour in France challenging Wal-Mart as the world's largest retailer.

While hypermarkets are generally not accepted as part of the American model, their availability and threat to operate independently force a high percentage of European developers to engage them as part of the shopping center format. This decision results in the districting of small shops to give individual product sectors critical mass and a sense of destination. Aside from some exceptional urban High Street locations, which can attract fashion department stores, the hypermarket presents itself as a realistic component in the shopping center mix.

Beyond Europe

These three strategies are important beyond their application in Europe. Collectively, they create a more flexible approach, focused and more exportable than the American model, proving the possibility of the European model as the new standard to which the world marketplace is migrating — whether in Madrid, São Paulo, Shanghai, or Dubai.


Stan Laegreid is a principal with Seattle-based Callison Architects.

Laegreid is Callison's lead shopping center designer. He is a 23-year retail design veteran, dedicating his career to understanding the mercurial worlds of retail and entertainment, specifically as they relate to design. From his work with leading retailers around the world, Laegreid understands and anticipates shopping center design trends, as well as developers' responses and concerns.

He recently completed design on the award-winning Scottsdale Fashion Square in Scottsdale, Ariz. and the innovative indoor/outdoor fashion center and retail village project called FlatIron Crossing for Westcor Partners in Broomfield, Colo. In addition to his shopping center experience, Laegreid designed numerous retail stores.

He is an active member of the International Council of Shopping Centers, the Urban Land Institute and the American Institute of Architects. His projects have won numerous awards including SCW's SADI Award. Laegreid is a graduate of the University of Washington's School of Architecture and currently resides in Seattle.

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